The France international has a release clause of €50m in his Porto contract, and the Portuguese club have made it clear they're not willing to sell him for anything less.
As a result, Chelsea have dropped their interest, and are set to turn instead to 18-year-old centre-back Zouma.
The France youth international played an important role in a St Etienne team that enjoyed a solid campaign in Ligue 1 last term, finishing fifth.
Chelsea boss Jose Mourinho is keen to line up a long-term replacement for the 32-year-old John Terry. The Blues have David Luiz and Gary Cahill, but Mourinho wants extra cover, especially as Luiz is reportedly a transfer target for Barcelona and Paris St Germain.
Former-Standard Liege centre-back Mangala was exceptional for Porto last season on their way to the league title. And the 22-year-old impressed in the Champions League, earning a call-up to the national team.
While Mangala will cost around the €50m mark, Chelsea believe they can snap up Zouma - one of the hottest prospects in French football - for a fraction of the price.
A £10m valuation has been reported for the teenager who is currently with the France under-20s squad in Turkey for the World Cup.
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