Alcoa deal attractively priced for South32, boosts growth funding, Morningstar says

South32

02/07/2026 20:07

** Morningstar analysts view South32's S32.AX asset sale deal with Alcoa favourably on valuation grounds, noting proceeds will help bankroll growth projects
** On Wednesday, the miner said it would sell its bauxite, alumina and the bulk of its aluminium assets to Alcoa for an enterprise value of up to $5.6 billion
** Morningstar positive on the deal as it values the assets around 8% higher than its valuation
** Adds proceeds will place S32 in good stead to fund the remaining development costs for its Taylor zinc-lead-silver project in Arizona
** Co also announced its Chile Sierra Gorda joint venture approved a fourth grinding line expansion to lift processing capacity by about 25%; Morningstar forecasts this will increase copper volumes by about 30%, compared with FY26 volumes once built and fully ramped in FY31
** Morningstar lifts its fair value estimate for South32 by 5% to A$4.10 per share
** Stock up over 6% since the deal was announced on Wednesday, bringing YTD gains to nearly 17%



 (Reporting by Shruti Agarwal in Bengaluru)
 ((Shruti.Agarwal@thomsonreuters.com;))