So BHP Billiton shareholders approved the spin-out of
the much anticipated South32. The split-up of BHP assets is expected in
late May and for those who don’t have BHP’s individuals assets
memorised it begs the question: What will it look like?

Let’s take a closer look.

Clearly South32 is getting BHP’s trimmings, by and large the stuff it
doesn’t want. But that said, South32 will still be a heavyweight miner.
It will be fairly diversified – though not terribly rounded out in some
respects – with a multi-billion market cap. Its mines, smelters and
other facilities will largely cluster in in Australia and South Africa.

From a commodities point of view, South32 will noticeably lack strong
production in base metals and iron ore. It won’t have copper or iron
ore mines in the fold. BHP keeps those.

But in-house, it won’t be obviously weighted to any particular
commodity it mines. It will derive profits from alumina, aluminium,
silver, lead, zinc, manganese, nickel and coal.

A few of its mines and operations will do more of the heavy lifting,
at least given recent history and metal prices. Indeed, broadly
speaking, the operations in Australia are its lowest cost and most
profitable. The mines in South Africa, though still fairly profitable,
will be a bigger drag.

In Australia three operations, out of a group of ten, should account
for nearly 40% of  South32 profits, if recent quarters are a guide.
GEMCO (60% owned) is a large manganese producer and drove 14.4% of
profits in H1 2015 among the group of mines South32 (and thus BHP
shareholders) is destined to own. Cannington is a large silver-lead-zinc
mine and it accounted for 13.6% of profits. Thereafter Worsley, an
alumina operation, gave 10.6% of profits in H1 2015.

South32 EBITDA