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Full Disclosure 2016

South32 LimitedNew

Key questions shareholders should ask

Company overview

South32 Limited, a metals and mining company headquartered in Australia, is listed on the Australian Securities Exchange, the Johannesburg Stock Exchange and the London Stock Exchange. The company was founded in May 2015, following BHP Billiton’s decision to bring together a number of its assets and a team of people to form a new resources company.1 BHP Billiton’s demerger to form South32 was a step taken by the BHP Billiton Board to “simplify BHP Billiton” and “maximise shareholder value” by forming a new company which would “benefit from the best of BHP Billiton’s approach to productivity”.2 Therefore, for the purposes of this assessment, BHP Billiton’s environmental record in South Africa prior to 2015 will also be examined, insofar as it is relevant to South32’s current operations.

South32’s operations in South Africa are comprised of South Africa Manganese, South Africa Energy Coal and South Africa Aluminium.3

South Africa Manganese comprises the Samancor Manganese Metalloys alloy plant (Metalloys), and the Hotazel Manganese Mines (HMM), owned by Hotazel Manganese Mines (Pty) Ltd. South32 operates both HMM and Metalloys. South32 has an effective 44.4 per cent ownership in HMM, and a 60 per cent interest in Metalloys.4  HMM is located in the Kalahari Basin in the Northern Cape. It has two mining operations, Wessels Mine and Mamatwan Mine.5  Metalloys is one of the largest smelters in the world, producing high-carbon ferromanganese (HCFeMn) and medium-carbon ferromanganese (MCFeMn) alloy.

South Africa Aluminium (in which South32 has a 100 per cent interest) operates the “Hillside” aluminium smelter in South Africa in Richards Bay, Kwazulu-Natal. Mozal Aluminium (in which South32 has a 47.1 per cent interest) is the only aluminium smelter in Mozambique and the second-largest aluminium smelter in Africa.

South32 has a 90 per cent interest in South Africa Energy Coal. Employees own 2 per cent through an Employee Share Ownership Programme and the remaining eight per cent is held by Pembani Holdings, a Black Empowerment company. South Africa Energy Coal operations, located near the towns of eMalahleni and Middelburg in the Mpumalanga Province, consist of four primary coal mining operations (Khutala Colliery, Klipspruit Colliery, Middelburg Colliery and Wolvekrans Colliery) and three processing plants.6

South32 also holds a 60% interest in Samancor Holdings (Pty) Ltd (Anglo American Plc holds the remaining 40%).  Samancor in turn owns 74% of Hotazel, which gives South32 its ownership interest of 44.4 per cent in HMM. The remaining 26 per cent of Hotazel is owned by Broad-Based Black Economic Empowerment (B-BBEE) entities.

South32 also has operations in Australia and Mozambique.

In 2016, South32 reported that it had 7,341 employees in South Africa.7

  1. https://www.south32.net/about-us/our-history  (last accessed on 7 November 2016).
  2. https://www.miningreview.com/news/bhp-recommends-shareholders-approve-south32-demerger/ (last accessed on 7 November 2016).
  3. https://www.south32.net/our-operations/south-africa (last accessed on 7 November 2016).
  4. Before the formation of South32, BHP Billiton similarly held a 60 per cent interest in the Samancor Manganese Metalloys alloy plant (Metalloys).
  5. https://www.south32.net/our-operations/south-africa/manganese-south-africa (last accessed on 7 November 2016).
  6. https://www.south32.net/our-operations/south-africa/energy-coal-south-africa (last accessed on 7 November 2016).
  7.  South32 Annual Report 2016, at p21.