Why the South32 (ASX:S32) share price has surged 16% in a month

Shares in the mining and metals producer continue their ascent today.

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The South 32 Ltd (ASX: S32) share price has been one to watch on the Australian indices this past month.

Whereas the S&P/ASX 200 Index (ASX: XJO) has sunk more than 2%, South32 shares have soared 16% into the green in this time.

Let's check what's been fuelling the South32 share price lately.

a man in a hard hat and overalls raises his arms and holds them out wide as he smiles widely in an optimistic and welcoming gesture.

Image source: Getty Images

Why is the South32 share price edging higher?

South32 shares have been on the move since the mining and metals company announced its FY21 results on 19 August.

In its report, the company recognised a 4% gain in revenue and a 90% jump in EBITDA from the year prior.

Despite this, its net loss for the year widened to US$195 million, up from US$65 million the previous year.

Yet, earnings per share (EPS) jumped up to US10.3 cents, a 164% year on year gain for shareholders.

The company was able to increase its dividend to just shy of US7 cents per share, an enormous 82% gain from FY20 that shareholders will no doubt enjoy.

From this event, the South32 share price began its march northwards.

It immediately jumped 20% in the three or four weeks following its FY21 results to $3.36 early in the month, before setting a new 52-week high of $3.51 on 16 September.

After some choppiness on the chart, spurred by the Evergrande debt crisis, shares in the mining company have since tracked towards this level again. Some of the gains came on the back of another announcement made last week.

The company's 40% owned venture, the Alumar aluminium smelter, has announced plans to restart operations via its parent and South32's joint venture partner Aloca.

First production is set for 2022 and should reach full capacity by the end of CY22, according to the company.

Investors see this as a huge positive for the company, given strengths in commodities markets that have occurred across 2021.

Aluminium hit a 13-year high of US$2,957/tonne in trading last week. That's a 65% increase from the same time last year with the price of aluminium setting consistent new highs from January this year.

South32 is in a unique position to benefit from the price increase, given it's an ASX resource share that produces aluminium.

The sum of these events goes some way to explain why the South32 share price has climbed more than 16% in the last month.

Although it's worth noting its share price can and does fluctuate with volatility in the broader commodities markets.

South32 share price snapshot

The South32 share price has been a standout over the last year to date as well, posting a return of 37% since January 1.

It has also climbed 56% over the past 12 months, more than double that of the broad index's return of about 25% in this time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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