By Alex MacDonald
LONDON--African iron ore explorer Zanaga Iron Ore Company Ltd.
(ZIOC.LN) said Tuesday that it plans to reduce the cost base of its
initial $2.2 billion Zanaga iron ore project in the Republic of
Congo in light of the lower iron ore price environment.
Iron ore prices have more than halved since the beginning of the
year, imperilling some of West Africa's existing iron ore
operations. Sierra Leone's London Mining PLC filed for bankruptcy
earlier this year while African Minerals Ltd. (AMI.LN) halted its
operations in the same country as it struggled to secure funding to
keep its mine operational.
Clifford Elphick, non-executive chairman of Zanaga Iron Ore,
said; "we are cognisant of the need to reduce the annual cash costs
of the Project. Fortunately, the most costly work programs required
for the assessment of the Zanaga Project have already concluded
alongside the completion of the Feasibility Study, and the
Project's key value-adding activities will now be conducted off a
much lower cost base."
He added that Zanaga remains confident of the robust economics
of the project even in the lower iron ore price environment.
Zanaga owns 50% minus one share in the project while Glencore
PLC (GLEN.LN) owns the remaining shares. Zanaga said the two
companies are continuing to engage with interested parties with
regard to an investment in the project but iron ore prices need to
stabilize before formal discussions are able to resume.
The company said it has secured a mining license for the project
and signed a mining Convention. The company will now focus on
establishing port and power agreements, validating the
environmental permit and seeking ratification of the mining
Convention by Congo Brazzaville's parliament.
Write to Alex MacDonald at alex.macdonald@wsj.com
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