The developers of the Zanaga iron ore project in the Republic of Congo said updated plans now estimate the project will require an initial investment of $2.17 billion, reflecting higher development costs but improved long-term economics driven by rising demand for high-grade iron ore used in low-emission steelmaking.
Zanaga Iron Ore Company (ZIOC) said on Wednesday that the revised estimate marks an increase from a previous projection of $1.9 billion as the company updated the mine development strategy following months of metallurgical testing.
The updated studies focused on producing high-grade iron ore concentrate suitable for direct reduced iron (DRI) production, a cleaner steelmaking process increasingly favoured by global steel producers seeking to reduce carbon emissions.
According to the company, the additional testing resulted in changes to the processing plant design, pushing projected capital expenditure higher while improving the project’s expected profitability.
Under the revised development plan, the first phase of the project would produce 12 million tonnes of iron ore annually at an estimated cost of $2.17 billion.
A second expansion phase would eventually raise annual output to 30 million tonnes, bringing total projected investment over the mine’s estimated 30-year lifespan to approximately $4.05 billion.
The updated mine plan significantly improved the project’s financial outlook. ZIOC said the project’s net present value (NPV) rose 29.4% to $4.9 billion, while the internal rate of return (IRR) increased to 24.3% from 23% under earlier estimates.
The company described completion of the updated study as a major milestone, saying it strengthened confidence in the long-term viability of the project amid growing international demand for premium-grade iron ore products.
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Global steelmakers are increasingly seeking high-grade ore suitable for lower-carbon production methods as governments and industries intensify efforts to cut greenhouse gas emissions from heavy industry.
ZIOC said Zanaga could become an important supplier of iron ore for cleaner steel production if development proceeds as planned.
The company is targeting a final investment decision by the end of 2027.
Before then, ZIOC plans to undertake pre-construction activities including updated mineral reserve estimates, environmental and social impact assessments, and further negotiations with potential lenders and strategic investors.
The company is also advancing discussions with Red Arc Minerals regarding a potential joint venture agreement linked to the project.
Under an agreement announced in February, Red Arc Minerals could gradually acquire up to 87.5% of the Zanaga project in exchange for total investments of $150 million.
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The companies are continuing negotiations to finalise the structure of the deal, after which future development costs would be shared according to their respective ownership stakes.
The Zanaga project is moving forward amid increasing competition among a growing number of large-scale iron ore developments expected to add substantial new supply to global markets over the coming years.
Across Africa, several major projects are advancing simultaneously, including the Baniaka project in Gabon and the MIFOR project in the Democratic Republic of Congo.
Meanwhile, Guinea’s massive Simandou iron ore project is expected to begin production in the coming years after decades of delays and negotiations.
Analysts have warned that the arrival of substantial new supply from Simandou could place downward pressure on global iron ore prices.
Research firm S&P Global has cautioned that increased supply from Guinea may intensify competition in an already oversupplied market.
Against that backdrop, securing long-term investors and offtake agreements will remain critical for Zanaga’s success.
The project has faced years of delays and financing challenges. ZIOC has spent nearly a decade attempting to move Zanaga toward development, a process that culminated last year with the exit of former joint venture partner Glencore.
The lengthy timeline mirrors challenges faced by other major African mining developments. Guinea, for example, spent more than 20 years assembling the consortium needed to finance and develop Simandou, a project estimated to cost around $20 billion including rail and port infrastructu
