Dar es Salaam. Tanzania stands to earn at least $664 million (Sh1.53 trillion) annually when large-scale nickel extraction starts in Kagera Region.
The agreement to that effect was signed in Bukoba yesterday between the government and the UK-based firm LZ Nickel Ltd. The London-headquartered company is part of Metal Ore Mining Industry.
Under the agreement, Tanzania and LZ Nickel will develop the world’s largest nickel deposit, according to the mining news website mining.com.
Nickel is a chemical element and a transition metal mostly used in the manufacture of high-grade steel. It is also used in the production of electric cars and batteries. World production of nickel at mines was estimated to be about 2.7 million tonnes in 2019.
Minerals minister Doto Biteko and LZ Nickel Ltd vice chairman Chris Von Crisom signed the agreement as President John Magufuli witnessed.
Speaking during the event, Foreign Affairs and East African Cooperation minister Palamagamba Kabudi said following the signing of the agreement, the government and the investor would establish a joint venture company to be known as Tembo Nickel Corporation, which will create two subsidiary companies that will extract and add value to the mineral. LZ Nickel Mining Ltd will be responsible for extraction, while LZ Nickel Refining Company, will, among other tasks, build a value-addition facility and smelter in Kahama.
Prof Kabudi said Tanzania would benefit from royalties, taxes and levies.
“We have agreed to conduct a feasibility study that will establish the value of minerals to be extracted and processed.”
He noted, however, that preliminary findings show that total sales would average $664 million (Sh1.5 trillion) annually, adding that the government would hold a 16 percent stake in the joint venture.
Through the stake, the government would receive dividends from the company’s net profits, with all the firm’s funds being retained in Tanzania.
“The company sought dialogue with the government mid-last year, and we agreed to sign the agreement after some of our wishes were met,” Prof Kabudi said.
He added that they had agreed that LZ Nickel Ltd should finalise all procedures with previous companies that had been engaged in the nickel project without involving the government.
Further, Prof Kabudi said, the company had to enter into a joint venture with the government and at the same time build a smelter. The two parties also agreed on equitable sharing of proceeds.
Speaking after the agreement was signed, President Magufuli said the Kabanga Nickel project was mooted back in 1976, with Tanzanian taxpayers’ money being spent on research, but no investor was found at the time.
“I’m happy that we have found an investor who will also build a smelter that will ensure that our minerals are no longer being smuggled out, but are processed here for the benefit of the country,” he said.
Dr Magufuli stressed that minerals were a lucrative natural resource, which should be exploited for the mutual benefit of Tanzania and investors.
For his part, LZ Nickel Ltd vice chairman Chris Von Crisom assured President Magufuli that their team represents significant capability and experience in bringing mines into production as well as funding mining projects for the last 40 years.
“We have developed and funded mining and refining projects in African countries, including South Africa, Zimbabwe, Ghana and Mauritania as well as Europe, Australia South America and North America,” he said.
He added that they had done this before and funding is available, assuring President Magufuli that they would not let Tanzania down.
Mr Von Crisom said the company was here to do business and help develop Tanzania develop further for the benefit of all its people.
He added that the signing of the framework agreement that establishes the Tembo Nickel partnership for the development of Kabanga Mine and refining of copper, cobalt and nickel was an historical milestone in Tanzania and East Africa
Mr Von Crisom said the essence of the agreement is to have an equitable partnership through Tembo Nickel, where all interests would be shared equally, adding that the project aims to add value to minerals for the development of the country.
“The project aims to develop the country’s vision of adding value to all minerals and to expand refinery beyond Kabanga. That will make Tanzania a hub in East and central Africa in the processing of all types of minerals in Africa.”
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