- At least three Australian firms have signed a handful of agreements including Evolution Energy Mineral Limited, EcoGraf Limited, and Peak Rare Earth Limited.
- This is the second mineral exploration and processing deal that Tanzania has signed in as many months and the government says there are more in the pipeline.
- Global markets are experiencing a rising demand for rare earth minerals, critical elements that are used in the manufacture of a vast array of electronic devices, and electric vehicles.
Australia, a vast country that hugely powers its economy through a vibrant mining industry, is bringing its expertise to Tanzania, East Africa for the exploration and processing of energy-rich graphite and other rare earth deposits.
At least three joint venture companies have been formed each having Tanzania accrue 16 percent of the shares, a rare deal in an industry that has for years left the East African country earning little because of depending on the export of raw minerals with the fine processing and value addition being undertaken by overseas firms.
At least three Australian firms—all registered in Perth—have signed a handful of agreements including Evolution Energy Mineral Limited, EcoGraf Limited, and Peak Rare Earth Limited.
Currently, global markets are experiencing a rising demand for rare earth minerals, critical elements that are used in the manufacture of a vast array of electronic devices, electric vehicles, and green technologies such as lithium batteries to which the world is transitioning.
This is the second mineral exploration and processing deal that Tanzania has signed in as many months and the government says there are more in the pipeline.
Tanzania’s President Samia Suluhu Hassan led the deal signing spotting a hefty $667 million agreement between her country and the Australian firms. During the signing event held in Tanzania’s capital Dodoma on April 20 2023, President Samia alluded to the fact that the world is transitioning to cleaner sources of energy and her country must be part of this progressive change.
As such, the president said it is imperative for Tanzania and its neighbors, all of which are rich in these minerals, to take advantage of the partnership and accelerate growth of the industry while creating jobs for the youth.
“These minerals are the key to the sustainable development of the manufacturing industry and the successful deployment of modern technologies across almost all industries,” the president said.
“We are strategically placed, around us are eight countries each of which possesses one or more of these minerals. Tanzania is right in the middle of that value chain and stands to benefit immensely from the exploration and processing of these minerals,” said Dr Samia.
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With the minerals being mined in Tanzania or processed or in transit, either way, Tanzania will benefit. Taxes, tariffs, jobs, infrastructure, technological advancement, technical expertise, complementary and supplementary services, corporate social responsibility (CSR), the list of benefits goes on and on.
Already, Tanzania and the three Australian miners have formed joint venture companies in line with presidential executive orders to have the mineral sector contribute at least 10 percent to the country’s Gross Domestic Product.
“Given the current trajectory, we are seeing prospects that we just may hit our target well before 2025 that we had set as our delivery time,” she said.
Notably, the contribution of the mineral sector to the GDP as of July and all through to September of last year was already 9.7 percent.
The mineral sector is crucial in the generation of the much need foreign exchange that will in turn help the country earn foreign exchange, a critical requirement to pay for imports. Currently, Tanzania has a negative balance of payment since it imports more than it exports, and increasing its foreign exchange reserves will help the country reduce the financial expense of exchanging its own currency during importation.
The president was emphatic when she cautioned artisanal miners against smuggling minerals to sell cheaply abroad; “at least, supply our own processing plants, which are short of these raw materials,” she urged.
Dr Samia underscored the value of local content both as a source of internal revenue as well as increasing individual household incomes and thus ending poverty in the country.
The president also alluded to the need for the new joint companies to list in the country’s own stock exchange the Dar es Salaam Stock Exchange (DSE).
In the latest agreement, Tanzania and Australia have formed three venture companies, first, Australia’s mining and exploration company Peak Rare Earth will operate in Tanzania under two joint venture entities; Mamba Minerals Corporation which will handle the actual mining and Mamba Refinery Corporation that will be refining the minerals for a 30-year period .
The companies will be operating in the mineral-rich District of Ngwala in Songwe Region, southern Tanzania. And for both of them, the government of Tanzania will earn 16 percent non-dilutable free interest shares.
The Ngwala investment is projected to give rise to almost 600 direct and 3,000 indirect jobs during the construction phase, and another roughly 200 direct and 1,000 indirect jobs once it starts operations.
Peak CEO Bardin Davis said: “It further elevates Ngwala’s position as the premier undeveloped rare earth project in the world with high-grade ore reserves, low levels of radionuclides, a fully piloted flowsheet, and a completed updated bankable feasibility study.”
“The value of gross sales will be over $1.86 billion… the investor is expected to acquire $389 million equivalent to 47 percent and the government of Tanzania will accrue $437 million equivalent to 53 percent of the related economic benefits,” explained the government’s head of negotiations Mr Palamagamba Kabudi.
The mineral exploration agreement will also see Evolution Energy Minerals Limited operate in the Chilalo area, Ruangwa District in Lindi region under a joint venture company dubbed Kudu Investment.
Again, in this joint venture pact, the government will earn the 16 percent shareholding non-dilutable free carried interest while the investor will accrue the remaining 84 percent of the shares.
“The initial investment is valued at 439 million US dollars and the project will operate in Ruangwa – Lindi for 18 years,” Mr Kabudi added.
The third project is with EcoGraf Limited and involves the mining of graphite under a joint venture company Duma Tanz Graphite Limited where the government of Tanzania will enjoy 16 percent non-dilutable free carried interest and the remaining 84 percent goes to the investors.
Graphite mining will take place in the Epanko area of Mahenge District in Morogoro Region and involves an initial investment of $127,700.
All these achievements in bringing foreign investors into the mining industry are very commendable. The query, however, remains who is responsible for the monitoring of the monies so accrued through these joint ventures. Who will hold the government accountable for the expenditure of millions of dollars?
Apart from vast wealth in arable land, Tanzania is rich in forestry and wildlife and has huge deposits of minerals such as gold, diamond, iron, coal, nickel, tanzanite, uranium as well as natural gas.
With widespread graft-ridden practices still deep seated in state-owned enterprises, the full benefit of these agreements may take years to trickle down to Tanzanians unless drastic measures are taken to hold suspect officials into account.
