Australian mining company Terramin has raised the estimated cost of developing its flagship zinc project in Algeria to US$415 million, as the North African country pushes to diversify its economy beyond oil and gas.
The updated cost for the Tala Hamza zinc mine, released in a revised feasibility study on Monday, marks a sharp increase from the US$341 million projected in an earlier 2018 study.
But the higher capital requirement comes with stronger output expectations, as Terramin said the project is now expected to deliver significantly more zinc and lead than previously forecast.
According to the company, the mine is expected to produce around 178,000 tonnes of zinc concentrate annually, compared with 129,300 tonnes projected in the earlier plan. It is also expected to yield about 33,000 tonnes of lead each year as a by-product.
The project, located in northern Algeria, is designed to operate for 20 years and is expected to recover its initial investment by the fourth year of production, according to the revised study.
Terramin said the project carries an after-tax net present value of $640 million and an internal rate of return of 24 percent, metrics often used by investors to gauge the economic attractiveness of mining ventures.
The revised figures come as Algeria seeks to expand investment in mining and other non-hydrocarbon sectors, in a bid to reduce its long-standing dependence on oil and gas revenues, which still dominate export earnings and public finances.
Although Algeria is one of Africa’s biggest energy producers, mining contributes only about one percent of gross domestic product, underscoring the limited role the sector has so far played in the broader economy.
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The Tala Hamza project has long been seen as one of the country’s most promising base metals developments and a test case for Algeria’s ambitions to unlock more value from its mineral resources.
Terramin said preparatory work had recently begun after several months of delay, signaling that the project may finally be moving closer to construction after years of slow progress.
The next major hurdle is financing.
The Australian firm said it is in discussions with a large Algerian state-owned bank to secure debt funding for the development, while also benefiting from backing by the Algerian Investment Promotion Agency, known as AAPI.
That state support reflects the strategic importance Algiers appears to attach to the mine, which could become one of the country’s largest non-energy industrial projects once operational.
Ownership of the project also reflects Algeria’s resource nationalism approach.
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The Algerian state holds a 51 percent stake in the venture, while Terramin owns the remaining 49 percent, in line with a long-standing framework that requires majority local ownership in strategic projects.
For Algeria, the project is part of a broader effort to attract foreign capital and technical expertise while ensuring the state retains control over key natural resources.
For Terramin, it represents a potentially transformative asset at a time when global demand for industrial metals is being reshaped by the energy transition, urbanisation and infrastructure investment.
Zinc is widely used to galvanise steel and protect it from corrosion, making it an essential metal in construction, transport and manufacturing. Lead, meanwhile, remains important in batteries and industrial applications.
Still, the project faces a less favourable market backdrop than when it was first conceived.
Global zinc prices have weakened in recent months amid concerns over softer industrial demand and sluggish economic activity in some major consuming markets.
According to market data cited in the updated study, zinc futures are currently trading around $3,150 per tonne, close to their lowest levels since December.
That has raised questions over the timing of new mine developments globally, even as producers and governments seek to position themselves for longer-term demand growth.
Despite those headwinds, Terramin appears to be betting that stronger projected output and state support will help offset the higher upfront cost and improve the project’s long-term appeal.
If financing is secured and construction proceeds as planned, Tala Hamza could mark a significant milestone for Algeria’s mining sector and offer a rare example of a large-scale industrial diversification project moving from promise to production.
