Republic of Congo-focused miner Zanaga Iron Ore Company has announced that it has registered an impairment charge of $110 million on the carrying value of its Zanaga iron ore project, a joint venture with Glencore, located in the Republic of Congo, amid the current low, and volatile, iron ore price environment.
The company said that, in recognition of the current iron ore price environment, a cost reduction process has taken place at the Zanaga project which will allow the project to progress off a lower cost base.
According to Zanaga, the iron ore market is currently transitioning through a period of significant change in supply and demand dynamics. On the supply side, there have been substantial production expansions of the major iron ore miners with the result that an unprecedented level of new supply has been entering and continues to enter the market. This expansion of supply has to some extent been offset by some producers reducing output or suspending production altogether. With iron ore prices trading at around U$50-60/mt, the expectation is that many marginal producers will be forced to exit the market over the coming months.