Pentagon awards $20 million to jump-start the production of battery-grade manganese at South32's Hermosa project in Arizona.

The Department of Defense (DOD) has announced a $20 million grant awarded via the Defense Production Act Investment (DPAI) Program to South32, a globally diversified mining and metals company, for accelerating the upcoming Hermosa zinc-manganese project in Arizona.

Located in a historic mining district in the Patagonia Mountains, Hermosa was chosen for its promise to improve domestic supply chain resilience through sustainably produced, battery-grade manganese essential to both military and civilian applications.

Despite its apparent necessity, there has not been any manganese mining in the U.S. since the 1970s. Due to a lack of North American production of this critical metal used in lithium-ion batteries and strong steel, domestic manufacturers must depend on China, which produces more than 95% of the world's battery-grade manganese.

The Pentagon's investment in South32's Hermosa project aims to help break America's heavy dependence on China for this metal critical to the clean energy transition, high-tech manufacturing, and national defense.

"This first DPA award for manganese production is a big step towards reducing import dependency throughout the battery material supply chain," said Anthony Di Stasio, acting Deputy Assistant Secretary of Defense for Industrial Base Resilience.

The funds will bump up the Hermosa project's completion by two years, with South32 becoming the first sustainable, domestic producer of battery-grade manganese.

This is the latest grant from the DPAI's multi-area program out of 16 awards totaling $356 million since the start of this year. The money will be matched with an additional $43 million investment by South32 to fund activities to support access to the manganese deposit.

Matching timeline with urgency

South32's Hermosa project is an advanced mining project capable of producing zinc and manganese, two federally designated critical minerals.

"The Department of Defense funding will help support development of the Hermosa project's battery-grade manganese deposit, the only advanced project in the United States that has demonstrated through a pilot testing program that it can produce battery-grade manganese from a domestic ore source," said South32 CEO Graham Kerr.

As the first critical minerals mining project added to the United States' FAST-41 permitting process, the Hermosa Project aims to put southern Arizona on the map in U.S. clean energy, where the project has ambitions to set a new standard for sustainable mining, grow the local economy and improve lives in Santa Cruz County and the surrounding community, all while supporting the country's battery mineral supply chain.

"This project represents an opportunity for the United States to create domestic supply chains for the minerals and metals important to national security," said Hermosa President Pat Risner. "The Department of Defense funding will help develop this critical resource on a timeline that matches that urgency."

The funding will enable Hermosa to advance its plans to bring much-needed battery-grade manganese to market, starting with DOD-designated end-users and expanding to all of North America.

The Hermosa project aims to embrace sustainability and advanced technology in its underground mine design, utilizing automation to increase efficiency and lower its operational greenhouse gas emissions, employing a power supply from renewable energy and, eventually, an all-electric underground mining fleet. It has a surface footprint of 750 acres and has been designed to minimize its environmental impact, using a projected 75% less water than other mines in the region.

Hermosa hosts a zinc-lead-silver sulfide deposit, a battery-grade manganese deposit, and an extensive, highly prospective land package with the potential for further polymetallic and copper mineralization. All of these metals are essential to the clean energy transition.