By Melanie Burton and Aaditya GovindRao

(Reuters) - U.S. President Donald Trump's tariffs on aluminium are more likely to be part of a bargaining strategy than a long-term policy of his administration, said CEO Graham Kerr of Australian diversified miner South32 on Thursday.

South32 produces aluminium in Brazil, South Africa and Mozambique, and sells a portion of its South African production to U.S. markets, Kerr said.

"The challenge, I guess, with all the tariffs is how long does it last... To me, it's a negotiation rather than a long term policy," he told an earnings call.

"The reality is, from our perspective, it probably won't impact our product placement too much." The company expects to produce 1.2 million tonnes of aluminium this year.

South32 beat analysts' estimates for the half year, reporting an over nine-fold surge in first-half profit to $375 million, up from $40 million a year earlier, driven by higher aluminium and copper sales and strong commodity prices.

That beat a Visible Alpha consensus estimate of $370.1 million.

Shares of the company rose 2.5% by midday, compared with a 2% rise in the broader miners' sub-index.

An uptick in aluminium prices, spurred by a constrained alumina market and supply deficit, led to the company's aluminium division posting an increase in underlying operating earnings of $160 million for the first half.

Alumina prices however were expected to extend their fall to $400 to $500 a tonne, Kerr said, as supply constraints in Guinea and Australia eased.

Earnings for the copper division also increased by $98 million, boosted by higher prices and lower labour costs.

The Perth-based miner, which separated from BHP Group in 2015, declared an interim dividend of 3.4 cents per share, compared with 0.4 cent a year earlier.

South32 reinstated its production forecasts for fiscal 2026, and slightly lowered them for this year, for its Mozal Aluminium smelter in Mozambique. It had withdrawn the forecasts in December, following civil unrest in the country.

The firm raised its full-year unit operating costs forecast for its Worsley Alumina project in Western Australia by 5%. It this week received federal approval to extend the life of those operations to at least 2036.

Analysts at Citi called the earnings results "solid", but said that cost pressures for the miner were still evident.

However, South32 also trimmed its full-year group capital expenditure forecast, excluding exploration and intangibles, by about $105 million.

(Reporting by Aaditya Govind Rao and Sherin Sunny in Bengaluru; Editing by Rashmi Aich and Christopher Cushing)

View Comments