July 1 (Reuters) – Australia’s South32 said on Wednesday it has agreed to sell most of its aluminium assets to Alcoa for an implied enterprise value of up to $5.6 billion, as the diversified miner moves to simplify its business.
Under the deal, Alcoa will acquire South32’s stakes in Australia’s Worsley Alumina, South Africa’s Hillside Aluminium, Brazil’s MRN bauxite mine, Brazil Alumina refinery and Brazil Aluminium smelter.
The U.S.-based aluminium producer will also assume about $1.2 billion in cleanup and site-closure liabilities tied to the assets, South32 added.
“Our business will be simpler with a portfolio of higher margin upstream operations, reduced complexity and greater resilience,” said Matthew Daley, who took over as South32’s chief executive and managing director on July 1.
Daley said the sale would help deliver an expected $125 million in annual overhead cost savings as new support structures are put in place.
The transaction is expected to complete in the second half of 2027, after which the Australian miner intends to return around $500 million to shareholders as a fully franked special dividend.
In a separate statement, Alcoa said that the cash-and-stock deal is expected to generate synergies of around $900 million in net present value through operational optimization across complementary assets.
“Greater scale and integration are expected to reduce complexity, lower costs, and improve competitiveness while strengthening supply chain resilience across key jurisdictions,” Alcoa added.
The transaction excludes South32’s Mozal aluminium smelter in Mozambique, which was placed on care and maintenance in March as the firm failed to secure a sufficient and affordable power supply.
In another statement, South32 said Chile’s Sierra Gorda joint venture approved a fourth grinding line expansion to lift processing capacity by about 25%, with growth capex expected at around $725 million between 2027 and 2030.
This will significantly increase copper production and lower operating unit costs, Daley said.
(Reporting by Shivangi Lahiri in Bengaluru; Editing by Vijay Kishore)
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