Reliable, low-cost energy is an enabler for the Australian economy: South32

Australia risks losing major projects to countries with cheaper energy as rising costs create ‘challenging’ investment decisions for resource companies, South32’s Graham Kerr warns.

South32 boss Graham Kerr. Picture: Carla Gottgens/Bloomberg

CEO Survey 2026: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2026?  Are cost pressures in your business: increasing/stable/easing?  Are you likely to increase, hold steady, or trim your investment spend or employment over the next 12 months?

We expect to see steady growth in the Australian economy heading into 2026, off the back of strong domestic consumption and an improved trade outlook. We will keep looking for cost efficiencies to lessen the impact of inflationary pressures that are affecting our industry. In terms of investment, we are increasing our capital expenditure as we develop new mining areas at Worsley Alumina in Western Australia, and continue construction at our Taylor zinc-lead-silver project in Arizona.

Technology

Which best describes your organisation’s AI adoption? (Exploring/Piloting/Implementing selectively/Scaled across business) If implementing or scaled, are the productivity benefits starting to come through or do you expect more time for the full impact. Has the use of AI started to influence employment decisions across your organisation?

We believe safe and well-governed AI has the potential to improve aspects of our lives, the safety of our people, and productivity in our business. While our approach to AI is developing, we view it through the lens of our four strategic pillars – safety, value generation, exploration and productivity enablers - and whether it can support enhancements in these areas.

For example, at our Hillside Aluminium operation in South Africa, we’ve been looking at a tool called the Safety Companion. It uses generative AI to sift through large amounts of data to find safety information that can otherwise be hard to obtain. While tools like this have the potential to complement our existing safety routines, we don’t believe they will fully replace them.

People

Has your organisation evolved its approach to flexible working during the past year? Does your organisation have a policy around office attendance? What feedback, if any, do you have for governments considering proscribing working from home for a set number of days per week?

Our view is that a one-size-fits-all approach doesn’t suit our diverse workforce. Bringing people together enables collaboration, learning and a sense of belonging, but the past few years have shown we can achieve great outcomes through flexible working too. The key is finding the balance of what works for each person, their role, and the business. 

Geopolitics

How significantly are global trade tensions/tariffs impacting your business? Is Australia getting the balance in managing its big economic and political relationships with major trading partners?

Ongoing geopolitical tensions have contributed to uncertainty and market volatility, and our business is not immune to the impacts of this. In terms of tariffs, we don’t currently have a major direct revenue exposure from the US.

We continue to focus on the factors we can control to manage this period of uncertainty – delivering on our plans, a disciplined approach to cost management and capital allocation, and maintaining a strong balance sheet.

Energy

Do you have any concerns about Australia’s pathway to renewables? Should there be more flexibility in settings leading to 2035?  Are energy costs becoming an increasing factor around your longer-term planning? 

We support the government setting ambitious Nationally Determined Contributions aligned with the goals of the Paris Agreement. These must be matched with policies and support to address the risk of carbon leakage and ensure transition risks are managed, to minimise economic disruption and support just transition. Energy costs are an important consideration in our decarbonisation pathways, as a key input in our operations. In recent years, energy costs have become more material to both our short and longer-term planning.

Energy costs in Australia have been rising faster than in some other parts of the world, and in some of those places the desire for renewable energy can be more easily and cheaply met, especially where they have large hydroelectric generation. The uncertainty in energy supply, energy costs and carbon costs is making investment decisions more challenging, particularly given the typically long-term nature of these decisions in our industry.

Reform

What would you nominate as your top policy priority that can be used to lift Australia’s competitiveness or productivity?  Should the Albanese government be pushing for even bolder policies around reform? 

Efficient environmental approval processes and cost-effective energy are critical for Australian businesses, particularly resources projects. Timely environmental approvals de-risk investments and provide confidence for projects to proceed.

The US has made major inroads in this regard. Our Hermosa project in Arizona was the first mining project added to the FAST-41 permitting process – a federal initiative designed to streamline permitting for critical infrastructure, make timelines more predictable, and address delays that major projects can face. This has allowed us to optimise Hermosa’s mine development schedule while enabling stakeholders to track and better manage the permitting process.

Recent efforts by the Australian government to remove duplication and streamline approvals, while at the same time maintaining robust environmental standards, are welcome. There is still a lot to do to realise the benefits of this reform - we look forward to seeing state and federal governments working together as this is further developed.

Reliable, low-cost and low-emissions energy is a critical enabler for Australian businesses, and should be another area of focus.