South32 Ltd (ASX: S32) shares are flying on Wednesday after the miner announced a major deal with Alcoa Corporation (ASX: AAI).
At the time of writing, the South32 share price is up 10% to $4.29.
The stock is still down around 11% over the past month, so today's jump will be a welcome change for investors. It has also pushed South32 shares around 20% higher since the start of 2026.
Here's what sparked the move.
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South32 sells its aluminium assets
According to the release, South32 has signed a binding, conditional agreement to sell a significant portion of its aluminium business to Alcoa.
The deal values the assets at up to US$5.6 billion. On top of that, Alcoa will take on around US$1.2 billion in rehabilitation provisions, bringing the total transaction close to US$7 billion.
The assets being sold include South32's 86% interest in Worsley Alumina, Hillside Aluminium in South Africa, and its stakes in the MRN bauxite mine, Brazil Alumina refinery, and Brazil Aluminium smelter.
Under the deal, South32 will receive US$3.1 billion in upfront cash, US$1 billion in Alcoa shares, and up to US$750 million in extra cash if alumina and aluminium prices meet certain levels through to 2030.
Management expects the sale to complete in the second-half of FY27, provided shareholder and regulatory approvals go through.
Why investors are buying today
The special dividend is likely one of the biggest reasons investors are sending the South32 share price higher today.
South32 plans to give shareholders at least half of the Alcoa shares it receives. The company expects this to be paid as a fully franked special dividend.
Based on the current value of those Alcoa shares, that dividend would be worth around US$500 million.
In addition, management said the deal should make South32 simpler, strengthen its balance sheet, and lower its costs.
The company expects annual overhead savings of around US$125 million once the full benefit comes through in FY29.
The upfront cash should also give South32 more room to fund its copper and zinc growth plans without putting too much pressure on the balance sheet.
South32's copper plans move ahead
The Alcoa deal wasn't the only update from South32 today.
The company also confirmed that the Sierra Gorda joint venture has approved a fourth grinding line project in Chile. South32 owns 45% of Sierra Gorda, while KGHM Polska Miedz owns the remaining 55%.
The project is expected to lift processing capacity from about 48 million tonnes a year to 60 million tonnes.
First production is expected in mid-FY30, with the project reaching full production rates in FY31.
Once complete, South32 expects the project to add average annual production of about 19,000 tonnes of copper, 6,000 tonnes of molybdenum, 8,000 ounces of gold, and 170,000 ounces of silver.
The estimated growth capital spend is US$725 million on a 100% basis.
