The Hermosa project in the US state of Arizona
The board of South32 has given the green light for the development of the Taylor polymetallic deposit – the first development at its regional-scale Hermosa project in the US state of Arizona.
The development of Taylor, which is aligned with the group’s strategy to reshape its portfolio, will require direct and indirect capital expenditure (capex) of $2.16-billion, South32 CEO Graham Kerr reported on Thursday.
The Taylor deposit has the potential to be a top ten global zinc producer with steady stage production of 290 000 t/y of zinc-equivalent, operating for 28 years at an average operating unit cost of $86/t ore processed.
Production will comprise 132 000 t/y of zinc, 163 000 t/y of lead and 8.4-million ounces a year of silver.
“Once in production, Taylor is expected to add 8% to group volumes, relative to 2023 levels, increasing our supply of critical commodities and sustainably lifting margins due to its first quartile cost position,” said Kerr.
Taylor is expected to reach first production in the second half of 2027 and deliver nameplate production in 2030.
With global zinc demand growth expected to outpace production by about three-million tonnes to 2031, an industry challenge of similar magnitude to copper, South32 expects higher incentive zinc prices as Taylor ramps up to nameplate capacity.
Hermosa was the first mining project added to the US government’s FAST-41 process, which streamlines and expedites environmental and permitting processes.
Beyond Taylor, South32 is progressing its Clark development option, which it sees as the only advanced project in the US with a clear pathway to produce battery-grade manganese from locally sourced ore. The company is considering an underground mine at Clark that is integrated with Taylor.
South32 is progressing an integrated permitting strategy for Taylor and Clark to obtain the required state and federal permits.
The company's immediate focus is completing the construction of critical path infrastructure. It will complete the three remaining surface dewatering wells in the second half of the 2024 financial year and will start construction of the main access and ventilation shafts in the first quarter of the 2025 financial year.
Shaft construction is planned to be completed in the first half of 2027, ahead of process plant commissioning and first production in the second half of that year.
Growth capex for development activity at Taylor is expected to be $190-million in the next six months to the end of the 2024 financial year.