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South32 Ltd (ASX:S32) has been awarded a US$166 million grant by the US Department of Energy (DOE) for the development of its Clark deposit. This deposit is part of the larger Hermosa project in Arizona and is set to become a key supplier of battery-grade manganese for the North American electric vehicle (EV) market.
The Clark deposit, currently the most advanced manganese project of its kind in the United States, is moving rapidly towards production. South32 plans to utilize this grant to develop a commercial-scale manganese production facility, with the DOE covering 30% of the facility's cost, up to the US$166 million award. The grant is part of a cost-sharing agreement that is still subject to final negotiations.
Development and Exploration Efforts
The focus of South32 is to build a large-scale operation capable of producing battery-grade manganese from locally sourced ore. This is aligned with the growing demand for critical minerals, particularly in the EV sector. The company is also in discussions with potential customers to qualify the product for battery manufacturing. Several non-binding Memorandums of Understanding (MoUs) have already been signed, laying the groundwork for future supply agreements.
In addition to advancing its commercial facility plans, South32 continues its underground exploration activities. The construction of a decline at the deposit is also in progress, which will enable bulk sampling through a demonstration plant, crucial for verifying the viability of the production process.
Strategic Importance of the Hermosa Project
South32’s Hermosa project holds significant long-term potential, with multiple deposits capable of producing critical minerals essential for a low-carbon future. While Clark is the current focus due to its advanced stage, the project also includes the Taylor zinc-lead-silver deposit, which is progressing as planned following final investment approval earlier in the year. The development of Taylor will unlock shared infrastructure that will further support the growth of the Clark manganese project.
Leadership Remarks
Graham Kerr, Chief Executive Officer of South32, highlighted the importance of the DOE's support in advancing the Hermosa project. The grant reflects recognition of the Clark deposit’s strategic role in supplying the North American market with battery-grade manganese, a material essential for the growing EV sector. Kerr emphasized the regional scale and potential of Hermosa to deliver critical commodities across multiple deposits for decades to come.
The Hermosa project stands as a cornerstone for South32’s long-term growth in the United States, positioning the company as a significant player in the supply of critical minerals required for a sustainable, low-carbon economy.
