South32 CEO Graham Kerr Weighs In on Global Mining M&A Boom and Copper Rush
One of the ASX's longest-serving mining executives has cautioned that dealmaking between global resources giants must "make sense" and not be driven solely by a frenzied hunger for copper. South32 chief executive Graham Kerr, who is preparing to exit the company after stepping down nine months ago, offered his insights on the recent surge in mergers and acquisitions activity among the world's largest miners.
Copper Demand Drives M&A Activity
Kerr noted that the recent spate of M&A deals, including a now-abandoned potential merger between Rio Tinto and Glencore, has been partly fueled by fears over the enormous costs associated with building new mines. "Everyone's chasing more exposure to copper," Kerr told The West Australian. "The fundamental belief is that copper will have to reach another level of pricing to induce new projects as they become more challenging, whether due to technology requirements, impurities, depth, or country location."
Copper has proven financially rewarding for the Perth-headquartered miner over the past six months. Underlying earnings from South32's stake in the Sierra Gorda copper mine in Chile more than doubled, soaring from $US178 million to $US393 million. This surge coincided with a more than 40 per cent increase in the price of copper during 2025.
Strong Financial Performance for South32
Robust silver and aluminium prices further bolstered South32's half-year profit, which rose by 29 per cent to $US464 million. This strong performance enabled the company to reward investors with an interim dividend of 3.9 US cents per share. Kerr acknowledged that mergers and acquisitions can be an effective strategy for securing additional supplies, but he stressed the importance of considering synergies between companies.
"For example, I think the Teck-Anglo deal is a great example where there are synergies at a corporate level, and they also have joint ventures and other projects located near each other," Kerr explained. "That's going to be key to creating value for shareholders."
Synergies and Shareholder Value
Last year, Anglo American and Teck Resources opted for an $85 million merger, rejecting advances from Pilbara giants Rio Tinto and BHP. A primary driver behind this merger was the potential synergies between Anglo's Collahuasi and Teck's Quebrada Blanca copper operations, which are situated approximately 40 kilometres apart in Chile.
In contrast, the revival of talks between Rio Tinto and Glencore did not resonate well with Rio's shareholders, despite the prospect of adding hundreds of thousands of tonnes of copper to its portfolio. This potential merger also evoked memories of Rio's disastrous $US38 billion cash acquisition of Canadian aluminium producer Alcan, which ultimately burdened the miner with significant debt and billions in writedowns.
Kerr's Cautious Stance on Rio-Glencore Talks
Kerr, who led South32 since its spin-off from BHP over a decade ago, refrained from commenting directly on the Rio Tinto and Glencore discussions. However, he referenced analyst observations that broadly indicated there was "no real overlap" between the two companies. This lack of synergy may have contributed to the deal's challenges.
Board Appointment and Market Reaction
Alongside announcing its half-year results, South32 revealed the appointment of former Rio Tinto executive Sinead Kaufman as an independent non-executive director. Kaufman had led Rio's minerals division for 30 years until her role was eliminated in a restructuring initiative led by new CEO Simon Trott in August.
Despite the positive financial news, South32 shares closed the day 3 per cent lower at $4.52, reflecting market dynamics and investor sentiment amid the broader mining sector's volatility.
