Industry: Mining.

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Main products: Alumina, aluminium, bauxite, copper, nickel, manganese, zinc, silver, lead, metallurgical coal

Key figures: Chief executive and managing director Graham Kerr, chair Karen Wood, chief financial officer Sandy Sibenaler, chief commercial officer Katie Tovich.

How it started: In a long-running bid to simplify its portfolio, BHP in 2014 announced its intention to demerge its “non-core” assets and focus its business on its four pillars: iron ore, copper, coal and petroleum. On May 6, 2015, BHP shareholders approved the demerger.

South32 was officially listed on the Australian Securities Exchange on May 18, 2015, with secondary listings in London and Johannesburg, and headquartered in Perth. Graham Kerr, BHP’s former chief financial officer, was installed as CEO.

How it’s going: South32 has embarked on a series of significant moves to reshape its portfolio. Foremost, it has exited thermal coal – the type of coal burned to create electricity – with the sale of its South African Energy Coal (SAEC) business to Johannesburg-based Seriti Resources, and has struck a deal to buy a 45 per cent stake in the Sierra Gorda copper mine in Chile. It also expanded its exposure to low-carbon aluminium through an increased shareholding in the hydro-powered Mozal aluminium smelter in Mozambique.

At an investor roundtable earlier this year, Kerr said the company remained in the process of actively reviewing and steering its portfolio towards more of what the industry terms “future-facing” metals – those standing to benefit as materials in renewable energy, batteries and other infrastructure that will be needed to decarbonise the global economy. Based on analysts’ commodity price assumptions, the company’s valuation split moved from 50:50 between bulk commodities and base metals to 25:75 post the Sierra Gorda acquisition.

The bull case: Although rarely in the spotlight like global heavyweights BHP and Rio Tinto, South32 is arguably one of the most diversified miners on the ASX. Benefitting from a strong balance sheet, South32 proved it was able to ride through a deep commodity price downturn during its early years, and another during the early stages of the COVID-19 crisis.

As China, the world’s biggest consumer of industrial metals, continues its economic recovery from its long-running zero-COVID restrictions, South32 could be well-placed to benefit from the possibility of an uplift in construction and manufacturing, which could require lots of aluminium, manganese, copper and nickel, without being exposed to iron ore.

Goldman Sachs, which has a “buy rating” on South32, forecasts a strong recovery in free cash flow by 2014 thanks to higher production and prices, and sees “potential upside” from growth projects including a Sierra Gorda copper expansion, plans to produce battery-grade manganese in Arizona and the possibility of developing a jointly owned copper deposit in Alaska.

The bear case: South32’s shares slumped earlier this year after it downgraded its full-year production forecasts for five mine sites and posted weaker-than-expected output of most commodities following operational events such as flooding, access or geological issues.

Looking ahead, there are also worries that an economic slowdown could hurt demand for commodities. Investment bank Barrenjoey points out that China accounts for more than 50 per cent of demand for much of South32’s product. “If growth does not recover in 2023, then there is risk to our commodity prices forecasts and returns,” it says.

Responding to mounting investor pressure for mining companies to do more to cut their carbon footprints, South32 has set targets to halve its emissions by 2035. Failure to achieve these goals could result in a de-rating of the company by investors, says Barrenjoey, due to higher borrowing costs and a higher cost of capital.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.