The deal was reached between the Australian firm and Mineral Products Procurement and Production Co., an affiliate of Iran's state-owned Mines and Mineral Industries Development and Renovation Organization, according to the IRNA report.
"The initial agreement has been finalized between the (two) parties, and the official contract will be signed within the next two months," said Ardeshir Saad-Mohammadi, the managing director of the Iranian firm.
International firms particularly from the West have become increasingly wary of investing in Iran because of a row over Tehran's nuclear programme that has led to three rounds of limited U.N. sanctions since 2006 and several U.S. penalties.
The West accuses Iran of seeking to build nuclear weapons, a charge Tehran denies.
The zinc plant, projected to have annual output of 300,000 tonnes, will be around Mehdiabad in central Iran, IRNA said.
Union Resources said in 2005 it planned to mine millions of tonnes of zinc and lead in central Iran. It said in 2007 it was making progress in its talks and described the Mehdiabad zinc- silver-lead desposit at that time as the largest undeveloped zinc resource in the world.
Zinc is prized by steel mills as an additive for its rust resistant qualities.
The construction of the plant will begin two months after finalisation of the contract and is due to be completed within three years," Saad-Mohammadi said. "Union Resources company will implement this project in three 100,000-tonne phases."
He said Australia had been involved in other mineral projects in Iran but said the zinc plant would be its largest.
The report did not give details about financing or about any shareholding arrangements. (Writing by Hashem Kalantari, editing by Edmund Blair)
