By Rhiannon Hoyle

South32 said the development of the Taylor deposit at its Hermosa project in southern Arizona will take longer and cost more to build than it previously anticipated.

The Australia-based miner said Thursday that work on the project has been slowed by contractor underperformance and productivity challenges, while scope changes, materially higher inflation and U.S. tariffs have contributed to higher costs.

South32 now expects to spend about $3.30 billion building the zinc, lead and silver project near Tucson, compared to an initial estimate of about $2.16 billion. First production is anticipated in the second half of fiscal year 2028, a year later than it estimated before.

"While targeted measures have been implemented to improve shaft construction productivity, our latest assessment has determined that these measures will only partially mitigate the impact of contractor underperformance," Chief Executive Graham Kerr said.

The operation is now expected to reach full capacity in fiscal 2031, instead of fiscal 2030.

Kerr said the project is being challenged by industrywide increases in prices for steel, piping, concrete and other items.

South32 now expects average sustaining capital expenditure requirements around $50 million annually, up from an earlier estimate of about $36 million.

The miner also revised a forecast for average operating unit costs to $100 per metric ton of ore processed. That compared to $86 per ton before, reflecting general inflation and higher assumed energy costs, South32 said.

The company approved the development of the Taylor deposit in 2024, part of a strategy to reshape its portfolio around commodities it views as essential to low-carbon technologies. South32 estimated Taylor could become one of the world's largest, lowest-cost sources of zinc, a metal widely used for galvanizing iron and steel to protect against corrosion.

The Taylor deposit is part of South32's Hermosa project, which includes the Peake copper deposit and the Clark battery-grade manganese deposit.

In its update Thursday, South32 reported an increase in Taylor's ore reserve and mineral resource of 52% and 10%, respectively. It said the mineral resource at Peake had increased by 32%.

South32 now expects an initial operating life at Taylor of roughly 33 years, up from about 28 years before.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

April 29, 2026 19:31 ET (23:31 GMT)

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