South32 Ltd. has agreed to divest its entire aluminium value chain to Alcoa Corp. in a deal valued at US$5.6 billion (AU$8.4 billion) as it focuses on higher margin upstream assets.
Under the agreement, Alcoa will acquire South32’s 86 per cent stake in the Worsley Alumina operation in Western Australia, alongside its 100 per cent interest in South Africa’s Hillside Aluminium, and various bauxite and aluminium joint ventures in Brazil.
The transaction is structured with US$3.1 billion in upfront cash and US$1 billion in Alcoa shares, alongside up to US$750 million in price-linked contingent payments running to 2030. Alcoa will also assume approximately US$1.2 billion in rehabilitation provisions and US$750 million in net debt and lease liabilities.
Meanwhile, South32’s Mozal aluminium asset in Mozambique is excluded from the deal and remains on care and maintenance ahead of a separate divestment.
The deal marks a major pivot for the Australian company, which will completely exit its aluminium business to reshape itself into a pure-play upstream base metals producer.
The sale announcement coincides with the commencement of Matthew Daley as South32’s new CEO and Managing Director, succeeding Graham Kerr, who stepped down on June 30 after a decade at the helm.
Daley said the transaction would deliver a “simpler business with a portfolio of higher-margin upstream operations”, heavily leveraged toward copper, zinc, silver, and lead.
“Following completion, our portfolio will be focused on high-quality, long-life assets leveraged to attractive market fundamentals, with approximately 85 per cent of pro-forma EBITDA from base and precious metals,” Daley said.
He noted the streamlined structure would result in an estimated US$125 million per year reduction in overhead costs by the 2029 financial year.
“The transaction further strengthens our balance sheet, enhancing our capacity to invest in high-returning growth projects and deliver shareholder returns,” the new CEO said.
For US-headquartered Alcoa, the acquisition represents a major consolidation of its mine-to-metal platform and expands its global footprint.
Alcoa CEO William Oplinger described the high-quality assets as a strong strategic fit expected to unlock US$900 million in net present value synergies, particularly through the integration of Western Australian mining and refining operations.
“This is exactly the type of opportunity Alcoa is built to execute,” Oplinger said.
“These high-quality, globally relevant assets are a strong strategic fit within our portfolio and align directly with our strengths as a leading pure-play upstream aluminum company.”
The transaction is subject to regulatory approvals, including the Australian Foreign Investment Review Board (FIRB) and the ACCC, alongside South32 shareholder approval at its 2026 annual general meeting. Completion is targeted for the second half of the 2027 financial year.
