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Highlights
- South32 shares have risen 11.5% in the past month, trading at AU$3.715, nearing its 52-week high of AU$4.02.
- The company is shifting its portfolio towards base metals, which are projected to account for 90% of revenue, up from 50% in 2015.
- South32 is committed to reducing its greenhouse gas emissions, having converted coal-fired boilers to natural gas and reported a six percent decrease in emissions for FY24 compared to FY23.
South32 Ltd (ASX:S32) is positioning itself for a promising future as its shares have surged by 11.5% in the past month, now trading at AU$3.715 each, just below its 52-week high of AU$4.02. The mining powerhouse recently held its 2024 hybrid annual general meeting (AGM), where it outlined significant strategic changes and operational updates that reflect its commitment to reshaping the business for sustainable growth.
During the AGM, Chair Karen Wood highlighted the company’s ongoing efforts to reshape its operations to align with market demands and future growth trajectories. She emphasized that the board has been actively engaged in overseeing the development and implementation of South32’s strategic plans, which have guided the company's direction since its inception. A key focus of this strategy is the identification of sustainable opportunities to enhance the business's future viability.
Two major portfolio shifts were announced during the meeting: the final investment decision for the Taylor zinc-lead-silver deposit at Hermosa and the divestiture of Illawarra Metallurgical Coal. These strategic moves signify a substantial pivot toward base metals, which are projected to generate approximately 90% of South32's revenue going forward, compared to about 50% at the time of its demerger from BHP Billiton in 2015.
CEO Graham Kerr also shared valuable insights into the company’s financial performance. For the fiscal year 2024, South32 reported underlying earnings of US$380 million. Despite facing operational challenges, including impairments at Worsley Alumina and Cerro Matoso, the company successfully returned US$198 million to shareholders through fully franked dividends and share buybacks.
However, the road to recovery has not been without its obstacles. Kerr noted that FY24 was marked by a mix of recovery and volatility on a global scale, with high-interest rates and persistent inflation affecting operations. Additionally, severe weather events impacted production, notably Tropical Cyclone Kirrily in January and Tropical Cyclone Megan in March, which led to the temporary suspension of operations on Groote Eylandt and significant damage to critical infrastructure.
Looking forward, South32 expresses optimism regarding its growth prospects in the United States. The company has recently secured a US$166 million award negotiation from the U.S. Department of Energy for its Clark manganese project, which is expected to bolster its position in the burgeoning North American market for battery-grade manganese—critical for the ongoing energy transition.
On the sustainability front, South32 is committed to reshaping its portfolio in line with global decarbonization efforts. The company has converted two coal-fired boilers to natural gas at Worsley Alumina, aiming for a 10% reduction in operational greenhouse gas emissions against FY21 levels. Moreover, South32 is actively collaborating with stakeholders to secure long-term, low-carbon energy solutions at its aluminium smelters in South Africa and Mozambique. A six percent decrease in operational greenhouse gas emissions was reported for FY24 compared to FY23.
