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South32 Ltd share price slides to record low on dark outlook

Credit: South32

Shares in South32 Ltd (ASX: S32) hit a record low today on the back of tumbling commodity prices as the base metal and coal mining company continues to see investors jump ship. The shares today hit a low of $1 having started their public life trading above $2 in May 2015.

The problem for the company is that a range of the metals it sells like copper, nickel and aluminium are all at multi-year lows, while coal prices appear to be in a long-term bear market as governments globally continue to seek other forms of energy due to environmental concerns.

After its spinoff South32 shares were transferred to eligible BHP Billiton Limited (ASX: BHP) shareholders in May of this year and investors left holding both will be disappointed with the stocks down 49% and 38% since the separation of the two companies.

Although the outlook might not seem great for South32 investors it remains one of the better mining companies on the ASX due to its scale and market dominance. It posted underlying earnings of US$575 million in the last financial year, although clearly the current year’s result is likely to be savaged by falling commodity prices and it looks a business to avoid for now.

The business is also reportedly considering de-listing from the Financial Times Stock Exchange due to a lack of liquidity as UK investors also get cold feet about the group’s outlook.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

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