Zanaga's Multi-Billion-Dollar Cameroon Iron Ore Project Impaired to $80 Million
30 Junho 2016 - 6:06AM
Dow Jones News
By Alex MacDonald
LONDON--Zanaga Iron Ore Co. (ZIOC.LN) said Thursday the value of
the Cameroon iron ore project, which it jointly owns with Glencore
PLC (GLEN.LN) and in which the partners had planned to invest $4.7
billion, has been written down to $80 million as a result of a
continued collapse in iron ore prices.
The project, which had already suffered several impairments
before to $100 million in 2014, was written down by a further $20
million in 2015. This contributed to Zanaga's $17.6 million loss
last year, which was narrower than the $165 million suffered in
2014.
The U.K.-listed miner, which owns 50% minus one share in the
project while Glencore owns the remaining stake, said it continues
to work on reducing costs and preparing the project to secure
financing in anticipation of its view that iron ore supply and
demand will return to a more balanced level in the future.
The benchmark iron ore price has fallen from a peak of more than
$190 a ton in 2011 to $53.4 a ton on Wednesday, having hit a decade
low of $37 a ton in December. Prices for the steelmaking ingredient
have been hit by a sudden wave of new supply emanting from years of
investment in mine expansions that came to fruition just as a
decade-long commodities boom began to sputter. Iron ore demand has
also taken a hit due to slackening demand from China, the world's
largest iron ore consumer and steel producer.
Zanaga and Glencore had previously planned to spend $4.7 billion
to develop the project in two phases, according to a Zanaga study
published in May 2014. The partners planned to spend $2.2 billion
to build an operation capable of producing and transporting 12
million tons of iron ore a year. The partners then planned to
invest another $2.5 billion to increase iron ore production by 18
million tons a year to 30 million tons a year. The mine is expected
to operate for 30 years.
-Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
June 30, 2016 04:51 ET (08:51 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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