South32 has signed a binding agreement to divest its Colombian nickel laterite and ferronickel operation, Cerro Matoso, to a subsidiary of CoreX Holding, marking a strategic retreat from the challenging nickel market.

The transaction is expected to complete by late 2025 pending regulatory clearances and internal restructuring. South32 will transfer full economic and operational control of Cerro Matoso to the buyer for a nominal upfront consideration.

The deal includes contingent payments of up to US$100M, primarily linked to nickel prices and project permitting milestones.

Of the US$100M, up to US$80M is tied to future nickel production and market prices, while the remaining US$20M is contingent on achieving permitting progress over the next five years at the adjacent Queresas & Porvenir North project.

The US$80M contingent payment is based on a sliding scale price participation structure and requires nickel prices to be above US$15,000/t starting in 2027 (in line with current spot prices), but only achieving maximum payments if nickel prices increase above US$19,000/t.

The Cerro Matoso operation, one of the few integrated laterite mining and ferronickel smelting assets in Latin America, has been increasingly squeezed by declining nickel prices as a result of oversupply from Indonesia. By exiting the asset, South32 aims to rebalance its portfolio towards higher-margin commodities, including copper and zinc.

The Cerro Matoso operation has been in operation for over 42 years, having commenced production in 1982. It was transferred to South32 in 2015 as part of BHP’s demerger that led to the creation of South32. The operation currently has a production capacity of 52.8ktpy Ni-in-ferronickel. In 2024, it produced 40.8kt Ni-in-ferronickel.

Cerro Matoso is not alone in feeling the strain of the global nickel downturn. In 2024, nine nickel operations—mostly in Australia—were placed under care and maintenance, representing a combined capacity of 157.5ktpy Ni.

Also in Latin America, Americano Nickel’s Falcondo ferronickel operation in the Dominican Republic was suspended. More recently, in February 2025, Anglo American finalised a deal to sell its Brazilian nickel business to MMG Singapore Resources.

If nickel prices continue to decline and demand for nickel-bearing batteries remains weak, further suspensions or divestments of nickel operations are likely in the months ahead, especially in those high-cost regions, such as Europe.