Chinese company in $3 billion Liganga-Mchuchuma steel project reacts

Dar es Salaam. The Chinese company awarded the tender to develop the over $3 billion (Sh6.8 trillion) Liganga iron ore to steel project revealed it was being held back for lack of incentives negotiated with the government in 2015.

The company won the tender for the mammoth project with the potential to create 5000 jobs and 30,000 indirect ones in 2010, but its rollout has been beset by bureaucratic delays.

In a paid up advertisement in the media, Sichuan Hongda Group – the parent company in the project suggested misleading information on the accruing benefits in the mining of the resource was to blame for the teething delays. It said the investment incentives were critical to the establishment of the strategic project that has been sold as possibly Tanzania’s industrial turning point. “As a serious investor and having spent considerable resources in development and implementation of the project, Sichuan Hongda, is still committed to implementing this project despite recurring challenges both locally and globally,” read the statement.

The Chinese company and its local affiliate Tanzania China International Mineral Resources Limited (TCIMRL) will team up with National Development Corporation (NDC) in the development of the project. The company said it was issuing the statement to clear the air on information that has been released relating to the manner in which the project was formulated.

Mchuchuma is said to have 428 million tonnes of coal while Liganga has 128 million tonnes of iron and the Chinese company has drawn an integrated mining and exploitation plan that include generation of 600MW of electricity. The firms will additionally process all the minerals locally to separate titanium and vanadium from iron ore.

The ministry of finance was not immediately available to say why signing of the incentives was taking too long despite last year’s promise by industry minister Charles Mwijage that only the signature of President John Magufuli was awaited to issue the relief and start of the project. Mwijage has since been sacked from cabinet.

The Liganga-Mchuchuma project has for many years been listed as a strategic national development investment but was this year dropped from the list by finance minister Dr Philip Mpango. No reason was given for the decision which attracted criticism from some MPs including Kigoma Urban legislator Zitto Kabwe who wanted it reinstated due to the potential it offered. TCIMRL) was expected to invest $1.8 billion to establish an iron ore mine and iron and steel complex to produce 1 million tonnes of iron per year and steel products, vanadium pentoxide and titanium dioxide. Its power plant would be run by coal, with 250MW used for the industry and 350MW connected to the national grid. NDC communications manager Abel Ngapembwa told The Citizen the project is still on and was only awaiting the incentive to be published in the Government Notice. He said only the government could speak on what was happening now. Sichuan Hongda said it won the tender for the project fairly and dismissed reports that it was eyeing all income, including taxes related to the running of the steel industry.

The firm pointed out that all the claims it was entitled to were fully negotiated with the government that went to issue the relevant mining permits and investment incentives.