Govt to earn 8.4tri/- from graphite mine

THE government is expected to add up to the state coffers a whopping US dollars 3.6 billion (almost 8.4tri/-) from a new mining company—Faru Graphite Corporation, when the envisaged project for the development of the world-class graphite mine at Mahenge in Ulanga District, Morogoro region kicks off.

The money is as a result of 51 per cent of the income generated by the project which equally anticipates creating almost 1,000 direct jobs for Tanzanians, and the total benefit to the national economy estimated to be US Dollars 8.5 billion over the 26 years life of the project.

The project follows a framework agreement between Tanzania and Black Rock Mining Limited, Mahenge Resources Limited (TZ) and Mahenge Resources Limited (UK) that was inked on December 13, 2021 to jointly develop the world-class Mahenge Graphite Mine.

Under the Framework Agreement, the parties agreed to establish a joint venture company for the purpose of the Graphite Mining project and in December 2021, Faru Graphite Corporation Limited (Faru) was incorporated.

The signing ceremony was attended by President Samia Suluhu Hassan and the government was represented by the minister for Minerals Dr Dotto Biteko.

In the agreement, the government has a 16 per cent Free Carried Interest (FCI) stake while the remaining 84 per cent goes to Faru Graphite Corporation Limited under the auspices of Black Rock Mining Limited.

According to Permanent Secretary in the Ministry of Minerals Adolph Ndunguru, in September 2022, a Special Mining Licence was granted to Faru Graphite Corporation Limited for the graphite project; and subsequently, the scheme is now at the development stage.

Mr Ndunguru was speaking in Dodoma yesterday during a progress meeting with stakeholders of the Mahenge Graphite mine, which included representatives from the Ministry of Minerals, the Mining Commission, the Office of the Treasury Registrar, Tanzania Revenue Authority (TRA), Tanzania Electric Supply Company Limited (TANESCO), Tanzania-Zambia Railway Authority (TAZARA), Tanzania National Roads Agency (TANROADS) and Tanzania Ports Authority (TPA).

The envisaged robust project requires a multi-faceted approach in order to ensure that it is developed in a timely way to maximise the opportunity for Faru and Tanzania into the growing global market demand for graphite.

According to Mr Ndunguru, the meeting sought to bring together all relevant stakeholders required to ensure alignment on all of the national interest in key aspects of the Project.

During his presentation, Faru Graphite Corporation Chief Executive Officer (CEO), Alimiya Osman said when the project kicks off, the Tanzanian government is expected to earn up to 800m/- a day through its FCI.

Speaking at the event, the company’s Executive Chairman, John Vries, said under the Framework Agreement, the government of Tanzania would secure project economics through a combination of dividends, taxes and duties. Our commitment to Tanzania exceeds this through the purchase of goods and services, provision of power, rail haulage and port services.

“It is estimated that the cumulative benefit to the Tanzanian economy will be US Dollars 8.5 billion over the life of the project, which will be implemented for 26 years, over the life of the project, based on the Enhanced Definitive Feasibility Study.’’ he noted.

According to Mr Osman, Some of the key facilities and infrastructure which need to be addressed to make the project possible include, power supply to the mine site, building of suitable tarmac roads from Ifakara to the Mine site and rail transport from Ifakara to the Dar-es-Salaam Port through the TAZARA railway network.

Others, he said, are access to land at Ifakara with a railway siding connecting to the TAZARA railway network, confirmation of the tax framework to be applied during the construction of the mine as set out in the framework agreement as well as support in facilitating the resettlement and compensation exercise.

In developing the project, so far the company had paid compensation to potentially affected persons in Mahenge amounting to 14.9bn/-, according to the company’s Executive Chairman.

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