Zanaga to advance iron-ore project in Congo
Zanaga Iron Ore Company has announced a successful equity fundraising of $21.5 million, with the potential to increase to $23 million, through subscriptions from a group of experienced investors in the mining and infrastructure sectors.
This strategic move is expected to bring valuable expertise in large-scale iron-ore development, financing, and project execution, strengthening Zanaga’s ability to advance its flagship iron-ore project in Congo-Brazzaville.
A key component of this transaction involves the repurchase of Glencore’s 43% equity stake in Zanaga for $15 million. This buyback will result in the termination of Zanaga’s existing relationship and offtake agreements with Glencore, as well as the resignation of Glencore’s appointed director from the Zanaga board. This step will give Zanaga greater strategic flexibility and control over its operations and future development.
The fundraise includes participation from high-profile investors and strategic partners. Greymont Bay is investing $10.85 million for a 26.2% post-buyback stake, with the option to increase its position to 28.8% through an additional $1.5 million investment. Greymont Bay’s backers include notable industry figures such as Mark Cutifani, former CEO of Anglo American and current chair of Vale Base Metals; Tony Trahar, strategic adviser at Vision Blue Resources; Tony O’Neill, co-founder of Odin and a respected figure in engineering; and Sir Mick Davis, founder of Vision Blue.
Additionally, Gagan Gupta, the founder and CEO of Arise, is contributing $4 million for a 9.7% stake. Gupta’s involvement is strategically aligned with Arise’s development of a special economic zone (SEZ) and port infrastructure in Pointe-Noire, which is expected to support the export of iron ore from the Zanaga project.
Offtake agreement
A significant outcome of the fundraise is the new offtake agreement with Gulf Iron and Steel (GIS), which secures marketing rights over 20% of Zanaga’s iron-ore production. This agreement is expected to improve market access and provide stability for future sales. Importantly, Zanaga retains the flexibility to allocate the remaining 80% of its production to other strategic partners, enhancing its ability to negotiate favorable terms in future deals.
The funds raised will provide Zanaga with over 12 months of working capital, enabling the company to advance key project initiatives, including the formal establishment of a construction consortium. The Zanaga project, with a projected annual capacity of 30 million tonnes and an estimated net present value (NPV) of $5.7 billion, is positioned to become a significant player in the global iron-ore market.
The strengthening of Zanaga’s leadership team is another notable development. Zanaga’s CEO, Martin Knauth, and Aura Energy chair, Philip Mitchell, will join the company’s board, bringing valuable operational and strategic insights. The buyback from Glencore marks a pivotal shift for Zanaga, allowing it to consolidate control and pursue a more streamlined and independent strategic direction. The involvement of highly experienced investors and the new offtake agreement with GIS are expected to significantly reduce the project’s risk profile and enhance its commercial viability. With high-purity iron-ore production of up to 68.5% Fe, the Zanaga project is well-positioned to meet the growing demand for low-carbon steel production, offering a premium product in a market increasingly focused on sustainability and efficiency.
