South32: Share Price Fall on Fears Over Worsley Alumina Mining Approval, Lower Guidance Overdone

No-moat South32 will appeal the conditions proposed by Western Australia’s Environmental Protection Authority, or EPA, in recommending approval of its proposed expansion of bauxite mining operations to supply its Worsley Alumina refinery. The EPA’s conditions restrict access to certain higher-grade areas and also increase operating costs, threatening the continued operation of the refinery should the Western Australian government agree with the EPA’s recommendations. This risk is likely the main driver of the 13% fall in the shares July 22, along with modestly disappointing fourth-quarter and fiscal 2024 sales, and lowered fiscal 2025 production guidance for Worsley alumina, Sierra Gorda copper, and its Cannington silver, lead, and zinc mine.