Highlights

  • South32 (ASX:S32) and Chevron Australia have signed a long-term gas supply agreement covering 55 petajoules over five years, beginning 1 January 2028.
  • The contract underpins two converted gas-fired boilers at the Worsley refinery, with a third boiler conversion under assessment.
  • South32 agreed to sell Worsley and other aluminium assets to Alcoa in July 2026, with shareholder approval received in October and completion expected in H1 2027.
  • The Alcoa deal values South32's aluminium value chain at an implied enterprise value of up to US$5.6 billion.

Long-Term Gas Supply Secured

Chevron Australia has agreed to supply 55 petajoules of natural gas over five years to South32's Worsley Alumina operation in Western Australia, with deliveries beginning 1 January 2028. The deal extends a long-standing relationship between the two companies and provides energy certainty for the refinery's gas-fired capacity into the next decade. Financial terms were not disclosed.

Gas Role in Worsley's Energy Mix

Worsley combines an open-pit bauxite mine near Boddington with an alumina refinery near Collie. Refining is energy-intensive, and the refinery has historically used a mix of coal, biomass and natural gas. South32 has converted two of three coal-fired boilers to gas and is assessing whether to convert the third. The new Chevron contract provides fuel certainty for the converted boilers through the duration of the agreement.

A Contract for the Next Owner

The timing is notable because South32 agreed in July 2026 to sell its 86% interest in Worsley, along with Hillside Aluminium and Brazilian interests, to Alcoa at an implied enterprise value of up to US$5.6 billion. The deal comprises US$3.1 billion in upfront cash, US$1.0 billion in Alcoa shares, approximately US$750 million of assumed net debt and up to US$750 million in contingent payments through 2030. Shareholders approved the sale on 15 October 2026, and completion is expected in the first half of 2027. If the timetable holds, Alcoa would own Worsley before the first Chevron gas delivery in 2028.

South32's Strategic Direction

The aluminium sale is part of South32's shift toward copper and other base metals. The company has indicated copper contributed more than half of FY26 earnings excluding aluminium. South32 has flagged a capital return to shareholders following completion of the Alcoa transaction.

Uncertainties

Gas pricing and detailed terms have not been disclosed. The contract volume and start date are attributed to secondary sources, as South32 did not lodge a separate ASX announcement. Completion of the Alcoa transaction remains subject to regulatory approvals.