Image source: © 2025 Krish Capital Pty. Ltd.

Highlights

  • Achieved 102% of FY25 production guidance, with 21% quarterly sales volume growth.

  • Returned US$350M to shareholders via dividends and share buy-back in FY25.

  • Divestments of Cerro Matoso and Metalloys progress portfolio shift toward energy transition materials.

South32 Limited (ASX:S32) has released its quarterly report for the three months ended 30 June 2025, highlighting positive operational and financial performance across the business. The diversified miner achieved 102% of its Group FY25 production guidance and delivered significant quarterly sales growth, helping to unwind working capital and support shareholder returns.

Operational Performance Surpasses Expectations

South32 reported a 21% increase in Group sales volumes for the June quarter, contributing to a working capital unwind of approximately US$225 million in the second half of FY25. Aluminium production rose 6% over the financial year, supported by the ramp-up of Brazil Aluminium and steady output at Mozal Aluminium, despite civil unrest in Mozambique.

Alumina production met full-year guidance, with Worsley Alumina commencing mining from new bauxite zones under the Worsley Mine Development Project. This development is expected to support sustained output until at least FY36.

Copper and Manganese Lead Commodity Gains

Sierra Gorda reported payable copper equivalent production increasing at 20%, surpassing guidance by 4%. South32 received US$54 million in distributions from the operation in the June quarter, taking FY25 returns to US$176 million.

Manganese output exceeded annual guidance by 9%, aided by operational improvements in both Australia and South Africa. Australia Manganese completed its recovery plan, while South Africa Manganese recorded a significant year-end performance.

Cannington met its revised FY25 production forecast following improved mining rates in the quarter. A review of the mine plan is underway to address increasing underground complexity, with further details to be shared with FY25 results.

Strategic Portfolio Moves and Impairments

During the quarter, South32 advanced its strategy to streamline its portfolio by entering into a binding agreement to divest Cerro Matoso, with the transaction expected to close in H1 FY26. The sale will result in a US$130 million impairment expense, to be recognised in FY25 results.

Additionally, the company divested the Metalloys manganese alloy smelter, generating a US$44 million pre-tax gain. South32 will also recognise an impairment for Mozal Aluminium due to uncertainty around future electricity supply. The final valuation is pending completion of the assessment.

Capital Management and Financial Update

In FY25, South32 returned US$350 million to shareholders, comprising US$294 million in fully-franked dividends and US$56 million through its on-market share buy-back. The company’s capital management program is now 94% complete, with US$144 million remaining to be distributed before the current expiry date of 12 September 2025.

FY25 capital expenditure (excluding equity accounted investments and Hermosa) is estimated at US$400 million, which includes US$57 million spent on Illawarra Metallurgical Coal prior to its scheduled divestment in August 2024.

The group made tax payments of US$236 million (excluding EAIs) during FY25 and expects its underlying effective tax rate to be approximately 35%, driven by jurisdictional tax regimes and the geographical mix of earnings.

Focus on Safety and Sustainability

South32 continued implementing its multi-year Safety Improvement Program, with over 95% of frontline employees completing the Lead Safely Every Day (LSED) training. The company reiterated its focus on delivering measurable safety outcomes across its global operations.

S32 shares were trading 2.42% higher at AUD 2.96 per share at the time of writing on 21 July 2025.