Diversified mining company South32 on Monday announced a binding agreement to divest its Cerro Matoso operation to a subsidiary of CoreX Holding, as part of a strategic response to structural changes in the global nickel market.

The transaction, South32 CEO Graham Kerr said, was consistent with the group's strategy to target growth in higher margin businesses in minerals and metals key to the world’s energy transition.

"The transaction will deliver a clean separation of Cerro Matoso and provide additional balance sheet flexibility to support investment in our growth options in copper and zinc," Kerr stated.

While the initial consideration is nominal, the agreement includes up to $100-million in future payments, comprising $80-million of price-linked payments, tied to future production volumes and nickel market prices and up to $20-million contingent on permitting milestones over the next five years for the Queresas & Porvenir North project.

The buyer would assume "economic and operating control of Cerro Matoso, including all current and future liabilities".

South32 would report Cerro Matoso as a discontinued operation in its 2025 financial year, with an impairment charge of $130-million.

Cerro Matoso, a long-standing asset in Colombia, would transition to the new owner with the support of local stakeholders. “Over the coming months we will work with the buyer, our workforce, the local communities, government, customers and suppliers to support a successful transition of ownership,” Kerr said.

The sale remains subject to several conditions, including international merger clearances and a reorganisation of the Cerro Matoso holding entity. Completion is expected by late 2025.

South32 is targeting growth in copper, zinc and the aluminium value chain. The company has a series of projects in the medium term, such as the fourth grinding line at Sierra Gorda, which is copper in Chile, the Taylor execution, which is zinc and potentially copper as well, in Arizona, US.