South32 Limited (ASX:S32) has revealed a substantial capital expenditure increase for its flagship Hermosa project in Arizona, lifting the expected growth capital for the Taylor deposit to about US$3.3 billion (approximately A$4.6 billion), up from US$2.16 billion at final investment approval.
The diversified miner attributed the increase to scope changes, including additional decline access and higher shaft construction costs, as well as materially higher inflation, industry‑wide rises in key input costs such as steel, piping, concrete and electrical components, and the impact of United States tariffs.
South32 cited slower‑than‑anticipated construction progress and shaft‑sinking productivity challenges, including contractor performance issues, as reasons for a more gradual ramp‑up, with the underground mine and 4.3 million tonne per annum processing plant now expected to reach nameplate capacity in FY31.
The mine’s initial operating life has been extended by about five years to 33 years, underpinned by a 52% increase in Ore Reserves to 99Mt and total payable production of 10.4Mt zinc equivalent.
The project is expected to deliver steady‑state annual EBITDA of around US$650 million based on the company’s long‑term price assumptions, supported by low‑cost production of zinc, silver and lead, which South32 positions as critical minerals for the energy transition.
At the adjacent Peake deposit, continued drilling has driven a 32% increase in the Mineral Resource to 33Mt at 0.87% copper, 0.28% zinc, 0.32% lead and 36g/t silver, reinforcing the potential for future copper production as part of an integrated Hermosa development.