South32 to invest $2.16 billion in Hermosa zinc and manganese project

Press release

February 15, 2024

South32’s Hermosa project, currently the only advanced mining project in the United States capable of producing two federally designated critical minerals – zinc and manganese, received board approval of $2.16 billion in funding to develop the zinc-lead-silver deposit at its Southern Arizona project site.

South32’s announcement of the approval represents the largest private investment in Southern Arizona’s history, and the largest investment in the local Santa Cruz County economy to date by a factor of nearly nine times.

The first critical minerals mining project added to the United States’ FAST-41 permitting process, South32’s Hermosa project has the potential to be one of the world’s largest zinc producers. It aims to put Arizona in the driver’s seat of the clean energy race, supplying a critical mineral needed for the expansion of renewable energy and associated infrastructure.

“Today’s investment decision represents a major milestone for our business and aligns with our strategy to reshape our portfolio toward commodities critical to a low-carbon future,” said South32 Chief Executive Officer, Graham Kerr. “Development of the zinc deposit is the first phase of a regional scale opportunity at Hermosa, with ongoing activities to unlock additional value from the manganese deposit.”

“With the largest private investment in Southern Arizona’s history, South32’s Hermosa project will strengthen the domestic supply of critical minerals needed for clean energy technologies and national defense, reducing America’s reliance on foreign countries and transforming the local economy,” said Hermosa project President Pat Risner. “It’s a win for Arizona and the nation.”

With a surface footprint of just more than 600 acres and projected to use approximately 75 percent less water than other mines in the region, the operation has been designed to minimize its environmental impact. Additionally, the Hermosa project is embracing sustainability and advanced technology in its next-generation, underground mine design, utilizing automation and technology to drive efficiencies and lower our operational greenhouse gas emissions South32’s investment will fund construction of a host of key infrastructure projects needed to implement that design, including water management systems, power, site facilities, underground shaft sinking, initial underground development and other work required to begin operations around the zinc deposit.

Once completed, this infrastructure would support future potential development of other deposits at the site, including the battery-grade manganese deposit.

Used in renewable energy battery storage, wind turbines and electric vehicles, zinc is a key component in the process to galvanize steel needed for infrastructure projects like roads and bridges. Global zinc demand growth is expected to outpace production by approximately 3 Mt (3.3 million st) to 2031.

Only 6 percent of zinc is currently produced in the United States and that total is forecasted to drop by 2030. Citing its importance for national security and economic growth, the U.S. government designated zinc a critical mineral in 2021.

The feasibility study for Hermosa’s zinc-lead-silver deposit showed an expected initial operating life for the mine of approximately 28 years with potential for further exploration upside.

Development of the zinc-lead-silver deposit is aligned to South32’s purpose to improve people’s lives now and for generations to come by supporting jobs in a community where unemployment is double the state average and a quarter of residents live below the poverty line.

Once in operation, the Hermosa project across its separate zinc and manganese deposits would help transform and grow the local economy and could create up to 900 good-paying jobs and support investment in the community, if both deposits move forward as proposed. At peak operation, that includes:

• Developing a homegrown workforce with the next-generation skills needed to operate the Hermosa project. The Hermosa project has an 80 percent local workforce goal, with the vast majority of employees living and working in Santa Cruz County to ensure downstream economic benefits for the entire region.
• Supporting another 1,600 indirect and induced jobs across Santa Cruz County and 3,100 indirect and induced jobs statewide.
• Adding $1.4 billion to Arizona’s economy annually with $999 million going directly into Santa Cruz County’s economy. Hermosa-related economic activity is expected to nearly double Santa Cruz County’s property tax base, providing funding for public schools, services, and community college.



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