South32 Sees US Aluminum Tariffs as Bargaining Strategy
Sydney, Australia - Graham Kerr, CEO of Australian miner South32, believes US President Donald Trump's aluminum tariffs are primarily a negotiation tactic rather than a long-term policy.
South32 produces aluminum in Brazil, South Africa, and Mozambique, with a portion of its South African output exported to the US market. Kerr notes the uncertainty surrounding the duration of the tariffs and believes they will not significantly impact South32's product placement.
The company forecasts aluminum production of 1.2 million tonnes for the year. South32's half-year results outperformed analyst estimates, with a nine-fold surge in profit to $375 million due to higher aluminum and copper sales and strong commodity prices.
Aluminum prices have risen due to constraints in the alumina market and a supply deficit. South32's aluminum division posted an increase in underlying operating earnings of $160 million for the first half. However, Kerr expects alumina prices to decline to $400-$500 per tonne as supply constraints ease.
Copper division earnings rose by $98 million, driven by higher prices and lower labor costs. South32, which separated from BHP Group in 2015, declared an interim dividend of 3.4 cents per share, significantly higher than the 0.4 cents declared last year.
The company has reinstated production forecasts for fiscal 2026 and slightly reduced them for this year for its Mozal Aluminum smelter in Mozambique, which had been withdrawn due to civil unrest. South32 raised its full-year unit operating costs forecast for its Worsley Alumina project in Western Australia by 5%.
Despite acknowledging cost pressures, the company has trimmed its full-year group capital expenditure forecast by $105 million, excluding exploration and intangibles.