South32 (LON:S32) reported what Chief Executive Officer Graham Kerr described as strong financial results for the first half of FY2026, supported by operating performance and higher prices for base and precious metals. Kerr also highlighted safety improvements across several metrics and said FY2026 production and unit cost guidance is unchanged for the company’s operated assets.
Safety performance and H1 financial results
Kerr said the company is seeing improvements in key safety measures following its global safety improvement program, including further improvement in significant hazard frequency, alongside reductions in lag indicators. “While the data is encouraging, we’re determined to continuously improve,” he said.
The company ended the period with net debt of $25 million. Kerr said the balance sheet strength supports both investment in growth and shareholder returns.
Dividend and capital management update
South32 announced a fully franked ordinary dividend of $175 million for H1 FY2026. The company also increased its $2.6 billion capital management program by $100 million, with $209 million remaining to be returned to shareholders.
Looking to the second half, Kerr pointed to “commodity price tailwinds” and said a planned drawdown of inventories at Mozal Aluminium is expected to add to group cash generation in H2.
Hermosa and Taylor project progress
South32 said it is continuing to focus growth on copper, zinc, and silver, with construction advancing at the Taylor zinc-lead-silver project within the broader Hermosa complex.
Kerr said a scheduled assessment of project milestones and capital expenditure will be completed in H2 FY2026, informed by pricing of additional underground and surface infrastructure packages to be awarded during the period. He emphasized the review is a planned step as the project approaches a higher level of commitment.
On construction progress, Kerr said foundational work for the processing plant is tracking to schedule, with two surface packages received “in line with our estimates” and two more expected over the next three months. He described shaft sinking as a key risk area, noting, “you’re never really comfortable till you’re finished.”
- Vent shaft: 459 meters of 824 meters (56%) complete.
- Main shaft: 370 meters of 898 meters (41%) complete.
He added that dewatering is tracking ahead of schedule and that observed flow rates have been lower than expected, with the company seeing about 2,000 gallons per minute at best compared with an expected 4,000 gallons per minute.
Kerr also discussed copper exploration upside at the Peak deposit, citing results including 143 meters at 2.1% copper equivalent and 162 meters at 1.42% copper equivalent. He said the company had allowed space for a copper circuit and estimated additional capex of about $50 million to $60 million for that circuit. Kerr said Peak could potentially add another 10 years to Taylor depending on how it grows, but he noted higher-value zinc and silver stopes close to the shaft would likely be mined first.
At the Clark deposit, Kerr said the decline was completed in Q2 FY2026 ahead of schedule and below budget, and the first bulk sample was taken in December 2025. He also noted roughly $20 million of work there was funded by the U.S. Department of Defense.
Sierra Gorda, Cannington, Ambler, and other portfolio updates
At Sierra Gorda, South32 discussed both near-term and longer-term growth options. Kerr said an exploration target has been defined at Catabela Northeast (adjacent to the Catabela pit) ranging from 1.1 billion to 2.9 billion tonnes, and described the orebody as open in all directions and at depth. He said the company plans further step-out exploration in calendar 2026 and noted the material has similar ore characteristics to existing feed and sits near existing mining and processing infrastructure.
Kerr said the feasibility study for a fourth grinding line at Sierra Gorda is nearing completion, with an independent review to be completed by the joint venture partners to support a potential joint final investment decision in mid-calendar year 2026. He said detailed engineering is about 63% complete, the project could lift concentrate capacity by about 20%, and construction would take about three years.
At Cannington, Kerr said South32 increased underground ore reserves by 28%, adding about 3 million tonnes and extending underground mine life by roughly two years to FY2033. He said the extension requires $65 million to $80 million of investment in ventilation and electrical work in FY2027 and FY2028, and that the company continues to study open pit options, targeting completion of a pre-feasibility study by calendar year 2026.
In Alaska, Kerr said the U.S. government’s decision to issue federal permits for the Ambler Access Road enables further growth through the Ambler Metals joint venture. He said the JV approved about $35 million for exploration and studies in calendar 2026, including around 4,500 meters of drilling at Arctic to support geotechnical and condemnation work, with the aim of completing a pre-feasibility study in late 2026. He also referenced exploration drilling at the Roosevelt prospect, which is 100%-owned and closer to the access road.
Mozal to enter care and maintenance; Brazil Aluminium and MRN
On Mozal Aluminium, Kerr told analysts the operation is “definitely heading for care and maintenance in March,” citing the lack of available power at an economically viable price and an impending shortage of key consumables such as pitch and coke. He said Eskom’s cross-border tariff structure implies power costs around $100/MWh, while South32 could “probably afford around $51/MWh,” adding that power above that level is rare outside China based on his comparison to global supply.
Kerr said ongoing care and maintenance costs are expected to be about $5 million per year, while estimated closure rehabilitation is about $119 million. He also cautioned that restarting a smelter is difficult and expensive and said Cahora Bassa indicated it could only supply low levels of power for the next two to four years, suggesting an extended period of downtime.
In Brazil Aluminium, Kerr said performance has been “incredibly disappointing,” citing instability in December 2025 that led to an unplanned 80 pots being taken offline. He said South32’s share of production guidance is 135,000 tonnes for FY2026 and 140,000 tonnes for FY2027 versus full capacity of 179,000 tonnes (all figures as stated on the call). Kerr said Alcoa deployed a specialist team from its technical center of excellence to support a revised plan.
On the MRN mine life extension (West Zone) in Brazil, Kerr said studies are underway to update schedule and cost, with a focus on obtaining the necessary operating license. He estimated South32’s share of capital could be around $200 million if it proceeds, and said final investment decision timing is expected in late calendar year 2027.
In closing remarks, Kerr said the company’s operations are performing to plan, benefitting from higher commodity prices, and that South32 remains focused on delivering growth projects in base metals alongside shareholder returns.
About South32 (LON:S32)
South32 Limited operates as a diversified metals and mining company in Australia, India, China, Japan, the Middle East, Mozambique, the Netherlands, Brazil, Russia, South Africa, South Korea, the United States, and internationally. The company operates through Worsley Alumina, Brazil Alumina, Brazil Aluminium, Hillside Aluminium, Mozal Aluminium, Sierra Gorda, Cannington, Hermosa, Cerro Matoso, Illawarra Metallurgical Coal, Australia Manganese, and South Africa Manganese segments. It has a portfolio of assets producing bauxite, alumina, aluminum, copper, silver, lead, zinc, nickel, metallurgical coal, manganese, ferronickel, and other base metals.
