Australia-based South32 Limited announced final investment approval for the Taylor deposit, the first development at its Hermosa zinc project in Arizona. Hermosa was the first mining project added to the US Government’s FAST-41 process and is currently the only advanced project in the United States which could supply two federally designated critical minerals (zinc and manganese).

FAST-41 was signed into law by President Obama in December 2015 to create a more efficient and transparent process for complex, critical infrastructure projects in the United States. A FAST-41 covered project must first be in one of 18 sectors and it also must also meet one of the four criteria areas: Objective, Discretionary, Tribal, or Carbon Capture. South32’s Hermosa project meets two criteria areas: the Objective Criteria and Discretionary Criteria.

Hermosa May 2023

Taylor is designed to be the first phase of a regional scale opportunity at Hermosa, with ongoing activities to unlock additional value from the Clark battery-grade manganese deposit and exploration opportunities in a highly prospective land package.

The South32 Board has approved the development of Taylor, for direct and indirect capital expenditure of US$2,160 million. Taylor is expected to reach first production in H2 FY27 and deliver nameplate production in FY30.

With global zinc demand growth expected to outpace production by ~3Mt to 2031, we expect higher incentive prices for zinc as Taylor ramps up to nameplate capacity. As the first phase of a regional scale opportunity at Hermosa, Taylor’s infrastructure including dewatering, power, roads and site facilities, will unlock value for future growth options. These include Clark, our battery-grade manganese deposit, and potential discoveries in our highly prospective regional land package, which has already returned high-grade copper and zinc results from Peake and Flux.

—Graham Kerr, South32 Chief Executive Officer

Zinc demand is forecast to grow at 2% per annum (vs. 1% in the prior decade) to 2031, supported by increasing intensity of use and the rapid deployment of wind and solar infrastructure. Zinc is needed to make infrastructure weather resilient, providing a protective coating to weather exposed steel structures such as wind turbines.

Conversely, zinc mine supply is constrained. Despite higher prices, China, the world’s largest producer, has not been able to lift supply due to rising environmental regulations and declining grades. Globally, processed zinc grades have nearly halved since the early 2000s, and Taylor has been the only major discovery in the past decade.

With global zinc demand growth expected to outpace production by ~3Mt to 2031, an industry challenge of similar magnitude to copper, South32 expects higher incentive zinc prices as Taylor ramps up to nameplate capacity.

Background. Hermosa is a polymetallic development located in Santa Cruz County, Arizona, 100% owned by South32. It comprises the zinc-lead-silver Taylor sulfide deposit (Taylor deposit), the battery-grade manganese Clark deposit (Clark deposit) and an extensive, highly prospective land package with the potential for further polymetallic and copper mineralization.

The Taylor deposit is a carbonate replacement style zinc-lead-silver massive sulfide deposit. It is hosted in Permian carbonates of the Pennsylvanian Naco Group of south-eastern Arizona. The Taylor deposit comprises the upper Taylor sulfide (Taylor Mains) and lower Taylor deeps (Taylor Deeps) domains that have a general northerly dip of 30° and are separated by a low angle thrust fault. The Taylor deposit has an approximate strike length of 2,500m and a width of 1,900m. Mineralization extends 1,200m from near-surface and is open in several directions, offering the potential for further growth.

The mine design for Taylor is a dual shaft underground mine, employing longhole open stoping with paste backfill. The mine development schedule has been aligned to a federal permitting process under FAST-41, which enables earlier access to multiple mining areas and an efficient ramp up to nameplate processing capacity of 4.3Mtpa. Shaft sinking is on-track to commence in Q1 FY25, with first production targeted in H2 FY27 and nameplate production rates in FY30.

Ore will be mined in an optimized sequence concurrently across four independent mining areas, crushed underground and hoisted to the surface for processing. The mine design contemplates two vertical shafts, for access, ore hoisting, ventilation and cooling. The primary haulage and material handling level is expected to be located at a depth of approximately 800m.

The FS mine design incorporates battery electric load-haul-dump vehicles, drilling and ancillary fleets, resulting in improved efficiency, reduced diesel consumption and GHG emissions compared to the PFS. South32 has embedded flexibility in the mine design to utilize an all-electric underground fleet to reduce operational GHG emissions as these options become commercially available.