The Mining Yearbook 2021

THE MINING YEARBOOK 2021

DOUBLING DOWN ON SA MANGANESE WILL GIVE SOUTH32 THE QUICK-FIRE GROWTH IT NEEDS

BY DAVID MCKAY

T

he burning question about South32 is whether the company has a meaningful way of capitalising on the foaming enthusiasm for battery metals currently underway.

Analysts ask it because ever since the company was formed - in 2014 following the demerger of BHP’s non-core assets South32 has tended to manage it mines for cash, generating $9bn in the process and disbursing more than 8% of that in dividends alone. That’s an impressive capital return programme, especially considering a further 19% has gone into share buy-backs.

This cash generation has been driven by the quantities of nickel it produces in Colombia, as well as metallurgical coal, zinc, lead and silver in Australia, and aluminium in Southern Africa. But this careful curatorship of assets is not in the spots the market considers sweet. Where, for instance, is the copper, lithium, iron ore, or even the newfangled rare earths that investors crave?

“There is no doubt that over the last two years, many of our commodities, whether it’s manganese, alumina, aluminium or metallurgical coal, have not performed as strongly as we’ve seen with iron ore,” says Graham Kerr, CEO of South32.

South32 has got “a couple of gaps” in its short-term growth options, he acknowledges.

But over the longer term, Kerr thinks it has better prospects than either Rio Tinto or BHP. South32’s exploration projects in the US states of Arizona and Alaska - situated far, far

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Graham Kerr CEO, South32