Perth, May 4, 2026, 03:02 AWST
- South32 now sees capital spending for the Taylor project coming in at around US$3.3 billion—about US$1.1 billion higher than the figure approved at final investment.
- The company now targets first production for the back half of fiscal 2028, while reaching full nameplate capacity is pushed out to fiscal 2031.
- Some analysts aren’t convinced by the new numbers, though South32 insists the larger ore base pushes the mine’s expected life to roughly 33 years. Mining
South32 Ltd opens the week under fresh pressure from investors following the Arizona Hermosa project overhaul, as analysts flag that a bigger ore body likely won’t make up for the US$1.1 billion jump in costs and a lengthier ramp-up for the Taylor zinc-lead-silver mine. Mining
The issue is in focus now because Hermosa stands out as one of South32’s key new-build growth projects in the U.S.—miners are hunting for zinc, copper, and manganese from lower-risk regions. The project falls squarely within the U.S. critical minerals initiative. Back in March, Reuters noted that Hermosa holds deposits of silver, zinc, and manganese, and it’s included in the FAST-41 federal permitting program, designed to expedite reviews for projects deemed nationally significant. Reuters
South32 now sees Taylor’s growth capex climbing to around US$3.3 billion, up from the US$2.16 billion it flagged at the February 2024 FID. The company cited extra decline access, revised shaft construction estimates, inflation, pricier steel, piping, concrete, electrical gear, and U.S. tariffs as drivers of the increase.
Chief Executive Graham Kerr said Taylor’s long-term prospects for zinc, silver and lead output remain intact, stretching across decades. But on shaft construction, Kerr acknowledged that even with steps to boost productivity, those actions would “only partially mitigate” what he described as contractor underperformance.
South32’s resource story just got a boost. The company reported a 52% jump in Taylor’s ore reserve, now at 99 million tonnes, with the mineral resource up 10% to 169 million tonnes. That stretches the mine’s projected operating life from 28 years to around 33 years.
The schedule slipped regardless. Now, first ore from the Clark decline should arrive by mid-FY28, with initial production pegged for the back half of FY28. Full ramp to capacity shifts out to FY31—pushed back by a year from prior guidance.
South32 shares have taken a hit. According to Intelligent Investor data, the stock was recently quoted at A$4.12—a decline of 4.63% over the past week. On April 30, right after the update landed, the shares closed at A$4.03. Intelligent Investor
RBC Capital Markets’ Kaan Peker called out improved scale and resource confidence, but said those positives were “overshadowed” by the jump in capex, the delay, and higher costs, according to Mining.com. Over at BMO, Alexander Pearce said the update puts Hermosa “essentially break-even” under the bank’s commodity price deck. Pearce trimmed his price target by 7% but stuck with a market perform. Mining
South32 hasn’t shifted focus from returns. In its update, the miner pegged steady-state EBITDA—earnings before interest, taxes, depreciation, and amortisation—around US$650 million annually, with post-tax net present value standing at roughly US$3.1 billion. Using spot prices, those numbers climb: EBITDA comes in closer to US$800 million, with net present value up near US$4.5 billion.
Slow-moving projects look especially vulnerable in this market. While BHP—South32’s old parent company—presses ahead with copper exploration in Zambia, chasing metals for grid upgrades and electrification, South32’s angle is different: Hermosa is already under construction in the U.S. That brings the finish line into view, but also means the spending is hitting now. Reuters
The risks are clear enough. Any further delays in shaft progress, another tariff hike, or stubbornly high freight and input costs could strain the budget once more. South32 has separately flagged that Middle East tensions are already pushing up global freight charges and raw material costs across its portfolio. Reuters
Permitting is still a wild card, but the latest developments are tilting toward South32. In March, Reuters said the U.S. Forest Service rolled out a draft decision plus a final environmental impact statement—it would clear the way for Hermosa to push onto federal land from its current private holdings. The clock is now ticking on objection and review periods before a final call gets made. Reuters
Now investors face a tougher equation: does a 33-year mine life and the promise of future copper upside at Peake justify the longer payback and bigger upfront bill? As for South32, Taylor remains a strategic asset, but underwriting it just got trickier.
