Project Information

Project Title:

South32 Hermosa Critical Minerals Project

Sector:Mining

Project Location Address:

• Street address 1: 2210 E Fort Lowell Road
  City: Tucson
  State: Arizona
  Zip: 85719
• Country: United States
  Street address 1: 1860 E. River Road, Suite 200
  City: Tucson
  State: Arizona
  Zip: 85719
  County: Pima County

Coordinates:

• Latitude: 31.463702
  Longitude: -110.726006

Project Sponsor Contact Information:

• Company Name/Agency: South32 Hermosa
  Project Sponsor: South32 Hermosa, a wholly owned subsidiary of South32 Ltd
  Street Address: 2210 E Fort Lowell Rd
  City: Tucson
  State: Arizona
  Zip: 85719
  POC Name: Pat Risner
  POC Title: President, South32 Hermosa
  POC Work Phone: 520-405-8895
  POC Email Address: Pat.Risner@South32.net

Alternative Point Of Contact (Optional):

• Company Name/Agency: South32
  Project Sponsor: South32 Hermosa
  Street Address: 1100 15th Street, Suite 400
  City: Washington
  State: District of Columbia
  Zip: 20005
  POC Name: Judy Brown
  POC Title: Head of External Affairs
  POC Work Phone: 520-603-2799
  POC Email Address: Judy.Brown@South32.net

Project Purpose:

South32 Hermosa Inc. (South32) is in advanced study and planning stages for the Hermosa Critical Minerals Project (Hermosa) - a zinc and manganese mining and processing operation. Hermosa contains one of the largest undeveloped zinc resources in the world and has proven potential to produce a battery-grade manganese that meets current battery chemistry requirements as well as evolving battery chemistries intended to meet the United States decarbonization needs. High-manganese chemistry batteries also present an opportunity to displace cobalt in electric vehicle batteries – at a significantly lower cost and without attendant supply concerns. While zinc and manganese are both designated critical minerals by the U.S. Geological Survey, President Biden has identified manganese as one of five strategic and critical minerals and authorized the Department of Defense to use its authorities under the Defense Production Act to increase domestic mining and processing necessary for the large-capacity battery supply chain.

South32 plans to construct a small-footprint, underground mining operation applying low-carbon design and best-in-class engineering principles. The Project will use renewable energy power, an all-electric vehicle fleet, and an integrated remote operations center to reduce noise, improve workplace safety and health, and support delivery of South32’s operational greenhouse gas reduction targets and long-term goal of achieving net-zero greenhouse gas emissions by 2025.

Project Description:

The Hermosa Project is located at longitude 31.463702, latitude -110.726006 in an historic mining district in Santa Cruz County Arizona, near the US-Mexico border. Part of the Project area will involve subsurface and surface disturbance of lands within the Coronado National Forest.

Nearly 25 percent of Santa Cruz residents live below the poverty line, and the county's unemployment rate is consistently 50 percent above the state average. South32’s planned investment at Hermosa (estimated at $1.7 billion) would be the largest ever in Santa Cruz County bringing much economic benefits, including providing 625 direct mine worker jobs and supporting an estimated 1,021 workers in other industries for a total employment impact of approximately 1,646 workers in Santa Cruz County. South32 will work with local and State educational institutions to develop training programs ensuring workforce readiness with priority given to local hiring at the Hermosa Project. The Hermosa mine development would nearly double the county’s property tax base, which is currently ~$14 million. The Project’s contributions to the county’s GDP and economic output would equal about 20% of the current GDP and economic output for Santa Cruz County.

The proposed mining method at Hermosa is underground stoping complemented by backfilling of the stopes to mitigate the risk of surface subsidence and reduce the amount of tailing storage. Tailings will be managed using a dry-stack method that will significantly limit the surface disturbance and deliver the highest standards of safety and water conservation. South32 has already constructed an existing dry-stack facility in 2020 as part of a $30 million remediation of historic mine waste on its patented fee land. This remediation was completed in accordance with the Voluntary Remediation Program of the Arizona Department of Environmental Quality.

The company has also voluntarily conducted Class III cultural resource surveys across its fee lands and adjacent federal lands. These surveys were conducted, with tribal monitors, consistent with Arizona State Historic Preservation Office and Department of the Interior standards. There were no findings of prehistoric cultural resources within the expected disturbance footprint. Cultural resource surveys of potential access routes also did not find any prehistoric cultural resources. Although there are no tribes located in the immediate vicinity of the Project, South32 recognizes and respects historic tribal affiliations in the area and is proactively engaging with local tribes.

Biodiversity, including sensitive species, monitoring has been ongoing since 2012. The Hermosa Project is being designed to avoid and minimize adverse impacts to biodiversity and critical habitat in the area.

Technical and Financial Ability:

Statement regarding the technical and financial ability of the project sponsor to construct the proposed project.
South32 Hermosa Inc. is a wholly owned subsidiary of South32, Ltd, a globally diversified mining and metals company.

• Technical

South32 operates several mines and is the largest producer of manganese ore in the world. The company conducts and measures sustainability performance against international standards and initiatives, including the International Council of Mining and Metals’ Mining Principles, United Nations Sustainable Development Goals and United Nations Global Compact. South32 also supports global efforts to align sustainability reporting standards and participates in several international working groups.

South32’s suite of assets include open-cut and underground mines, refineries, smelters and associated infrastructure. South32 produces bauxite, alumina, aluminum, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese. We have more than 25 active exploration programs across the globe to discover our next generation of mines.

The Hermosa deposit and mine-design is like South32’s Cannington mine in Queensland Australia. The Cannington mine has been in operation for more than 20 years and is one of the world’s largest producers of silver, zinc, and lead. The operation consists of an underground hard rock mine and surface processing facility, a road-to-rail transfer facility and a concentrate handling and ship loading facility.

• Financial

South32 is a global mining and metals company listed on three exchanges and has a market capitalization of $15 billion as of March 2023. While South32 has applied for federal financial assistance under the Defense Production Act (DPA) Title III program administered by the Department of Defense (described below), South32 is not dependent on government funds to develop the Hermosa project.

Summary of Financing, Reviews and Authorizations:

• Federal Financing

South32 is seeking $20 million in funding under DPA Title III for expansion of domestic production capability and capacity (“Accelerated Access to Domestic Manganese Ore for Advanced Materials Assessment”). Any federal funds would be matched by a $43 million investment from South32 (including in-kind expenditures) to construct an exploration decline concurrent to ongoing feasibility study work related to the mine and processing facilities. The Hermosa Project can happen without federal financial assistance. DPA funding would facilitate early access to the ore body and shorten the time for production of manganese ores.

• Environmental Reviews and Authorizations

Operations at Hermosa would occur on and under lands of the Coronado National Forest. Upon South32’s submission of a Mine Plan of Operations to the US Forest Service (USFS) for approval under the USFS locatable minerals regulations, the USFS will become the lead federal agency for purposes of compliance with the National Environmental Policy Act (NEPA) and coordinating with other federal and non-federal parties on securing authorizations required by other federal and state environmental laws. These approvals will include: consultation with the U.S. Fish & Wildlife Service as required by the Endangered Species Act (ESA); securing a Section 404 permit under the Clean Water Act from the U.S. Army Corps of Engineers; and consultation with the State Historic Preservation Officer and appropriate Tribal Historic Preservation Officer(s) under the National Historic Preservation Act (NHPA).

Project Assessment:

1. South32 Hermosa’s zinc-manganese integrated mine development is surrounded by the Coronado National Forest and will be required to submit a Mine Plan of Operations to the USFS. USFS review and approval process will trigger NEPA and numerous other federal and state authorizations will be required.

2. South32 estimates that the total cost to construct the Hermosa Project will be approximately $1.7 billion – well in excess of the statutory minimum project cost of $200 million.

3. The Hermosa Project does not qualify for abbreviated authorization or environmental review processes under any applicable law.

The South32 Hermosa Project falls within (1) the mining sector (limited to “extracting ore, minerals or raw materials from the ground”) and (2) manufacturing sector as operations will include beneficiation and mineral processing of the zinc and manganese ores.

Form Submitter Contact Information:

Name: Judy Brown
Title: Head of External Affairs
Work Phone: 520-603-2799
Email: Judy.Brown@South32.net

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The lead agency, the USDA Forest Service, has posted the FIN.

Application and Supporting Documents: 

Information on the status of mitigation measures: NA

Description of the status of any litigation: N/A

Information about project-related public meetings, public hearings, and public comment periods: N/A

Description of any Federal agency action taken or decision made that materially affects the status of the project: N/A