South32 (LON:S32) Chief Executive Officer Graham Kerr said the miner is entering a new growth phase with a streamlined portfolio, stronger exposure to base and precious metals and a balance sheet supported by improved commodity prices and reliable operating performance.
Speaking at Bank of America’s Global Metals, Mining and Steel Conference, Kerr said the presentation would be his last at the event as South32 CEO. Matthew Daley, who was in attendance, is scheduled to take over the role later this year.
Hermosa Project Remains Central to Growth Plans
Kerr highlighted South32’s Hermosa project in Arizona as a major part of the company’s growth pipeline. The Taylor deposit at Hermosa is expected to deliver first production in the second half of fiscal 2028, with nameplate capacity expected in fiscal 2031.
South32 recently updated the Taylor schedule and capital estimate. Kerr said first ore mined at Taylor will now come through the Clark decline in mid-fiscal 2028, after work confirmed Clark’s decline could provide additional access to the Taylor ore body. He said the change is expected to improve operational flexibility, bring first production ahead of shaft sinking and increase ore handling capacity by 25%.
The company also raised Taylor’s estimated gross capital expenditure by about $1.1 billion. Kerr attributed the increase to scope changes, revised shaft construction costs, higher inflation, industrywide cost increases for steel, piping, concrete and electrical inputs, and U.S. tariffs. In a later discussion, he said direct tariff exposure was about $60 million, while broader inflation and tariff effects on materials such as steel had driven larger increases.
Despite the higher capital estimate, Kerr said Taylor remains a high-margin, long-life project. South32 expects steady-state annual EBITDA of about $650 million and an estimated net present value of about $3.1 billion. Kerr said the current mine life is around 33 years after in-fill drilling extended the initial life by five years, and he said the deposit remains open in several directions.
Kerr Sees Strong Zinc Fundamentals
In a fireside chat with Kate McCutcheon, who leads metals and mining research in Sydney, Kerr said South32 views zinc as having a similar supply-demand story to copper. He cited demand from galvanization in China and India, as well as emerging uses in wind turbines.
Kerr said zinc has less recycling potential than copper and faces less substitution risk because replacing zinc in galvanization would be significantly more expensive. On the supply side, he said the market has seen limited exploration and project development investment, while mature mines are becoming deeper and lower-grade.
“We think over the next decade, you need three, if you like, zinc deposits the size of Taylor to come online to actually meet that gap,” Kerr said.
He added that Taylor’s silver output is also attractive, saying the project could nearly double South32’s annual silver production when combined with Cannington.
Copper and Aluminum Assets Also in Focus
Kerr said South32 continues to assess growth options at Sierra Gorda, its copper asset in Chile. He said the fourth grinding line expansion remains on track for a joint final investment decision around midyear 2026 and would be self-funded by the joint venture. The project could increase throughput by about 20% and benefit from existing power and water availability.
He also discussed the Catabela Northeast exploration target, describing it as a large discovery with attractive grades and potential for further expansion. Kerr said South32 plans additional step-out drilling over the next six to 12 months.
On aluminum, Kerr said demand remains attractive and that South32 believes China’s 45 million-ton aluminum cap is “real.” He said the shift in new smelting capacity growth from China to other countries could support stronger aluminum pricing because new supply outside China is unlikely to benefit from the same low-cost power conditions.
Kerr also addressed Hillside Aluminium in South Africa, calling it a strong cash generator in the current pricing environment. He said the asset could run for another 30 to 40 years, but its future depends on securing another power contract after the current agreement expires in 2031. Kerr said discussions with Eskom have been ongoing for about five years and “feel like” they are moving in the right direction.
Portfolio Transformation and Succession
Kerr said South32’s portfolio has changed significantly since its demerger from BHP. He said the company has sold businesses including South Africa Energy Coal, South Africa Manganese, Australia Manganese, Cerro Matoso and Illawarra, while adding exposure to “green aluminum,” Sierra Gorda and Hermosa.
He said the company began with roughly half of its portfolio exposed to bauxite, thermal coal and metallurgical coal, and half predominantly in aluminum. Today, he said, South32 has about 80% exposure to base metals, including aluminum, with more than half of earnings expected to come from the Americas in the next couple of years.
Asked what advice he would leave for Daley, Kerr said he had focused on setting him up for success. He said Daley’s strengths include engagement with people, technical capability and improving operational performance, including making Taylor “the best it can possibly be.”
Kerr closed by thanking investors and colleagues for their support over his 11 years as CEO, saying South32 would be “in very capable hands” under Daley as the company moves into its next phase of growth.
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.
