South32 — Diversified Mining Cycle

South32 was spun off from BHP in 2015 — inheriting BHP's non-core assets in aluminium (Worsley Alumina, Hillside Aluminium, Mozal), manganese (GEMCO in Australia, Hotazel in South Africa), zinc-lead-silver (Cannington in Australia), energy coal (Illawarra in Australia) and Colombia coal. Listed on the JSE, ASX and LSE, South32 provides diversified exposure to aluminium, manganese, zinc and coal cycles from a single stock.

Aluminium: The Largest Earnings Driver

South32's Worsley Alumina (Australia) and Hillside Aluminium (South Africa) and Mozal Aluminium (Mozambique) smelter expose approximately 40% of earnings to the LME aluminium price cycle. Hillside Aluminium — powered by Eskom electricity — faces ongoing cost pressure from South African power supply challenges. Worsley's Australian bauxite-alumina integration provides cost advantages relative to non-integrated aluminium smelters.

Manganese: The Steel Additive Cycle

South32's GEMCO operation on Groote Eylandt (Australia) and Hotazel mines (South Africa) make South32 the world's largest manganese ore producer. Manganese is an essential steel alloy — approximately 7kg of manganese is used per tonne of steel. Manganese ore demand therefore follows steel production (and thus Chinese construction and manufacturing) with high correlation. Manganese alloy prices are more volatile than the ore price.

Zinc: Cannington and Americas Silver

South32's Cannington mine (Queensland) is one of the world's largest silver-lead-zinc mines. Zinc demand follows galvanised steel production (infrastructure, automotive) while silver adds a precious metals overlay. Cannington's diversified base-and-precious metal profile provides partial PMI and gold cycle exposure alongside the manganese and aluminium commodity cycles.

Transformation: Copper via Hermosa

South32's Hermosa project in Arizona — developing the Taylor zinc-lead-silver deposit and Clark battery-grade manganese deposit — represents its transformation toward copper-adjacent battery metals. The acquisition of Trilogy Metals (Alaska copper-zinc) adds further optionality. South32 is strategically repositioning toward metals required for the energy transition.

Key Risks

South32's diversified portfolio creates complexity — investors must monitor aluminium, manganese, zinc and coal price cycles simultaneously. South African aluminium smelters face structural Eskom power cost challenges. Manganese market is relatively opaque and illiquid compared to copper or aluminium. Coal assets face accelerating ESG exclusion pressure from institutional investors.

Cycle Performance Summary