South32’s proposed Hermosa manganese and zinc mine in the US has moved closer to a major expansion after it became the first mining project added to an American government fast track process aimed at promoting speedier development of clean energy assets and other infrastructure.
South32 is in the final stages of a feasibility study to look at expanding Hermosa by developing what’s called the Taylor deposit and possibly the linked Clark prospect – areas of mineralisation to the existing mine in Southern Arizona.
The results of that study are due in the third quarter of this year.
Hermosa is the only advanced mine development project in the US for zinc and manganese (as of 2023) that can produce two of a list of federally-designated critical minerals for the renewable future, hence its Fast track designation.
“The inclusion of Hermosa as the first mining project added to the FAST-41 process is an important milestone that recognises the project’s potential to strengthen the domestic supply of critical minerals in the US,” South32 CEO Graham Kerr said in a statement.
South32 is undertaking additional engineering studies to align the mine development schedule for a federal permitting process and include current market cost estimates. That is part of the feasibility study.
The current phase of study work for Hermosa’s Clark deposit has confirmed its potential to supply battery-grade manganese to US electric vehicle supply chain, the company said in Monday’s statement.
Becoming a FAST-41 project will make the rigorous federal environmental review and permitting process for this project more transparent, predictable, and inclusive for all everyone concerned.
South Africa, Gabon and Australia account for more than two-thirds of global production of manganese, mainly used in the steel sector. Domestic output in the US — which once had mines in states including Virginia — ended in the 1970s.
Demand for manganese from the battery sector is set to grow sharply over the next seven years to 2030.
South32 is the world’s biggest producer of manganese with mines in Australia (they used to be owned by BHP) and South Africa.
The FAST-41 legislation sets up new procedures that standardise interagency consultation and coordination during the permitting process for mining projects.
Hermosa comprises the zinc-lead-silver Taylor sulphide deposit (Taylor Deposit), and the zinc-manganese-silver Clark oxide deposit (Clark Deposit).
The Taylor deposit is massive – South32 says it extends to a depth of approximately 1,200 meters over an approximate strike length of 2.5 kilometres and width of 1.9 kilometres.
The project is estimated to see a single stage ramp-up to nameplate production of up to 4.3 million tonnes per annum (Mtpa). Its annual average production from the Taylor deposit has been estimated to be around 111,000 tonnes of zinc, 138,000 tonnes of lead, and 7.3 million ounces of silver.
The deposit’s mineral resource estimate is 138 million tonnes averaging 3.82% zinc, 4.25% lead, and 81 grams to the tonne silver.
In 2022 South32 estimated a cost of $US1.7 billion to develop the Taylor deposit via an underground mine. A new cost estimate will come later this year in the finished feasibility study.
The initial resource life of the Taylor deposit is expected to be around 22 years.
According to South32, the Clark Deposit has the potential to produce battery-grade manganese for the growing North American electric vehicle supply chain, with zinc and silver co-products.
Besides the existing Taylor and Clark deposits, South32 says Hermosa also has highly prospective areas including the copper-lead-zinc-silver Peake exploration target, as well as the Flux prospect which is similar in make up to the Taylor deposit.
South32 held a 17% stake in Hermosa before agreeing to buy the remainder for $US1.3 billion in 2017 which turns out to have been a well-timed purchase even though some analysts quibbled at the time at the 50% premium paid to the existing owner, Arizona Mining.
The shares eased nearly half a per cent to $4.18.
