Australian mining company South32 (NYSE:SOUHY)(ASX:S32) has reached a binding agreement to sell its Cerro Matoso nickel operation in Colombia, signaling a strategic move away from nickel as the company pivots toward commodities more closely aligned with the energy transition, particularly copper and zinc. The Cerro Matoso divestment, valued at up to $100 million, involves a nominal upfront payment and future performance-based payments of up to $80 million tied to nickel output and market prices. An additional $20 million may be paid contingent on permitting milestones over the next five years.

The buyer, CoreX Holding—a global industrial conglomerate—will assume all current and future liabilities associated with the asset upon completion of the transaction. The sale is expected to close in late 2025, pending necessary merger approvals and corporate restructuring.

Strategic Refocus Amid Market Volatility

South32 stated the decision aligns with its long-term strategy to streamline its asset portfolio and concentrate on higher-margin metals considered essential for decarbonization technologies. These include copper and zinc, which are projected to play a vital role in electrification and renewable energy infrastructure.

The sale comes at a time of sustained downturn in global nickel markets. A steep decline in prices has been largely attributed to a surge in production from Indonesia, which has significantly reshaped the supply landscape. This oversupply has undermined the economics of nickel operations globally.

South32’s own nickel production dropped by 6% in the nine months ending March 2025, driven in part by lower planned nickel grades. In a related development last year, BHP—another major Australian miner—announced plans to suspend its Western Australia nickel operations starting October 2024, citing unviable market conditions.

Cerro Matoso, located in Colombia’s Córdoba department, has been among the affected assets. The open-pit ferronickel mine has faced operational and market headwinds amid shifting dynamics in the global nickel industry. As a result of the sale, South32 expects to record a $130 million impairment charge in its fiscal year 2025 financial results. This charge, however, will be excluded from the company’s underlying earnings, consistent with accounting treatment for one-off non-cash losses.

For CoreX, the acquisition is part of a broader strategy to expand its nickel holdings worldwide. In addition to Cerro Matoso, the conglomerate recently acquired Compagnie Minière du Bafing in Côte d’Ivoire. It also controls Golden Eagle Nickel in North Macedonia and NewCo Ferronikeli in Kosovo. The Colombian acquisition adds a South American asset to CoreX’s growing portfolio, potentially enhancing its geographic diversification and production capabilities in the nickel space.

Outlook

The Cerro Matoso sale reflects broader shifts in global resource markets, where demand expectations linked to clean energy are prompting strategic reallocations by major miners. With nickel prices under prolonged pressure, assets once considered core are now being re-evaluated. South32’s decision to exit Cerro Matoso underscores a bet on more stable or growth-oriented metals such as copper and zinc—both seen as vital to the electrification of transport and the expansion of renewable power systems. The coming months will determine how regulatory and corporate restructuring hurdles affect the closing timeline, but the company appears set on reducing its exposure to nickel amid a challenging market outlook.