The South32 Ltd (ASX: S32) share price has been rattled by concerns about China’s economy and the possible default of its second-largest property developer, Evergrande Group.
Despite getting caught in the hysteria, the company announced some positive news regarding its Brazilian operations.
At the time of writing, the South32 share price is 0.76% higher to $3.315.
South 32 share price higher on smelter restart plans
South32 holds a 40% share in the Alumar aluminium smelter, which has been in care and maintenance since 2015.
Earlier this week, its joint venture partner Aloca announced plans to restart its operations. This announcement came on the back of surging spot prices.
The process to restart the idled capacity will begin immediately. First production is due around the second quarter of 2022.
The company expects the plant to ramp up to its full 268,000 metric tonne a year of capacity by the fourth quarter of 2022.
Aloca said that the restart is forecast to cost around US$75 million, including US$10 million in capital expenses.
The South32 share price has so far traded flat this week. Though it has fared much better than the S&P/ASX 200 Index (ASX: XJO).
“Our restart decision is based on an analysis that shows the smelter can be competitive throughout all cycles, leveraging the co-located refinery, a strong workforce, and competitive, renewable power arrangements,” Alcoa COO John Slaven said in a statement.
To add some perspective, South32 produced a total of 982,000 tonnes of aluminium in FY21.
Aluminum prices boom to 10-year highs
Aluminium is a top-performing commodity this year thanks to increasing production mandates from Chinese policymakers.
Aluminium prices were sitting around 2-year lows of about US$1,450 a tonne in May 2020, before rallying to US$2,550 a tonne by the end of FY21.
China’s supply squeeze, in addition to the recent military coup in the West African nation of Guinea, has propped up aluminium prices to a decade high of US$2,700 in early September.
This has helped drive the South32 share price to 2-year highs of $3.52 last Thursday.