South32 Ltd. has flagged an increase it capital expenditure for its Taylor zinc-lead-silver project in Arizona, US due to higher costs driven by tariffs.
The company revised the total growth capital expenditure for the Taylor deposit, the first phase of its regional-scale Hermosa project, to approximately US$3.3 billion (AU$5.1 billion). This represents an increase of roughly US$1.1 billion compared to the estimates provided at the final investment approval in early 2024.
South32 CEO Graham Kerr attributed the higher capital requirements to a combination of scope changes, contractor challenges, and a difficult global inflationary environment.
“This includes scope changes with the addition of decline access, revised shaft construction costs, materially higher inflation, industry-wide increases in key input costs such as steel, piping, concrete and electrical, and United States tariffs,” Kerr said.
A driver of the revised budget is the decision to invest US$100 million in decline infrastructure via the co-located Clark deposit.
While adding to the upfront cost, this move is expected to unlock significant value by allowing the company to access the Taylor orebody ahead of full shaft commissioning, effectively increasing ore handling capacity by 25 per cent.
Despite the higher price tag, the project’s fundamentals remain robust. Successful infill drilling has seen the Taylor Ore Reserve jump 52 per cent to 99 million tonnes, extending the mine’s initial life by five years to approximately 33 years.
“Taylor continues to demonstrate its quality, with expected steady-state EBITDA of approximately US$650 million per annum and a net present value of US$3.1 billion,” Kerr added.
The company noted that first production is now expected in the second half of the 2028 financial year, with a ramp-up to nameplate capacity by 2031.
The revised timeline reflects slower-than-expected shaft construction due to contractor performance, though South32 has implemented targeted measures to improve productivity on-site.
