Is South32 a Buy After Macquarie’s Upgrade? Here’s What Investors Need to Know

South32 (ASX: S32) climbed 3.6% on Friday after Macquarie upgraded the stock to Outperform with an A$3.70 price target. The broker pointed to improved returns and a favourable commodity backdrop as reasons for the bullish shift. For investors watching the ASX resources space, this upgrade comes at an interesting time. Silver has surged 119% year-to-date, copper is up 36%, and aluminium has gained 14%. With South32 producing all three metals, we believe the company is well-positioned to benefit from this commodity strength.

The question now is whether this BHP spinoff can finally turn favourable market conditions into shareholder returns.

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South32’s Multi-Commodity Advantage Sets It Apart

What makes South32 different from many ASX miners is the sheer breadth of its portfolio. The company produces nine commodities across operations in Australia, Southern Africa, and the Americas. This includes silver, copper, aluminium, manganese, zinc, lead, bauxite, alumina, and metallurgical coal.

The flagship Cannington operation in Queensland is one of the world’s largest silver and lead producers, contributing around 6% of global silver output. This suggests South32 stands to benefit significantly from the current silver rally. In Chile, the Sierra Gorda copper mine gives the company meaningful exposure to what many analysts consider the most important energy transition metal. Meanwhile, the Hermosa project in Arizona represents a significant growth option in copper and zinc.

In our view, this diversification provides a natural hedge against single-commodity volatility. When one metal weakens, others often strengthen, smoothing out returns over time. For investors who want metals exposure without betting on a single commodity, we believe this makes South32 an attractive option.

Portfolio Transformation Signals a Cleaner Growth Story

Recent moves suggest management is sharpening its focus on energy transition metals. The company completed the sale of its Cerro Matoso nickel operation in Colombia to CoreX in December 2025. This streamlines the portfolio toward higher-margin commodities, which we see as a positive step.

A new CEO, Matthew Daley, will join in February 2026 from Anglo American. He brings extensive copper experience from his time at Glencore’s Canadian division. This signals that South32 is serious about growing its copper exposure. The company has also been actively buying back shares throughout 2025, which indicates management believes the stock is undervalued.

The Investor’s Takeaway for S32

South32 is trading near A$3.56, giving it a market value of about A$16 billion. Macquarie’s A$3.70 target suggests a modest 4% upside in the short term, but the bigger opportunity is stronger earnings if commodity prices remain high.

The key risk to watch is the Mozal aluminium smelter in Mozambique, which may move into care and maintenance by March 2026 due to expensive electricity. South32 has already taken a US$372 million impairment, and production is expected to fall next year. Mozal is a smaller part of the business, but it highlights the operational challenges miners can face.

Overall, South32 is suited to investors looking for diversified exposure across metals, rather than relying on one commodity. With a supportive commodity backdrop and a recent broker upgrade, the turnaround story is gaining momentum, making the stock worth keeping on the watchlist.