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Why Uranium is Crucial for Tanzanian Industrial Take-off

Why Uranium is Crucial for Tanzanian Industrial Take-off

One of the most successful African economies of the 21st century, Tanzania has ambitious plans to recover the country from the challenges associated to COVID-19 pandemic. In order to achieve the new goals, it is necessary to focus on the accelerated industrial development, since advanced technologies in manufacture is the principal mechanism to ensure rapid GDP growth.

But first of all Tanzanian economy needs a solid energy base, which the country is able to provide on its own. Thanks to its rich uranium reserves, Tanzania in the long run can bet on nuclear power, which will allow it to get far ahead in competition with other developing nations.

Uranium mining itself is able bring Tanzanian economy considerable benefits, as the price for this metal, indispensable for the nuclear industry, is actively growing.
More than three decades after the UN General Assembly declared November 20th as Africa Industrialization Day in 1989, the continent still possesses a small share of global industrial output. Despite being the second most populous continent in the world (1.2 billion people), Africa accounted for only 1.4% of global manufacturing value-added goods in the first quarter of 2020.
COVID-19 has become a new challenge for African economies. The UN estimates that the mixture of domestic problems and lower external demand as a result of the global recession will put a heavy burden on the African industrial sector. Countries depending on sectors like Travels and Tourism have been most affected by the Covid-19 pandemic.
However, the situation differs significantly across the continent. Those nations that have paid enough attention to industrial development in the past decade are now more likely to overcome the crisis relatively fast. Tanzania, no doubt, should be mentioned among these countries.
Сlaim for Economic Miracle
With an average real GDP growth rate of 6.3% over 2010-2019, Tanzania was among the fastest-growing economies in Africa and in the world. In 2020, according to the International Monetary Fund (IMF), the real GDP of Tanzania, despite the pandemic crisis, grew by 4.8% reaching USD 64.4 billion.
In April 2021, Tanzania’s new president Samia Suluhu Hassan in her first speech to the parliament mentioned the priority of the Sixth Phase Government in the next five years to reach a GDP growth rate of at least 8% yearly.
What does this figure mean in terms of businesses and ordinary people? Nothing less than an economic miracle given that the global economy average growth in the 2020s is unlikely to be more than 3-4 per cent a year. This is how the dramatic economic boost in China looked like in the 2000s: the country's GDP grew much faster than the world economy. Even a cursory analysis of the Chinese experience allows to assert that the secret is simple: China has achieved its successes thanks to industrialization.
This is not to say that other developing nations, including African, should emulate the Chinese path in details. Industrialization is a universal cure against economic backwardness, and Tanzanian government has already made industrialization an important part of its economic policy. As of 2017, industry contributed 28.6 per cent to the GDP – fairly good figure for Africa.

The industrial sector in Tanzania is relatively diversified comprising agricultural processing, mining, cement production, oil refining, shoes and apparel, wood products, fertilizer and so on.
The industrial development in Tanzania is actively promoted by international organizations. Between 2012 and 2016, the United Nations Industrial Development Organization (UNIDO) successfully implemented the pilot national industrial upgrading and modernization program in Tanzania. As a result, beneficiary enterprises operating in the dairy, edible oil and food processing sectors increased by 38 per cent of local sales in average, while two of them doubled their exports.

A Fundamental Obstacle
Meanwhile, the prospects for an economic miracle in Tanzania are clouded by one massive infrastructure problem - the shortage of electricity.
According to the Rural Energy Agency (REA) under the Ministry of Energy of Tanzania, biomass makes up close to 90% of the total primary energy consumption in the country. This leads to the deforestation of 100,000 hectares per year, of which only about a quarter is reforested. 63.5% of the households in Tanzanian mainland use firewood as the main source of energy for cooking.

As of 2017 only 18% of 50.76 million inhabitants had access to electricity. Although the accessibility to power has increased recently to just over 50% due to distribution efforts particular in rural areas, its sustainability and further growth need more reliable source of power.
The unreliability of electricity supply has a negative impact on the development of the Tanzanian industrial sector. As Tanzanian economy is diversifying and shifting away from its agricultural base, this adds considerable pressure to energy consumption, making the low access rate and other supply limitations an obstacle to economic growth.
Reliable power supply to manufacturing companies will certainly increase productivity and the industrial base, which is indispensable to the country’s overall development agenda. But what source is able to provide energy for the future industrial growth?
Compared to many other African countries, Tanzania is very rich in energy resources, but this potential has not been fully exploited yet. Energy for rapid industrialization must be reliable, cheap and clean. It is these three qualities that nuclear energy combines, for the development of which Tanzania has every opportunity thanks to its own uranium reserves.

To meet its growing energy demand, Tanzania was planning to introduce nuclear power on the basis of the 2003 Atomic Energy Act, which authorizes the use of uranium to produce electricity. This law has stringent provisions for the safe use of uranium. The decision made Tanzania the first country in East and Central Africa ready to introduce nuclear power to generate electricity.

Moreover, currently the shortage of electricity is expected to overcome via Julius Nyerere Hydropower Station which is under construction across the Rufiji River in Eastern Tanzania.
Towards Sustainable Mining
Tanzania’s advantage in the nuclear realm is obvious. The government has already established a partnership with Russian state corporation Rosatom, a major player in the global nuclear industry, and its’ international holding Uranium One. The Mkuju River uranium project in Tanzania, which is being implemented by Mantra Tanzania Ltd., a subsidiary of Uranium One, is among the most promising in Africa.
Still, the project of Mantra Tanzania is in its early stage, but the company has contributed a lot into sustainable development of the Mkuju River region. Starting from the preliminary stage of work, Mantra Tanzania successfully performs a number of significant social and infrastructural tasks, including road construction and water supply, donation of specialized equipment for schools and hospitals, inclusive initiatives for schoolchildren and farmers with disabilities, programs to support local suppliers and provide employment to the population, etc.
By the end of the last decade Tanzania was at an advanced stage of uranium exploration. The governmental plan was to commence mining operations at the first approved mining site as soon as economic conditions become favorable and the price of uranium rises.

The International Atomic Energy Agency (IAEA) has supported the country in the introduction of its uranium mining program, including through a 2013 advisory mission to get the project off the ground.
After the accident at the Japanese nuclear power plant at Fukushima in 2011, it seemed that nuclear power was facing a crisis for decades to come. In fact, these fears did not materialize.

Today, world uranium prices are actively recovering from a decline, so it’s high time to launch the active phase of Tanzanian mining project.
This is because the nuclear will play an indispensable role in the global transition to clean energy. Some advanced economies, such as France, have already announced that the development of nuclear energy will be the basis of their green transition strategy.

Recently, the European Union included nuclear energy in its taxonomy of green investments. The discussion to be continued in November during the UN climate summit COP27 to be held in Egypt, which is already constructing its first nuclear power plant in cooperation with Rosatom. Indeed, Africa is ready not to lag behind in the new stage of the global nuclear race.

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2 Comments

  • avatar
    Tuxi Nedo
    23/01/2022

    Reading the column set me pondering on the subject, of course Uranium is a precious metal with great financial benefits but for us to develop more its not due to Uranium or any other metal. its how we work, execute, manage projects to success which is not there. If you talk about precious metals or commodities we have many and it has shown in the past that they are all mismanage, the question how do we do it different and right this time?

  • avatar
    Tuxi Nedo
    23/01/2022

    Reading the column set me pondering on the subject, of course Uranium is a precious metal with great financial benefits but for us to develop more its not due to Uranium or any other metal. its how we work, execute, manage projects to success which is not there. If you talk about precious metals or commodities we have many and it has shown in the past that they are all mismanage, the question how do we do it different and right this time?

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