South32’s plans to advance its Arizona-based Hermosa project towards manganese production has received a boost after the company landed a $166 million (R2.9bn) funding grant from the US government.
With existing manganese operations in South Africa and Australia, South32 invested $372m at Hermosa – which is also earmarked to produce zinc and copper – during its 2024 full year.
This investment was sunk into installation of critical path infrastructure as well as progressing studies and permitting, including for the Clark manganese segment of Hermosa.
The US Department of Energy has now granted South32 up to $166m in funding to develop battery-grade manganese. The commodity is a key component in the renewable energy industry as it is a stabilising component in cathodes used in nickel-manganese-cobalt lithium ion batteries.
“Hermosa represents a regional scale project with the potential to produce commodities critical to a low-carbon future across multiple deposits for decades to come,” said South32 CEO Graham Kerr.
“We welcome this grant from the US Department of Energy, which recognises Clark’s potential to supply battery-grade manganese to the emerging North American market.”
South32 said it was expecting to invest a further $600m at Hermosa under its 2025 full year. The money will be invested into progressing the construction of Taylor, a zinc-lead-silver deposit as well as “exploration decline at Clark (manganese) to enable access to ore for further product test” work.
According to South32, the Clark manganese deposit at Hermosa “is currently the only advanced project in the US with a clear pathway to produce battery-grade manganese from locally sourced ore” for the North American electric vehicle battery market.
It said the $166m grant from the US Department of Energy’s Battery Materials Processing and Battery Manufacturing programme will further support the development of a commercial-scale manganese production facility.
“On a cost-share basis and subject to final negotiation, the DOE will provide 30% of the cost of the manganese production facility. While subject to further study, construction of the facility and the development of Clark represents a significant opportunity to establish a North American supply chain of battery-grade manganese in a phased approach in line with market development,” said the company.
South32 was now “engaging potential customers to advance product qualifications for battery manufacturing, including potential agreements for future supply following the signing” of various non-binding Memorandums of Understanding (MoU) agreements.
The construction of a decline at Clark to enable bulk sampling through a demonstration plant and further underground exploration was already under way. Decline access at the operation was now scheduled for the end of the company’s current operating year.
The US Department of Defence is supporting construction of the decline at Clark through a $20m grant from its Defence Production Act Investment Programme.
The infrastructure that South32 is developing for Taylor will also unlock value for future growth options, including Clark battery-grade manganese deposit.
“Following final investment approval earlier in the year, construction of our large-scale, long-life Taylor zinc-lead-silver project is progressing as planned. In addition to Taylor and Clark, we are continuing further exploration programmes at Peake to test the potential for a continuous copper system connecting Peake and Taylor,” said Kerr.
South32’s South Africa Manganese production is expected to be 2 million wet metric tons per year in 2025 and 2026, a decline from the 2.2m tons recorded this year, with the company expecting to continue to use higher-cost trucking to optimise sales volumes and margins.
In Australia, South32’s manganese production decreased by 34% to 2.3 million wet metric tons in its full year 2024 after it temporarily suspended operations in March due to the impacts of Tropical Cyclone Megan.
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