Miner South32 wipes $1.9b from value of US project
Mining giant South32 has slashed $US1.3 billion ($1.9 billion) from the value of its proposed Hermosa project in the United States, halving the zinc-lead-silver resource’svalue as the miner feels the heat from inflation and operational problems.
South32 said on Monday the high costs of steel, cement and electrical components has pushed up the cost of developing the Taylor deposit, which is part of the Hermosa project, located in the Patagonia Mountains in the US state of Arizona.
South32 chief executive Graham Kerr. Trevor Collens
That, coupled with delays triggered by COVID-19 restrictions and problems with water-logging at the site, triggered the $US1.3 billion write-down in the value of the Taylor deposit, the company said in a trading update.
“We are disappointed by the delays resulting from the impact of COVID, the significant dewatering requirements and current inflationary market conditions,” Mr Kerr said.
“The Hermosa project has the potential to sustainably produce commodities critical for a low-carbon future, from multiple development options, for decades to come.”
South32 told the market on Monday the total value of the Hermosa project is now $US1 billion, comprising the discounted $US482 million valuation for the Taylor deposit, while the zinc-manganese-silver Clark deposit and regional exploration land package are unchanged at $US519 million.
The miner will now split up the Hermosa project, which it bought in 2018, to develop the deposits individually.
South32’s downbeat outlook for its flagship North American project comes after an optimistic tone was set by two of Australia’s biggest miners – Rio Tinto and Northern Star – which last week signalled that that inflationary pressures were easing.
South32 is a
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