Southern Arizona mine gets $166 million from feds to make battery ingredient
The U.S. Department of Energy will provide as much as $166 million to the Hermosa mining project to spur critical mineral production in the Patagonia Mountains, 75 miles southeast of Tucson.
The grant announced Friday is designed to boost the domestic supply of manganese, a key ingredient used in electric vehicle batteries.
Australia-based global mining company South32 is exploring what it has called a major, high-quality deposit of the mineral in the mountains of Santa Cruz County, where it has already started construction on an almost $2.2 billion underground mine that is also expected to produce zinc, lead and silver.
Zinc is another federally designated critical mineral used to galvanize steel needed for such infrastructure projects as bridges, wind turbines and transmission lines.
South32 officials said the Battery Materials Development Grant will support the development of a state-of-the-art, commercial-scale production facility to turn out battery-grade manganese from ore mined at the Hermosa site.
The Department of Energy is expected to cover about 30% of the cost of the production facility up to $166 million, though the award is subject to final negotiation.
"This project has the potential to provide a reliable, lower-carbon and cost-effective domestic option for manganese products within the electric vehicle battery supply chain that currently relies entirely on foreign imports," said Pat Risner, president of South32 Hermosa.
According to the company, more than 95% of battery-grade manganese currently comes from China. No manganese ore has been mined in the United States since the 1970s.
Concerns raised
The Hermosa Mine is one of 25 battery-related projects in 14 states picked by the Energy Department to share more than $3 billion as part of what the Biden-Harris administration calls its "Investing in America" agenda.
Administration officials said the selected projects are projected to eventually support more than 8,000 temporary construction jobs and 4,000 permanent operating jobs.
In a written statement on Friday, U.S. Secretary of Energy Jennifer Granholm touted the grants and the companies set to receive them. "By positioning the U.S. at the forefront of advanced battery manufacturing, we are creating high-paying jobs and strengthening our global economic leadership and domestic energy security, all while supporting the clean energy transition," Granholm said.
This is the second major federal grant the Hermosa mine has received this year. In May, the U.S. Department of Defense awarded $20 million to the project , also to boost the domestic manganese supply.
Construction has begun at the Hermosa site on an access shaft to reach the deposit, which starts near the surface of a hillside overlooking the historic mining district. The shaft is slated for completion by the end of next year.
South32 officials said they are still studying when — or whether — to ramp up manganese mining and production. As part of that process, they are talking to battery companies, automakers and other potential customers to determine demand for their product.
If South32 decides to move ahead, the company has said it wants to build its production facility somewhere in Southern Arizona, preferably in Santa Cruz County.
But some residents and environmental groups are already raising health and safety concerns over the trucking and processing of manganese, which in high levels is toxic to humans .
On Sept. 12, a coalition of conservation groups filed a legal petition challenging the air quality permit that was issued to the Hermosa project by the Arizona Department of Environmental Quality in August.
The groups want the federal Environmental Protection Agency to overturn the permit, which they say violates clean air laws and regulations.
The petition was filed by the Center for Biological Diversity, Patagonia Area Resource Alliance, Arizona Mining Reform Coalition, Calabasas Alliance, Friends of the Santa Cruz River and the Grand Canyon Chapter of the Sierra Club.
"South32's Hermosa mine should never have been issued an air pollution permit," said Carolyn Shafer with the Patagonia Area Resource Alliance. "The EPA is our last chance for reversing this disastrous decision and protecting the health and wellbeing of all creatures that live in and near the Patagonias."
Added Jeremy Nichols, senior advocate for the Tucson-based Center for Biological Diversity: "This is about standing up to the Arizona Department of Environmental Quality's blatant attempt to give the mining industry a free pass to pollute."
Under review
For their part, South32 officials are promising to develop a "different kind of mine" powered by renewable energy and governed by strict environmental safeguards. They insist the operation will be developed using " state-of-the-art technology and industry best practices" to protect the safety of employees and the surrounding community. That includes conducting a "baseline assessment of existing community exposure" to manganese and other pollutants, company officials said.
The project is in the midst of an environmental review by the U.S. Forest Service .
The review is currently slated for completion in mid-2026 and will focus on South32's plans to mine beneath Coronado National Forest and build support facilities on public land surrounding the company's private tract. The proposed facilities on forest land include a second tailings pile and at least two infiltration basins for returning treated groundwater back into the local aquifer.
The Forest Service is also reviewing South32's request to build a new 138-kilovolt transmission line to deliver power to the mine and an 8-mile main access road through nearby Flux Canyon that would link the site to Arizona Route 82 near the turn-off for Patagonia Lake.
The $2.16 billion the company plans to spend on Hermosa has been called the single largest private investment in Southern Arizona history.
South32 is promising to create up to 900 jobs and nearly double the tax base in Santa Cruz County, where company officials said the unemployment rate is twice the state average and roughly 25% of residents live below the poverty line.
Hermosa president Risner said the funding from the Energy Department should certainly help with all that.
"This grant highlights how important Hermosa and Santa Cruz County are to boosting America's energy security in a way that creates economic opportunities across southern Arizona," he said.
Contact reporter Henry Brean at . On Twitter:
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