South32 aluminium FY2026: Hillside delivers, Brazil recovers, Worsley takes price hit

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South32 delivered a stronger FY26 financial performance, with underlying revenue rising 7 per cent to USD 8.11 billion, reinforced by higher commodity prices and stronger operating performance. Within its aluminium portfolio, Brazil Aluminium and Hillside Aluminium recorded significant earnings improvements. The year also marked a strategic turning point, with South32 agreeing to sell most of its aluminium value chain assets to Alcoa for up to USD 5.6 billion.

CEO Matt Daley stated, “Strong operating performance coupled with commodity price tailwinds underpinned one of the best financial results in our history, with Group Underlying EBITDA increasing by 28 per cent to USD 2.5 billion and Underlying earnings increasing by 55 per cent to USD billion.”

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Group earnings: FY26 vs FY25

Profit after tax attributable to members – USD 1.09 billion vs USD 213 million, up 410 per cent Y-o-Y

Underlying revenue – USD 8.11 billion vs USD 7.61 billion, up 7 per cent Y-o-Y

Underlying EBITDA – USD 2.46 billion vs USD 1.93 billion, up 28 per cent Y-o-Y

Underlying earnings attributable to members – USD 1.03 billion vs USD 666 million, up 55 per cent Y-o-Y

The aluminium value chain produced a mixed picture. Higher aluminium prices contributed USD 435 million to the Group’s result, but this was more than offset by a USD 504 million negative impact from lower alumina prices.

For the aluminium value chain itself, saleable aluminium production declined 8 per cent to 1.11 million tonnes, as Mozal Aluminium moved into care and maintenance. Alumina production, however, remained broadly stable at 5.1 million tonnes.

Worsley Alumina (86 per cent share)

Worsley Alumina, produced 3.72 million tonnes of alumina in FY26, almost unchanged from  3.73 million tonnes in FY25.

Operationally, the asset benefited from improved bauxite availability. The gain was hampered by a temporary, weather-related disruption to third-party gas supply during Q3 FY26.

The financial picture was considerably weaker. Worsley’s underlying revenue fell from USD 1.92 billion in FY25 to USD 1.32 billion in FY26, while underlying EBIT dropped sharply from USD 619 million to USD 5 million.

The key issue was the weaker alumina pricing environment. Across South32’s alumina business, the average realised alumina price declined 32 per cent. Thus, the underlying EBITDA declined to USD 210 million.

For FY27, South32 has allocated USD 85 million of safe-and-reliable capital expenditure to Worsley Alumina, alongside USD 75 million for improvement and life-extension work. The latter includes the Worsley Mine Development Project, including the Nullaga mine development.

Brazil Alumina (36 per cent share, non-operated)

Brazil Alumina produced a record 1.41 million tonnes in FY26, up 5 per cent, from 1.36 million tonnes in FY25. The refinery operated above nameplate capacity, supported by improved plant availability.

Yet the improvement in output did not translate into higher earnings. Underlying revenue declined from USD 749 million to USD 502 million, while underlying EBIT moved from a USD 226 million profit to a USD 27 million loss.

The contrast highlights the extent to which commodity prices influenced FY26 performance: Brazil Alumina produced more metal and operated efficiently, but the weaker alumina price environment outweighed the operational gains.

Brazil Aluminium (40 per cent share, non-operated)

Brazil Aluminium delivered a notably different result. South32’s 40 per cent share of the non-operated smelter produced 144,000 tonnes in FY26, up 4 per cent, or 6,000 tonnes, from 138,000 tonnes in FY25. Production exceeded revised guidance by 7 per cent.

The smelter continued ramping up all three potlines, helping Q4 production rise 12 per cent to 37,000 tonnes from 33,000 tonnes in Q3.

Sales rose 4 per cent to 143,000 tonnes for FY26, with Q4 sales jumping 56 per cent because of the timing of export shipments.

Underlying revenue increased from USD 355 million to USD 441 million, while underlying EBIT swung from a USD 97 million loss in FY25 to a USD 20 million profit in FY26.

South32 attributed the broader aluminium portfolio’s earnings improvement to a 19 per cent increase in the average realised aluminium price, alongside lower alumina input prices at Brazil Aluminium and Hillside Aluminium.

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Hillside Aluminium (100 per cent share)

Hillside Aluminium remained South32’s largest aluminium-producing asset, with 717,000 tonnes of saleable aluminium production in FY26, broadly unchanged from 718,000 tonnes in FY25. The smelter continued testing its maximum technical capacity despite the impact of load-shedding.

Sales were weaker, falling 6 per cent to 688,000 tonnes from 732,000 tonnes. Q4 sales nevertheless increased 10 per cent to 174,000 tonnes, largely because of a carry-over shipment from the previous quarter.

The financial performance was much stronger than the production numbers suggest. Underlying revenue increased from USD 1.989 billion to USD 2.236 billion, while underlying EBIT surged from USD 85 million to USD 581 million.

This makes Hillside the standout earnings contributor among the aluminium assets covered in the report. Its result benefited from the stronger aluminium price environment and lower alumina input prices, even though production remained essentially flat.

Mozal Aluminium (63.7 per cent share)

Mozal Aluminium produced 248,000 tonnes in FY26, compared with 355,000 tonnes in FY25, a 30 per cent decline. Production covered the period through March 2026, when the smelter was placed on care and maintenance, owing to power deal deadlock.

Sales declined 22 per cent to 275,000 tonnes, although the operation still sold 46,000 tonnes in Q4 as remaining finished-goods inventories were cleared.

Despite the production shutdown, Mozal generated USD 890 million in underlying revenue and USD 182 million in underlying EBIT in FY26, compared with USD 979 million and USD 55 million respectively in FY25.

Aluminium portfolio: Stronger prices, sharply different asset outcomes

South32’s aluminium portfolio delivered stronger earnings despite an 8 per cent decline in saleable aluminium production to 1.109 million tonnes, as higher aluminium prices and lower input costs lifted underlying EBITDA by USD 678 million to USD 865 million. Hillside Aluminium and Brazil Aluminium were the main positive contributors, while weaker alumina prices weighed heavily on Worsley Alumina and Brazil Alumina.

Even Mozal’s earnings remained significant despite the production shutdown, but its future contribution is structurally different now that the smelter is on care and maintenance.

FY27 outlook: Preparing for a reshaped aluminium portfolio

South32 has guided to USD 300 million of FY27 capital expenditure for its Aluminium Value Chain Assets, up from USD 272 million in FY26. Safe-and-reliable spending is expected to rise to USD 225 million, while improvement and life-extension expenditure is planned at USD 75 million.

Worsley Alumina is expected to produce 3.9 million tonnes, Brazil Alumina 1.36 million tonnes, Brazil Aluminium 140,000 tonnes and Hillside Aluminium 720,000 tonnes.

South32 has also announced the sale of its aluminium value-chain assets, excluding Mozal Aluminium, to Alcoa Corporation.

On July 1, 2026, South32 announced a binding conditional agreement to sell its interests in Worsley Alumina, Hillside Aluminium, Brazil Alumina and Brazil Aluminium, together with its interest in the MRN bauxite mine, to Alcoa for an implied enterprise value of up to USD 5.6 billion. Alcoa will also assume approximately USD 1.1 billion in rehabilitation provisions.

South32’s aluminium value chain is therefore entering FY2027 from a position of strong smelting economics but uneven upstream performance. The planned Alcoa transaction will ultimately remove most of these assets from South32’s portfolio, with the Group increasingly focused on base metals and growth projects such as Hermosa and Sierra Gorda.

As Daley noted, “Looking ahead, our focus on operational excellence, a strong balance sheet and transformational growth in base metals leaves us well positioned to deliver value for shareholders.”

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