Key facts
- South32 is selling most of its aluminium assets to Alcoa for up to $5.6 billion.
- Alcoa will assume approximately $1.2 billion in rehabilitation provisions.
- The transaction is expected to be completed in the second half of 2027.
- South32 plans to return around $500 million to shareholders after the deal closes.
- Incoming CEO Matthew Daley is open to value-accretive and strategically aligned M&A opportunities.
Australia's South32 has agreed to sell most of its aluminium assets to U.S.-based Alcoa for an implied enterprise value of up to $5.6 billion. The deal includes Alcoa's acquisition of South32's interests in Australia's Worsley Alumina, South Africa's Hillside Aluminium, and Brazilian operations, including the MRN bauxite mine, Brazil Alumina refinery, and Brazil Aluminium smelter. Alcoa will also assume approximately $1.2 billion in related rehabilitation provisions for these projects. Incoming South32 CEO Matthew Daley stated that the divestment will simplify the company's portfolio to higher-margin upstream operations, reduce complexity, and enhance resilience. He anticipates new support structures will lead to a leaner, lower-cost operating model and an annual reduction in overhead costs of $125 million. Alcoa indicated the transaction is expected to generate synergies valued at around $900 million in net present value through operational optimization. The completion of the transaction is anticipated in the second half of 2027. Daley also stated he is open to mergers and acquisitions that add value, are strategically aligned, and maintain financial strength, but they must compete for capital with the company's organic pipeline. South32 also announced its Sierra Gorda joint venture approved a fourth grinding line expansion expected to lift processing capacity by about 25%.