LONDON, Sept 13 (Reuters) - Glencore Xstrata andjunior partner Zanaga Iron Ore Company (ZIOC) have cutback planned spending on the early stages of the co-owned Zanagaproject and announced on Friday a joint search for funding.
News of a revised project design - which will mean lowerexpenditure as the mine will now be developed in stages -cheered investors in ZIOC, sending shares in the junior up 22percent on improved prospects for the group's eponymous flagshipinvestment. ZIOC owns 50 percent minus one share of Zanaga.
A project in the Republic of Congo which Glencore majorityowns after its takeover of miner Xstrata, Zanaga is one ofdozens of promising West African iron ore deposits held back bya dire lack of infrastructure, from rail and road to ports.
ZIOC said in a presentation to investors that the initialcapital cost was reduced to $2.5 to $3 billion from a previous$7.4 billion. It was not clear on Friday how much funding couldcome from a new third party investor.
Glencore has made no secret of its dislike of greenfieldprojects - mines built from scratch - where cost overruns anddelays have been frequent in recent years, and cost miningcompanies billions. It has preferred to highlight the prospectsof a rival project in its portfolio in Mauritania, where thereis an existing railway and a port with spare capacity.
Glencore said this week it had scrapped 44 of 88 projects inXstrata's portfolio, most of them greenfield projects.
Friday's revised project design for Zanaga - which could useexisting infrastructure - could make the project easier tofinance as Glencore and Zanaga Iron Ore Company explore options.
The feasibility study will be completed in the secondquarter of next year. An investment decision from Glencore wouldcome only after that, it said on Friday.
Zanaga shares were over 32 pence, valuing the explorationcompany at almost 90 million pounds ($142 million).
Glencore (GLEN)
Zanaga Iron (ZIOC)