/ 18 April 2023

Tanzania signs multimillion-dollar deals for mining projects

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Samia Suluhu Hassan, Tanzania's President, during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Thursday, Jan. 19, 2023. The annual Davos gathering of political leaders, top executives and celebrities runs from January 16 to 20. Photographer: Stefan Wermuth/Bloomberg via Getty Images

Tanzania is positioning itself as a solution for countries looking to be less dependent on China for critical raw materials while accelerating plans for a more sustainable economy. 

“These minerals are promoting Tanzania’s name worldwide and even the world’s powerful countries are looking at Tanzania. In the future, our country will be a production hub of these minerals which will stimulate investment,”  President Samia Suluhu Hassan said at the signing of multimillion-dollar agreements with three Australian mining companies.  

The agreements, signed this week with Peak Rare Earths, Evolution Energy Minerals and Ecograf, outlined arrangements for the projects’ ownership, development and management. 

According to Palamagamba Kabudi, chair of the government’s negotiating team, Tanzania will have a 16% stake in each of the jointly established companies.

Under Tanzania’s agreement with Peak Rare Earths, bastnaesite (used to create magnets for high-technology applications) will be mined in the south-west of the country in Ngualla, in the Songwe region.

According to Peak Rare Earths, construction of the Ngualla project is expected to cost about $320 million and create up to 3 000 indirect jobs during construction and up to 1 000 jobs when operational.

“The venture will see the construction of a mine, mill, concentrator, community projects and associated infrastructure,” the company said. 

Under the agreement with Evolution Energy Minerals, mining will take place at the Chilalo Graphite Project in the south-east. 

The details of the agreement were worked out in March after the company announced that its feasibility study confirmed the project would have low capital costs, could provide high margins and deliver sustainably sourced graphite to the rapidly growing battery market over the 17-year life of the mine.

Graphite is used in lithium-ion battery manufacturing. About 70% of graphite comes from China and few viable alternatives for making batteries exist.

In 2020, Tanzania’s estimated graphite reserves were at 17 million tonnes, ranking sixth globally after Turkey, China, Brazil, Madagascar and Mozambique. 

EcoGraf will also be mining graphite at the Epanko Graphite Project in the Morogoro region. 

The company aims to produce “high-purity” graphite products for lithium-ion batteries and large and jumbo-flake graphite to be exported to high-value industrial markets.

To date, over $30 million has been invested in the graphite mining and mineral processing business. 

“EcoGraf is very pleased to be partnering with the government as it will be a key stakeholder in the development of Epanko, a world-class graphite project which is forecast to make an inter-generational contribution to the Tanzanian economy,” the company said.

According to EcoGraf, the demand for natural graphite, led by the global lithium-ion battery market, is forecast to increase at 31.5% per annum this decade.

In early April, US Vice-President Kamala Harris, while speaking at a meeting with Hassan as part of her week-long African tour, announced the development of a critical minerals processing facility in Tanzania, with US backing.

Based at the Kabanga nickel project in north-western Tanzania, the plant will deliver battery-grade nickel to the US and global markets by 2026. The Kabanga mine holds 44 million tonnes of nickel, copper and cobalt.

“Importantly, raw minerals will soon be processed in Tanzania, by Tanzanians. It will help address the climate crisis, build resilient global supply chains and create new industries and jobs,” she said.

According to a press release from the White House, the arrangement was struck through the Partnership for Global Infrastructure and Investment and TechMet, which specialises in critical metals and is partly owned by the US government.

At a time when the global energy transition is accelerating, Africa has been strengthening itself to take full advantage of this boom in demand for critical metals.

The continent has 30% of the world’s mineral reserves, including many minerals essential to the green transition. 

The Democratic Republic of the Congo produces about 70% of the world’s cobalt; Zambia is rich in copper and cobalt; South Africa has the largest share of manganese reserves; Zimbabwe has large lithium deposits and Madagascar, Guinea and Mozambique have significant deposits of graphite. — bird story agency