Production Guidance Surpassed Across Key Commodities
South32 Limited, also known as S32 on the Australian Stock Exchange, has exceeded its Group FY25 production guidance, achieving 102% output across operations. The miner recorded significant gains in copper and aluminium production. Copper output rose 20%, while aluminium increased 6%. South32 recorded a 21% rise in group sales volumes in the June quarter. The performance enabled a US$225 million working capital unwind in the second half of FY25.
Figure 1: South32 Limited (ASX:S32)
CEO Highlights Strategic Shift and Operational Strength
Chief Executive Officer Graham Kerr said, “We delivered another strong quarter of operating performance, exceeding the Group’s FY25 production guidance, driven by annual production growth of 20% in copper and 6% in aluminium. Australia Manganese successfully resumed export shipments during the quarter, marking a significant recovery from the impacts caused by Tropical Cyclone Megan.”
Figure 2: Chief Executive Officer of S32, Graham Kerr
Manganese and Aluminium Recovery Boosts Quarterly Sales
Australia Manganese production surged to 1,106 kwmt in FY25, up 11% above guidance. Export shipments resumed in the June quarter following the completion of wharf construction. South Africa Manganese finished strong with a 25% increase in quarterly output, pushing FY25 production to 2,151kwmt, up 8% above guidance.
Aluminium operations saw consistent improvements. Brazil Aluminium increased production by 33% to 138kt, exceeding guidance by 6%. Mozal Aluminium reached 355kt, operating near nameplate capacity following recovery from civil unrest. Hillside Aluminium produced 718kt, maintaining stability amid load-shedding challenges.
Copper Operations Drive Returns from Sierra Gorda
Sierra Gorda delivered 88.1kt of copper equivalent in FY25, up 20% year-on-year and 4% above guidance. The operation returned US$176 million to South32 in FY25, including US$54 million in the June quarter. The rise came from improved copper grades and molybdenum recoveries.
Cannington Output Stabilises Following Operational Challenges
Cannington met revised FY25 guidance with 241.9kt zinc equivalent. Production climbed 23% in the June quarter after underground mining rates improved. South32 is reviewing the mine plan to manage rising complexity underground. An update is expected in the FY25 results.
Strategic Divestments and Capital Management
The Company completed the sale of Illawarra Metallurgical Coal and announced the divestment of Cerro Matoso. Cerro Matoso produced 37.1kt of nickel in FY25, exceeding guidance by 6%. The sale, announced in July, will involve nominal upfront payment and up to US$100 million in future considerations. South32 expects a US$130 million impairment, to be excluded from underlying earnings.
The Metalloys manganese alloy smelter divestment completed in June with South32 recognising a US$46 million post-tax gain. The Company also returned US$350 million to shareholders in FY25, with US$294 million in fully-franked dividends and US$56 million via share buy-back. The US$2.5 billion capital management program is now 94% complete.
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Hermosa Project Advances with US$517M Investment
South32 invested US$517 million in Hermosa during FY25. The Taylor zinc-lead-silver project reached major milestones including commencement of shaft sinking and process plant construction. At the Clark manganese deposit, the exploration decline remains on schedule for completion by end of calendar year 2025.
A draft Environmental Impact Statement for the Taylor deposit was released during the quarter. The final statement remains on track for the second half of FY26. South32 also updated its exploration target for the nearby Peake copper deposit to 35Mt.
FY25 Exploration and Development Funding Totalled US$133M
Total exploration expenditure reached US$133 million in FY25. This included US$35 million for greenfield opportunities and US$63 million across existing assets. Exploration efforts targeted copper systems near Taylor and the Peake deposit, with concept studies and drilling to continue into FY26.
Cost Management and Marketing Outcomes
FY25 operating unit costs are expected to remain in line with guidance. South32 delivered cost efficiency across assets while managing currency and commodity price impacts. Alumina prices rose 44% year-on-year to US$518/t at Worsley. Aluminium realisations increased 8% to US$2,572/t at Brazil Aluminium. Copper sales fetched US$4.18/lb, up 8%.
Electricity Supply Risk Prompts Impairment at Mozal Aluminium
South32 will recognise an impairment for Mozal Aluminium in FY25 results. The decision follows uncertainty over electricity supply beyond March 2026. Mozal contributed 355kt of aluminium in FY25, operating near nameplate in the final quarter. South32 continues discussions with Mozambican and South African utilities to secure long-term supply.
Outlook Remains Focused on Energy Transition Commodities
South32’s divestments and capital allocation reinforce a pivot towards base metals and battery minerals. The Company expects FY26 production to remain steady across most commodities, while prioritising Hermosa’s development and resolving strategic power constraints.
