South32 Surges to US$360M Profit, Accelerates Hermosa Project Growth
South32 reported a robust US$360 million net profit for H1 FY25, driven by strong commodity prices and operational execution, while investing heavily in growth projects like Hermosa and returning US$169 million to shareholders.
- Net profit after tax rises to US$360M in H1 FY25
- Underlying EBITDA reaches US$1.02 billion, with 28% operating margin
- US$248M invested in Hermosa project growth capital expenditure
- US$169M returned to shareholders via dividends and share buy-back
- Production guidance largely unchanged; Mozal Aluminium guidance slightly revised
Strong Financial Performance Amid Commodity Tailwinds
South32 has reported a significant uplift in its financial results for the first half of fiscal year 2025, posting a net profit after tax attributable to members of US$360 million. This represents an increase of US$307 million compared to the prior corresponding period, underpinned by robust operating performance and favourable commodity prices across its portfolio.
The company’s underlying earnings rose by US$335 million to US$375 million, supported by an underlying EBITDA of US$1.02 billion and a solid operating margin of 28%. These results reflect South32’s ability to capitalise on improving market conditions while maintaining operational discipline.
Focused Portfolio Transformation and Growth Investment
South32 continues to evolve its portfolio towards minerals and metals critical to the global energy transition. The divestment of Illawarra Metallurgical Coal in August 2024 for up to US$1.65 billion has streamlined the business and permanently lowered the cost base. The company also sold its interest in the Eagle Downs metallurgical coal project, retaining upside through contingent payments and royalties.
Capital expenditure remains focused on growth, with US$248 million invested in the Hermosa zinc-lead-silver project in Arizona, USA. Construction milestones at Hermosa are progressing well, including the development of ventilation and main shafts and completion of the concentrator pad. First production is expected in the second half of FY27, positioning Hermosa as a future top-10 global zinc mine.
Shareholder Returns and Balance Sheet Strength
South32 returned US$169 million to shareholders during H1 FY25 through a fully franked dividend of US$154 million and an on-market share buy-back of US$29 million. The company has reduced net debt by US$715 million to just US$47 million, supported by strong operating cash flows and proceeds from asset sales.
Liquidity remains robust, with US$1.6 billion in cash and an undrawn US$1.4 billion revolving credit facility maturing in December 2028. Credit ratings from S&P and Moody’s were reaffirmed, underscoring the company’s financial resilience.
Operational Outlook and Market Dynamics
Production guidance for FY25 remains largely unchanged, except for a slight revision at Mozal Aluminium, where output is now expected at 350kt, down from 360kt. Operating unit costs are forecast to decline for most operations in the second half of FY25, reflecting efficiency gains and inventory drawdowns.
South32’s commodity exposure benefits from tight markets and strong demand fundamentals, particularly in aluminium, copper, zinc, and manganese. The company is advancing multiple exploration and development projects, including the Sierra Gorda copper mine expansion and near-mine exploration at Hermosa, to sustain long-term growth.
Safety and Environmental Progress
Safety remains a priority, with ongoing improvements in injury frequency rates and hazard reporting culture. Environmental approvals have been secured for new bauxite mining areas at Worsley Alumina, supporting medium-term production sustainability. South32 continues to invest in rehabilitation provisions and environmental management aligned with regulatory requirements.
Bottom Line?
South32’s strong H1 FY25 results and disciplined capital allocation set the stage for growth, but commodity price volatility and operational risks remain key watchpoints.
Questions in the middle?
- How will evolving commodity prices, especially copper and aluminium, impact South32’s earnings in H2 FY25 and beyond?
- What are the timelines and capital requirements for the Sierra Gorda fourth grinding line and Hermosa Taylor project final investment decisions?
- How will South32 manage operational challenges and cost pressures at Australia Manganese and Mozal Aluminium?
