South32 (LSE:S32) delivered a strong operational performance in fiscal 2026, surpassing its overall production guidance while increasing quarterly sales volumes by 15%. The higher sales helped unlock working capital and improve cash generation across the business. Production exceeded expectations across several operations, including aluminium, manganese, copper and zinc, with Sierra Gorda, Cannington and South Africa Manganese among the strongest contributors.
The company also took a significant step in reshaping its portfolio by agreeing to sell the majority of its aluminium value chain to Alcoa in a transaction with an implied enterprise value of up to $5.6 billion, in addition to rehabilitation obligations. Once the deal is completed, approximately 85% of South32’s pro forma earnings are expected to come from base and precious metals, while approved development projects are forecast to increase production by around 55%.
South32 continued to advance its long-term growth pipeline during the year. The company approved the construction of a fourth grinding line at the Sierra Gorda copper joint venture, a project expected to increase copper-equivalent production by roughly 30% from fiscal 2031. At the Hermosa development in Arizona, South32 invested approximately $710 million during fiscal 2026, progressed construction of the Taylor zinc-lead-silver mine and secured the Final Record of Decision, completing the project’s federal environmental permitting process.
Cash generation from equity-accounted investments remained strong, with the company receiving $503 million in net distributions during the year. South32 also continued returning capital to shareholders through dividends and share buybacks, distributing a combined $327 million. Although the transition of Mozal Aluminium into care and maintenance will result in one-off charges, these will be classified as significant items and excluded from underlying earnings as the company continues to prioritise operational performance and disciplined investment.
For fiscal 2026, South32 expects its underlying effective tax rate to be approximately 33%, reflecting the jurisdictions in which it operates and the associated royalty structures. The company also continued investing across its portfolio through capital expenditure, additional lease commitments and exploration activities at Hermosa, Ambler Metals and other development projects designed to support future growth in base metals.
More about South32
South32 is a diversified global mining and metals producer with an expanding focus on base and precious metals. Its portfolio includes copper, zinc, lead, silver and manganese assets alongside alumina and aluminium operations, with projects located across Chile, the United States, Australia, South Africa and Brazil.
The company is steadily repositioning its business towards long-life, higher-margin base metals assets, with the goal of generating the majority of future earnings from these commodities. This strategy is supported by ongoing investment in major development projects while maintaining shareholder returns through dividends and share buybacks alongside a disciplined balance sheet.
Following its leadership transition on 1 July 2026, South32 continues to strengthen its position as a leading upstream base metals producer. Key growth initiatives include the Sierra Gorda copper expansion, the Hermosa zinc-lead-silver and battery-grade manganese projects in Arizona, and established manganese operations in Australia and South Africa that underpin its global production footprint.
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