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South32 secures US government grant for manganese project

Mining giant South32 (ASX:S32) has become another Australian company to receive a renewable industry grant from the US Government.

It joins the likes of Lynas Rare Earths in receiving funding from the government, either under its Inflation Reduction Act or from special funds managed by the Department of Defense or the Department of Energy.

On Monday, South32 announced that it had been selected for a grant from the US Department of Energy (DOE) to develop its Hermosa zinc and manganese project in Arizona, aimed at supplying the North American electric vehicle battery market.

South32 stated that the US DOE will provide a grant of up to $US166 million ($A244 million) to support the potential development of a commercial-scale manganese production facility. On a cost-sharing basis, the DOE will cover 30% of the facility’s cost.

South32 is already a global leader in manganese, with operations on Groote Eylandt in the Gulf of Carpentaria (currently being rebuilt after serious damage from a cyclone in March) and in South Africa.

The DOE grant was part of a total award of US$3 billion to 25 battery manufacturing sector projects across 14 American states, as the Biden administration continues its efforts to reduce US dependence on China in battery production and related technologies.

South32 mentioned that the project is subject to further study and that it is engaging potential customers to advance product qualifications for battery manufacturing. This includes potential agreements for future supply, following the signing of multiple non-binding memorandums of understanding.

“Hermosa’s Clark deposit is currently the only advanced project in the United States with a clear pathway to produce battery-grade manganese from locally sourced ore for the North American electric vehicle battery market,” South32 said in Monday’s release.

The Hermosa project, located in the Patagonia Mountains of southern Arizona, received final investment approval from the company earlier this year.

Even though South32 is a major producer of raw manganese, China refines much of the world’s battery-grade manganese, which is beginning to play a larger role in batteries for electric vehicles and other uses.

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