At time of writing, South32 Limited [ASX:S32] are trading at $3.72. This marks a 2.19% increase from yesterday’s trading price, allowing the company to maintain their recent upward climb. South32 shares have increased in price every day for the past week.
In a time where the mining and commodities sector is struggling to keep its footing — with US President Donald Trump adding his own quaking tariffs on traded materials with China — a mining stock that is on the rise is certainly something worth drawing attention to.
What is signalling this climb?
While there’s no clear correlation between any new announcement and this share price increase, a turn of focus to environmentally-friendly practices could be pushing South32 shares higher.
On 7 September, South32 released a report on the ASX titled ‘Our Approach to Climate Change 2018’. The strategy has three core areas:
Climate Change Opportunity — providing the raw materials that facilitate climate action and help with the transition to a lower carbon future.
Climate Resilience — adding climate change modelling to any investment decisions, as well as implementing ‘Intelligent Land Management’ projects including water protection and biodiversity conservation.
Emission Reduction — staying below FY15 levels. FY18 saw a further 4% drop in carbon emissions compared to FY17, so they are on the right track with this.
In addition, the South African Energy Coal (SAEC) sector of South32 was announced to become a stand-alone business in November 2017. SAEC was contributing to 96% of thermal coal production, making it a harmful asset for a company pushing for a low-carbon future.
The climate change report stated that this move ‘…demonstrate[s] that we are taking meaningful action to transition to a low carbon and more climate resilient way of operating’.
South32’s efforts to practice what they preach may be what is bringing smiles to investors’ faces, for many reasons…
Bids for SAEC
While South32 are keen to rid themselves of the environmental burden of SAEC, other resource companies are ready to snatch it up.
The business is estimated to be worth nearly $800 million as a stand-alone, and bids are matching this figure. Bidders include Exxaro Resources, Phembani Group, and the Mining Forum of South Africa.
This interest may also be what is sparking the climb in share price.
What next for South32?
It’s hard to tell right now exactly how these resource/commodity trading wars are going to play out. Time is needed for the turmoil to die down.
But a push towards combatting climate change frames South32 as a company that looks past the numbers, which is always an admirable quality to have…especially when change in mining practices is growing more and more necessary.
For Money Morning
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