Kabanga Nickel Project: A boon for Tanzania’s economy

TANZANIA: THE Kabanga Nickel Project in Ngara District, Kagera Region, is set to be a transformative force for the country’s economy.

This project represents a pivotal development in the global energy and mining sectors.

This initiative, supported by both the United States (US) and BHP, is expected to play a significant role in addressing climate change challenges through its contribution to the low-carbon economy.

With its vast mineral resources and significant investment, the project is poised to drive substantial economic growth and development across several sectors.

Recently, the Minister for Minerals, Anthony Mavunde, along with Tembo Nickel officials, met officials from the US in a delegation led by the US Ambassador to Tanzania, Mr Michael Battle, to discuss various issues related to the 50 million US dollars investment in the country.

The delegation from the US was led by the Special Coordinator for the Partnership for Global Infrastructure and Investment (PGI), Helaina Matza.

PGI is a joint project of the United States, Canada, the United Kingdom, Italy, Germany, France and Japan.

The minister also met with BHP’s Chief Development Officer, Ms Catherine Raw, who is in the country to oversee the development of the Nickel Kabanga project.

She said the implementation of the project is in line with the construction of the mineral refinery in Kahama District, Shinyanga Region, which is expected to cost 500 million US dollars (about 1.355tri/).

The BHP company has also underlined the importance of investing in the area, as minerals are expected to address challenges of climate change.

Speaking during the meeting, Mr Mavunde commended President Samia Suluhu Hassan for cementing a good relationship between the country and the US, which has resulted in an increase of investors in Tanzania.

He added that President Samia’s 4R philosophy of Reconciliation, Resilience, Reform and Rebuilding – has greatly contributed to the improvement of the investment climate in the country.

According to Mr Mavunde, the investments from the US were the results of the 2022 US-Africa summit, which was also attended by President Samia.

“In March 2023, the US Vice-President, Kamala Harris, visited Tanzania.

Her visit cemented our good relationship and encouraged more investors to come to Tanzania,” said Mr Mavunde.

The government of Tanzania has a 16 per cent interest through the local partnership entity, Tembo Nickel Corporation, while Kabanga Nickel Ltd (UK) holds the balance.

The current project development timeline anticipates first production in 2025.

The output will ramp up to target a minimum annual production of 40,000 tonnes of nickel, 6,000 tonnes of copper and 3,000 tonnes of cobalt.

Tanzania is committed to becoming a significant producer of responsible and sustainable metals to supply the increasing global demand and facilitate the move to a low-carbon economy.

Kabanga is the largest development ready nickel sulfide deposit in the world.

It contains in-situ nickel equivalent resources estimated at 1.86 million tonnes and an in-situ nickel equivalent grade of 3.44 per cent.

The Kabanga Project is believed to comprise one of the world’s largest and highest-grade nickel sulfide deposits. The upcoming mineral refinery in Kahama District, part of the Kabanga Nickel project, promises to be a major economic driver for Tanzania.

This ambitious project, featuring the largest development-ready nickel sulfide deposit, is set to transform the country’s mining sector.

Project overview and economic impact the refinery, with an estimated construction cost of 500 million US dollars (about 1.36tri/-), is slated to commence production in 2025.

It aims to achieve an annual output of 40,000 tonnes of nickel, 6,000 tonnes of copper and 3,000 tonnes of cobalt. This scale of production is expected to significantly impact Tanzania’s economy.

Boost to national revenue and economic growth Dr Hilderbrand Shayo, an economist and investment banker, highlights the refinery’s potential to enhance state revenues and support sustainable development.

By adding value to nickel, a widely available resource, the project will increase export earnings and create substantial economic benefits.

Dr Shayo emphasises that establishing a refinery near the resource base will shift Tanzania’s focus from exporting raw materials to producing value-added products.

This strategic move is expected to boost the country’s economic growth and improve its trade balance.

Job creation and regional development A lecturer and business analyst at St Augustine University of Tanzania (SAUT), Dr Sylvester Jotta underscores the significant socio-economic impacts of the refinery.

The project is anticipated to generate numerous job opportunities, increase local incomes and stimulate regional economic activity.

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“With the construction of the refinery, there will be increased demand for local goods and services, benefiting small businesses and workers,” says Dr Jotta.

The Pay-As-You-Earn (PAYE) system will also boost government tax revenues. According to him, the refinery will address the economic instability in the region, exacerbated by the closure of the Buzwagi Mine.

By revitalising the mining sector, the project will contribute to the growth of both the regional and national GDP.

Long-term economic benefits Executive Director of Research, Innovation and Projects at Orbit Securities, Mr Fortius Rutabingwa, noted that the refinery will enhance local beneficiation of mineral resources.

He points out that the project will generate direct and indirect employment, increase tax revenues and promote energy use from local sources, including Mwalimu Nyerere hydroelectric power and gas-generated electricity.

In a snapshot, the Kabanga Nickel refinery represents a transformative opportunity for Tanzania.

By adding value to its mineral resources, the project will stimulate economic growth, create jobs and bolster regional development.

As Tanzania shifts towards local beneficiation, the refinery stands to be a cornerstone of the country’s economic advancement.