Zanaga Iron Ore Co Ltd (AIM:ZIOC) has outlined an ambitious new development strategy aimed at unlocking billions of dollars in additional value from its flagship project in the Republic of Congo, according to a detailed research note from Panmure Liberum.
Following its break from Glencore and a fresh injection of funds, Zanaga is pressing ahead with a series of technical workstreams that analysts believe could boost the net present value (NPV) of the project by more than $4 billion.
The timing is notable. The Zanaga project, which holds a 6.9 billion-tonne resource and is already permitted for mining, has long been viewed as a sleeping giant in the iron ore world.
But with a heavyweight group of investors now backing the company - including former Anglo American and Xstrata bosses - the mood has shifted from cautious optimism to active reappraisal.
Premium product
At the heart of Zanaga’s strategy is a pivot to premium, low-carbon iron ore products - namely those suited for use in direct reduction iron (DRI) steelmaking, a cleaner alternative to traditional blast furnaces.
Panmure Liberum’s analysts wrote: “ZIOC [Zanaga] estimates that if the production of direct reduction iron spec concentrate from Zanaga ore can be confirmed, this has the potential to add up to US$ 6 billion to the NPV of the project.”
Initial lab tests are due in the second quarter of this year, with bulk and pilot scale testing potentially beginning by the end of 2025.
The research note outlines four key initiatives Zanaga is pursuing to enhance value. In addition to the DRI test work, the company is exploring the feasibility of a pellet plant.
That investment could benefit from the Republic of Congo’s ample gas and electricity supply. Analysts estimate this alone could add $1 billion to the project’s value.
Third pillar
The third pillar is a proposed redesign of the project’s logistics infrastructure. Rather than phasing production with two separate pipelines - one for 12 million tonnes per annum (mtpa) and another for 18mtpa - Zanaga is looking at building a single, larger 30mtpa pipeline from the outset.
According to Panmure, this could avoid the cost and delays of a second permitting process, reduce capital expenditure, and simplify long-term operations.
The final item on the list is tailings management. Zanaga’s current plan involves a traditional wet tailings storage facility, but the company is now leaning towards a dry-stack system, which could cut sustaining capital costs, shrink the environmental footprint, and offer a safer overall design.
Based on the updated feasibility study from April 2024, the Zanaga project already boasts an estimated after-tax NPV of between $1.9 billion and $3.8 billion, assuming a benchmark iron ore price of $115 per tonne. With the proposed improvements, Panmure suggests the economics could become even more compelling.
Green steel push
In a sector increasingly focused on decarbonisation, Zanaga’s shift towards higher-grade products and infrastructure efficiency seems tailor-made for the moment.
“The ‘green steel’ push into lower-carbon electric arc furnace production is driving a shift to higher grade iron ore products,” Panmure wrote, adding that recent advances in ore processing technology could help the company hit DRI specifications.
Still, much of this hinges on successful test results and the company’s ability to line up strategic partners. Talks are already underway to assemble a construction consortium, and with a reinforced leadership team—including several former mining majors—the company is aiming to get shovels in the ground.
It is early days, but the message from Panmure Liberum is clear: Zanaga now has the means, the market conditions, and the backing to turn a long-stalled mega-project into a serious contender in the global iron ore game.