ZANAGA Iron Ore Company is investigating building a plant for the production of low emission iron ore, possibly in the Middle East or Republic of Congo (RoC).
The initiative is part of the AIM-listed firm’s plans to breathe fresh life back into a proposed $2bn Zanaga Iron Ore mine in the RoC.
Only certain qualities of iron ore are suitable for pelletisation, a value add that enables production of steel though low emission electric arc furnaces. Iron ore for pelletisation fetches a significant market premium.
ZIOC said on Wednesday it had received interest from Saudi Arabia and the United Arab Emirates (UAE) regarding the pelletisation plant and was exploring these opportunities.
However, gas resources in RoC supplied by local power provider Centrale Électrique du Congo (CEC) could also fuel a locally built plant to be situated in the Pointe-Indienne Special Economic Zone. A memorandum of understanding was recently signed with CEC to develop power solutions, ZIOC said.
“Priority will be given to evaluation of sites in the Pointe-Indienne SEZ in Republic of Congo, or sites identified in the Middle East,” said ZIOC of a study it had completed.
Including other optimisations, including building a 30 million ton a year pipeline accommodating the project’s two phase mining plan and dry tailings facility, would take the project’s total NPV to $9.5bn in total, it said.
The Zanaga Iron Ore project has been under consideration for years. A feasibility study was completed in 2014 which was updated by ZIOC’s current team led by head of corporate development Andrew Trahar, and ZIOC’s CEO Martin Knauth.
A consortium of investors including one grouping consisting of former Anglo American CEOs Mark Cutifani and Tony Trahar, along with former Xstrata boss Mick Davis, have subscribed for a $21.5m share placement in ZIOC.
Proceeds from the placement, which could be increased to $23m by March 26, will be used to buy and cancel shares held by Glencore, equal to 43% of ZIOC.
Investors also include New York-based private capital firm Heeney Capital Resource Partners, Phil Mitchell, former head of business development at Rio Tinto and Gagan Gupta, CEO of Arise which is developing the SEZ at RoC’s Pointe Noire.
“We look forward to commencing this work upon settlement of the second tranche of the fund raise and, through these investigations, we aim to quantify the benefits to the Project and our investment, community, state and industry stakeholders,” said Knauth.
The placement of ZIOC shares to private investors is conditional on 20% of Zanaga project’s marketing rights being taken by Gulf Iron and Steel (GIS), described by ZIOC earlier this month as “a consortium of strategic industry entities” interested in developing integrated steelmaking facilities in Asia and the Americas.
Cutifani was instrumental in having Manara Minerals, the state-owned Saudi Arabian metals and minerals investor buy a 10% stake in Vale’s newly created Vale Base Metals of which he is also chairman.
