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South32 ( SHTLF ) eyes larger stake in Sierra Gorda from KGHM

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Underlying profit more than halves to $380 mln, from $916

mln

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Announces $200 mln share buyback

(Recasts, adds CEO comments in paragraphs 1-7, manganese

comments in paragraphs 9,10)

By Melanie Burton

MELBOURNE, Aug 29 (Reuters) - Diversified miner South32 ( SHTLF )

would consider both buying and building from existing

mines to get more copper, its CEO said on Thursday, as its

yearly profit beat market expectations and it returned cash to

its shareholders.

The miner is reshaping its portfolio since it was spun off

from BHP a decade ago to produce mostly base metals,

and CEO Graham Kerr is, like many miners, keen to get his hands

on more of the metal deemed key to the energy transition.

"We would love in the ideal world to buy a larger stake in

Sierra Gorda because we see a lot of opportunity and potential

there," Kerr told Reuters in an interview.

South32 ( SHTLF ) owns a 45% stake in the northern Chilean mine with

Poland's KGHM, which has not so far indicated it is

open to selling, he said. KGHM did not immediately respond to a

request for comment. The mine produced 86,200 tonnes of copper

last year.

Miners are having to become more aggressive to secure new

projects or risk missing out, given the anticipated demand for

the metal.

From existing operations, South32 ( SHTLF ) expects to be able to

quantify in the next year the size of copper potential around

its Peak deposit in Arizona.

MANGANESE

South32 ( SHTLF ) outlined a return to growth for its Australian

manganese operations as it posted a 59% drop in annual profit,

beating market expectations and said it will buy back $200

million worth of shares.

The world's biggest producer of manganese said it is working

to restore its GEMCO operations in far north Australia which

suffered major damage from a cyclone earlier this year.

Kerr has said he would be open to buying out partner Anglo's

40% GEMCO stake since Anglo is undergoing a restructure but

added on Thursday he is not in any talks to do so at the moment.

The company expects to produce around 1 million wet metric

tons (wmt) of manganese in fiscal 2025 from its Australian

operations before that rises to 3.2 million wmt in fiscal 2026.

Underlying profit at South32 ( SHTLF ) for the reported period dropped

to $380 million, from $916 million a year ago, but was higher

than a Visible Alpha consensus estimate of $334.2 million.

"Overall they have done a bit better than people expected on

production," said Sudhir Kissun, an investment analyst at Allan

Gray. Shares traded up 0.7% to A$3.1 as other miners slipped.

South32's ( SHTLF ) Illawarra metallurgical coal operations, recently

sold for $1.65 billion to an Indonesian-led consortium, were

hurt by lower realized prices and reduced shipments, resulting

in its underlying EBIT falling to $441 million from $714 million

a year ago.

The miner said is aiming to secure the necessary

environmental approvals for its Worsley alumina development

project by 2024-end.

South32 ( SHTLF ) declared a final dividend of 3.1 cents per share,

compared with 3.2 cents a year earlier.