Base metals, Commodities, Exploration/Development, News

South32 narrows its focus

South32 has not been shy about dictating its renewed agenda, with yesterday’s announcement further proof of this.

The major miner is looking to remove coal from its business through the sale of its Illawarra metallurgical coal operation in New South Wales. This comes hot on the heels of South32’s divestment of its 50 per cent stake in the Eagle Downs coal mine.

An entity owned by Indonesian company Golden Energy and Resources (GEAR) and local group M Resources are the proposed buyers of Illawarra; however, BlueScope told the market it could consider its own bid for the operation.

BlueScope has an offtake agreement that extends to 2032 for the supply of metallurgical coal from the Appin and Dendrobium mines that comprise the Illawarra operation.

“BlueScope has ongoing rights under the long-term supply contract, including pre-emption acquisition rights in favour of BlueScope, and the company will consider its position,” BlueScope said.

South32 chief executive officer Graham Kerr told The Australian Financial Review that BlueScope effectively has right of way on this deal, meaning if BlueScope chooses to buy Illawarra at the current $US1.65 billion ($2.54 billion) price tag, GEAR and M Resources cannot raise their bid.

The deal further highlights South32’s eagerness to boost its exposure to ‘future-facing’ minerals such as copper and zinc.

The company recently announced plans to move ahead with the development of the Taylor critical minerals deposit that sits within the Hermosa project in Arizona, US.

With a final investment decision made, South32 will develop Taylor with the goal of reaching first production in 2027.

“Taylor is expected to deliver attractive returns over multiple decades, with the feasibility study confirming the potential for a long-life, low-cost, low-carbon operation, with an initial operating life of 28 years,” Kerr said.

Kerr said Taylor has been designed to minimise its environmental impact, featuring a small footprint underground mine with efficient water use and dry-stack tailings.

“We have applied ‘next generation mine’ design principles utilising automation and technology to drive efficiencies and lower our operational greenhouse gas emissions.”

In its recent half-year report, South32 said it now has more than 25 greenfield exploration options in base metals, while the company has progressed the feasibility study for the fourth grinding line expansion at its Sierra Gorda copper mine in Chile.

The fourth grinding line has the potential to deliver a 18 per cent increase in plant throughput to between 57 million tonnes per annum (Mtpa) and 58Mtpa. A final investment decision is set to be made for the expansion in the fourth quarter of the 2023–24 financial year.

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