South32 announced its first-half results, which were hit by weak nickel prices, and announced it will move forward with a $2.16 billion zinc, lead and silver project in the United States.
The Australian mining company has announced final investment approval for the Taylor deposit at the Hermosa site in Arizona, with production expected to begin in 2027. The project is expected to have an initial operating period of approximately 28 years and an internal rate of return of approximately 12%.
The price of zinc, used as a coating to protect iron and steel from rust, has fallen by almost a quarter in the past year, but long-term demand remains strong as it can be used to make electric car batteries. It is expected that. Silver is also involved in the energy transition, as it is also an ingredient in solar panels.
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“This investment is a major milestone for our business and further repositions our portfolio towards products essential to a low-carbon future,” South32 CEO Graham Kerr said in a statement. It will happen,” he said. He said Taylor has the potential to become one of the world's largest and lowest-cost zinc producers.
South32 announced the investment after its after-tax profit plunged 92% in the six months to December due to falling metal prices. The company is not alone in suffering as nickel prices have fallen by around 40% over the past year, with BHP Group, the world's largest mining company, announcing a $2.5 billion impairment in the value of its Australian nickel assets.
Perth-based South32 said the average price of battery metal it received in the first half of the year fell 34% year-on-year. Colombia's Cerro Matoso nickel mine produced just 18.3 million tonnes in the first half of the year, and the company is targeting full-year production of 40 million tonnes.
“While some products faced headwinds in the second half of the year, we continued to focus on improving cost efficiencies,” Kerr said in the earnings call.
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