Iron ore price slumps to three-week low on weak China demand, strong global supply
Property investment in China fell 10.1% in the first half of 2024 from a year earlier.
Shares in Zanaga Iron Ore Company (LON:ZIOC) dropped 15% in London on Thursday after the company detailed its change of focus to a small-scale early production operation at its flagship Republic of Congo project.
AIM-listed Zanaga, worth $50m after today’s pullback, announced a $1.5m agreement with Glencore (LON:GLEN) for a 2018 work program on the early production project at the property located close to the border with Gabon and 250km northwest of the capital Brazzaville.
According to Zanaga preliminary test work results indicate that a small scale project is capable of producing a premium product pellet feed concentrate with an iron ore grade of 66.6%.
Clifford Elphick, non-executive chairman of Zanaga said “the early production project is targeting a low capital cost operation utilising existing road and potentially rail transportation solutions as well as existing port infrastructure.”
The staged 30 million tonnes per annum Zanaga mine envisaged in the company’s 2014 feasibility study has been put on the backburner. The stage one 12mtpa open pit mine, which received environment permits in November, requires a capital outlay of as much as $2 billion, but operating costs could be as low as $23–24 a tonne according to company estimates.
The Steel Index benchmark price for Northern China 62% Fe ore fell 4% on Thursday to trade at $72.00 a tonne, giving up its gains for the year.
3 Comments
RICHARD CARTON
Saying it has stalled is an exaggeration. It will take longer that’s for sure but this will be a mine that will operate for many years.
patentbs
So, why the change of focus? I know they want to have income and this will do it short term. But are they afraid of the $2B investment or a lower price of ore?
Altaf
I think what they are doing is targeting the sweet spots to get 66.6% Fe ore. By the time they recover some money, the remaining mine will produce 50% Fe and they lose on selling prices. Then they will permanently put the project on backburner.