ants I recently attended a hearth conversation with South32 CEO Graham Kerr to reflect on how the mining giant got to where it is today.

South32, which spun off from BHP in 2015, describes itself as a “globally diversified mining and metals company” and is now transitioning into a major US manganese producer.

While the company’s future is certainly bright, Chief Executive Graham Carr has admitted that South32 initially had a portfolio that could only be described as “a mixed bag.”

“There are a lot of assets within BHP that don’t get the love and systems they need and have a lot of opportunities for future development,” he said during a hearth chat at a recent Melbourne Mining Club luncheon.

“For me, this split was a great opportunity for both companies to be even better than they were before.

South32’s product mix includes energy coal, metallurgical coal and manganese, with nickel, lead, silver, zinc and aluminum in its portfolio.

Carr and his colleagues began to see the potential of base metals from this standpoint.

Eight years later, the company’s portfolio has changed significantly since Kerr attended the first South 32 meeting with then-chairman David Crawford.

“We certainly had the belief that which assets belonged to South32 and which assets did not belong to South32,” Carr said.

“If you take a step back and look at the world today, it is really recognized that there has been a lot of M&A activity in the last 20 years and most of the mid-sized mining companies have disappeared.

“One of the advantages of South32 has been that it is a mid-sized mining company. For a mid-sized company, just one or two great discoveries or one or two great acquisitions can fundamentally change the nature of the group and create a lot of value for its stakeholders.

“It was clear that some commodities had more attractive prospects than others. We talked about wanting copper, and we also talked about expanding our presence in zinc and nickel, but these commodities in particular are much more attractive in a decarbonized world.”

These discussions laid the groundwork for South32 to transition its portfolio and projects to one based primarily in the Americas.

The US government’s recent approval of the Hermosa project in southern Arizona means South32 could become the country’s leading manganese producer.

Hermosa, a potential manganese and zinc producer, has been added to a list of FAST-41 projects aimed at creating better processes for complex critical infrastructure projects. Hermosa is one of the first mining projects to participate in the program and could help obtain federal permits for the development of South 32’s Taylor and Clark deposits located within the Hermosa project.

Once the Taylor and Clark projects go live, Kerr said South 32’s portfolio composition will rise to 85 percent base metals, with the bulk of the company’s value coming from the Americas.

“The inclusion of Hermosa as the first mining project to be added to the FAST-41 process is an important milestone in recognizing the project’s potential to enhance the domestic supply of critical minerals in the United States,” Carr said. “This project offers a significant opportunity to sustainably produce commodities that are essential for a low-carbon future.”

South32 has a Clark feasibility study underway and a pilot plant recently started production. A feasibility study for the Taylor deposit is expected to be completed later this year.

A key part of the project is South32 working with the local community to ensure that the project benefits the surrounding area.

“Being subject to the FAST-41 project will make the rigorous federal environmental review and permitting process for this project more transparent, predictable, and inclusive for all stakeholders,” said Pat Lisner, president of South 32 Hermosa.

“We are committed to working closely with the U.S. Forest Service, cooperating agencies, Native American tribes, and local stakeholders in Santa Cruz County, Arizona to develop this project in a manner that benefits the community, minimizes environmental impact, and creates opportunities for the entire region.”

In addition to US assets, South32 also has growth options in South America. Sierra Gorda copper mine in Chile.

South32 bought a 45% stake in Sierra Gorda in February 2022, and although the company has long been keen to increase its copper presence, it has taken some getting used to.

“How many people in the room did you see?” Shrek with children before? Mr Carr asked the audience at the Melbourne Mining Club. “There’s a part where Donkey talks to Shrek and says, ‘Shrek, you’re like an onion.’

“When the business development team first brought Sierra Gorda to me, I probably, like most people in the market, thought, ‘This is a challenging asset. ”

“For every challenge we gave the business development team to remove the layers of the onion, they delivered more positive results.

“Eventually, we became convinced that it was the right thing to do.

“We have been buying for about a year now and are really happy with this acquisition.

Alongside its presence in Chile, South32 is also involved in revenue arrangements with two emerging copper exploration projects in Argentina, Chita Valley and Don Julio.

South32 recently exercised an earnings right to acquire a 50.1 percent interest in the Chita Valley Project following a three-year exploration partnership with Minsud Resources Corp.

The mining giant has signed a revenue deal with Sable Resources to explore Don Julio in 2021, and drilling is underway at the project.

Carr said Argentina could be a hotspot for copper jurisdictions in the coming years.

“Argentina has become an interesting place,” he said.

“When we first started working there, it was probably just us.

“If you look at where it is, it’s on the other side of the Chilean Mountains where basically all the copper is.

“So I think this is a fairly rapidly developing area.”

Whether it’s the Hermosa project in the US, a series of emerging projects in South America, or other “future-proof” assets in South32’s portfolio, the company has many avenues to become part of the global decarbonization story in the years to come.

And given South32’s strong track record in project execution and expansion, the company’s shareholders can rest assured that their shares are well positioned.

This feature was published in the June/July issue of Australian Resources & Investment magazine.