The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Antony Currie

MELBOURNE, July 1 (Reuters Breakingviews) - There's nothing like proving the doubters wrong. Graham Kerr must be feeling that as he steps down after 11 years running South32 S32.AX. The $13 billion Sydney-listed mining company was laughed off and dubbed a "CrapCo" by analysts, investors and journalists alike when it was spun out of BHP BHP.AX in 2015, regarded as little more than a sprawling mess of unwanted assets. On Wednesday, though, hours after his official final day, Kerr unveiled the last of several deals he has struck to create a leaner firm that now generates more than half its earnings from the energy transition and AI metal: copper. That's likely to attract suitors.

Kerr is selling South32's eclectic mix of aluminium assets in Australia, Brazil and South Africa to global giant Alcoa AA.N at an enterprise value of up to $5.6 billion. That includes $750 million in net debt and lease liabilities, and schmuck insurance of up to $750 million linked to commodity prices to 2030. The buyer will benefit from some extra heft and geographic reach and reckons cost savings from meshing operations together, especially Down Under, are worth some $900 million to shareholders.

The seller, which had already offloaded coal, nickel and smelting businesses in recent years, has the benefit of looking far more focused. Granted, the aluminium sale means it'll lose around 40% of its EBITDA. But it's a low-growth business that obscured the 55% or more increase in production it expects to come from copper - which will now account for around 55% of EBITDA - zinc, lead and silver. Removing the overhead from its capital-intensive aluminium sites will also help almost double South32's underlying EBITDA margin to 50%.

That puts it in the same territory as BHP and Rio Tinto RIO.AX. Yet even after a 10% jump in its share price on Wednesday, South32's enterprise still trades at less than 5 times EBITDA, while its larger rivals sport multiples of between 6 and 7 times that metric and pure-play copper miners even higher ones. In other words, there's a cheap, digestible, red metal-heavy player that has just sloughed off an asset that, because few others wanted it, acted as an effective poison pill.

It's not a huge copper player at some 100,000 tons a year, compared with the just below and above 800,000 tons Rio and Glencore GLEN.L dig up. And Kerr's successor at South32, Matthew Daley, may fancy being a buyer himself rather than giving in to the behemoths. But with new copper mines short on supply and demand increasing, even incremental additions are appealing - perhaps even to its former parent.

Follow Antony Currie on Bluesky and LinkedIn.

CONTEXT NEWS

South32 on July 1 said it is to sell most of its aluminium assets to Alcoa at an enterprise value of up to $5.6 billion.

Alcoa will pay $3.1 billion in upfront cash and $1 billion in its own shares. The buyer will also hand over up to $750 million depending on alumina and aluminium prices to 2030. And it will take on $750 million of the unit's net debt and lease liabilities. On top of that, Alcoa will also assume roughly $1.2 billion of so-called rehabilitation provisions.

The transaction marks the end of Graham Kerr's tenure as CEO. He officially stepped down on June 30 after leading the company since it was spun out of BHP in 2015. His successor is Matthew Daley.