By Alex MacDonald
LONDON--Commodities titan Glencore Xstrata PLC (GLEN.LN) and
joint venture partner Zanaga Iron Ore Company (ZIOC.LN) said Friday
they have revised their joint venture iron ore project in the
Republic of Congo Brazzaville into a phased development project,
thereby reducing the initial capital outlay needed for the project
by about two-thirds.
The Zanaga iron ore project will now be developed in two phases.
In the first phase of the project, the joint venture partners will
spend around $2.5 billion to $3 billion to develop a mine that is
capable of producing up to 14 million metric tons of iron ore
product annually, including 1 to 2 million tons of ore that can be
taken directly out of the ground and shipped to customers.
12 million tons of the ore will be transported via a 370
kilometer pipeline to a port for shipment while the remaining 1 to
2 million tons of ore will be shipped by truck. The joint venture
will then consider a second phase expansion to 30 million tons of
iron ore annually.
The phased development marks a significant departure from the
initial plan to spend $7.4 billion to build a 30 million ton a year
iron ore project with a pipeline and port to match. It creates a
"materially more palatable project for potential investors and debt
providers given its lower and more efficient capex number," said
Liberum Capital analysts in a note.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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