South32 Sells Aluminium Assets to Alcoa for US$5.6bn

South32 has signed a binding conditional agreement to sell its aluminium assets to Alcoa in a deal worth up to US$5.6bn, according to the company. Alcoa will also assume rehabilitation provisions of approximately US$1.2bn tied to the assets.

The deal was announced on 1 July 2026, the same day Matt Daley began as Chief Executive Officer and Managing Director of South32.

In the deal, Alcoa will acquire South32's interests in Worsley Alumina (86%), Hillside Aluminium (100%), the MRN bauxite mine (33%), the Brazil Alumina refinery (36%) and the Brazil Aluminium smelter (40%).

South32's Mozal Aluminium plant is excluded from the transaction for the time being. The smelter has been in care and maintenance mode since March 2026, and its divestment remains under consideration.

Deal structure

The deal’s implied value of up to US$5.6bn is split into four components, according to South32.

Upfront cash accounts for US$3.1bn of the total, and Alcoa will also issue around 17 million of its own shares to South32, valued at US$1bn total.

A further US$750m in net debt and lease liabilities will be assumed by Alcoa, and up to US$750m in contingent cash consideration is also included, linked to alumina and aluminium prices through to 2030.

Following completion, South32 has confirmed it intends to distribute around US$500m to shareholders.

Leadership reaction

Graham Kerr, the inaugural Chief Executive Officer of South32, will continue in a strategic advisory role to support the transaction.

“This Transaction will unlock significant value for shareholders and repositions South32 as a leading upstream base metals focused company with high-margin assets and transformational growth,” Graham says.

“The sale of our aluminium value chain assets to Alcoa for up to US$5.6bn will deliver significant upfront proceeds while retaining upside to commodity price strength through price-linked consideration. 

“This Transaction sees us unlock and capture our share of material synergies from combining our respective alumina businesses in Western Australia.”

Matt Daley says: “Following completion, our portfolio will be focused on high-quality, long-life assets leveraged to attractive market fundamentals, with approximately 85% of pro-forma EBITDA from base and precious metals.

“Our business will be simpler with a portfolio of higher margin upstream operations, reduced complexity and greater resilience.

“This will enable a leaner, lower cost operating model that will deliver ongoing value through an anticipated US$125m per annum reduction in overhead costs as new support structures are implemented.”

Growth and outlook

South32 expects production growth of approximately 55% from two projects: the Taylor development and a fourth grinding line expansion at Sierra Gorda. 

The company also holds a pipeline of copper and zinc growth options in study and exploration phases.

The transaction is expected to strengthen South32's balance sheet, according to the company. This increases the group's capacity to invest in growth projects and deliver shareholder returns.

The deal is expected to complete in the second half of 2027 and Alcoa will assume the rehabilitation liabilities tied to the acquired assets once it closes.

For South32, the sale cuts aluminium smelting and refining from its portfolio, and copper and other base metals will become the company's primary focus.

For Alcoa, the deal adds bauxite, alumina and aluminium assets across Brazil, South Africa and Western Australia. Several of these sit close to Alcoa's existing operations in the same regions.