The financing of a new niobium mining project has been halted.
Dar es Salaam. The financing of a new niobium mining project has been halted.
However, negotiations are going on between the project implementer and the government to help unlock the stalemate as funders are reportedly finding new mining laws difficult for them.
Panda Hill Tanzania Ltd (PHT), which is involved in the project, says shareholders have changed their mind as new mining law and regulations are likely to raise investment risks.
“We are no longer continuing with the project…we are looking for new partners to raise funds. Our shareholders are not ready to continue financing,” PHT general manager Dennis Cooke told BusinessWeek.
According to him, at least $200 million is needed to finance the construction of a PHT niobium processing plant. “We are still negotiating with the minister for mining on the project implementation under the new mining law.”
The government enacted the new mining law in 2017, followed by local content law in the mining sector in the same year.
Under the new mining law, the provision on the stabilisation or the lack of a chance to review mining contracts in case global prices fluctuate was removed.
The Repoa director of research, Dr Abel Kinyondo, said all the parties had their interests as investors want to maximise profits while the government wants to gain highly from the lucrative sector after almost three decades of lopsidedness.
“It is important for the government and investors to take an inclusive approach involving negotiations to have a win-win situation,” said Dr Kinyondo.
According to him, mining laws of 1979, 1998 and 2010 had no provision for renegotiations to strike a win-win situation.
He proposes that parties negotiate rather than avoid the approach.
According to PHT’s 2016 report, some of project activities that were undertaken were the construction of a production unit, processing unit, a warehouse, an administrative space, a storage space and parking facility.
Others were the installation of machinery, safety and security systems as well as preparation for trial work.
The executive secretary of the Tanzania Mining Commission, Prof Shukrani Manya, said PHT had been granted a mining licence.
“We don’t know about their pending mining activities. Please, ask them to get more information about their ongoing activities,” he said.
The PHT project is jointly owned by Tremont Investments Ltd (Tremont) and Cradle Resources Ltd (Cradle).
In March 2015, a pre-feasibility study and definitive feasibility study were completed in April 2016, according to a PHT report “In May 2016, MDM Engineering was awarded as the front-end engineering design [FEED] contract for the project.”