JPM’s Decision lead Tancoal to fuel the Industrialization Drive

Tancoal was incorporated by the Reg­istrar of companies in the year 2008. Tancoal is a Public Private Partnership between the Government of Tanzania through its investment arm, the Nation­al Development Corporation (NDC) which owns 30% of the Shares and Intra Energy (Tanzania) Limited (IETL) which owns 70% of the Shares.

IETL is a wholly owned subsidiary of Intra Energy Corporation Limited, a company listed in the Australian Stock Exchange (ASX:IEC).

Tancoal is a Coal mining company currently mining Coal on its Coal min­ing license located in the Mbalawala area, Mbinga District, Ruvuma region.

What is a coal?

Coal is not a very common miner­al to most people and still a relatively new product to many Tanzanians. Coal is grouped as an energy mineral and also as a raw material in some instances.

Coal is a combustible black or brown­ish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements; chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed if dead plant matter decays into peat and over millions of years the heat and pressure of deep burial converts the peat into coal.

Coal from the Tancoal mine is of very good specifications similar to the Coal sold in South Africa and in some cases better than the South African Coal. The Coal is suitable for industrial usage and also for coal fired power stations.

Coal Mining

Tancoal was issued with a Coal Min­ing License No. 439 on the 18th August 2011 by the then Ministry of Energy and Minerals. The Mining License was in respect of Mbalawala area, Mbinga Dis­trict, Ruvuma region. Tancoal started coal mining activities in the year 2011.

Tancoal coal mine sites are located in the Ngaka Coalfield, the areas named Mbalawala in the south and Mbuyura in the north having 216 and 207 million tons of resources base respectively. This make total resources 423 million tons.

Tancoal is a main coal mining compa­ny in Eastern Africa.

Coal production capacity

Tancoal has the capacity of produc­ing 90,000 tons of Coal monthly while the current market demand ranges in the region of 55,000 tons to 65,000 tons. Tancoal’s production capacity is balanced and synchronized with the market demand, in the sense that the company is able to adjust its production capacity for any market demands.

Unlike other goods which can be stockpiled over a long period of time, Coal stockpiles are usually under dan­gers of spontaneous combustion and thus have to be well kept and monitored at all times.

Domestic Market for Tancoal

The domestic market for Coal since inception faced a stiff competition from imported coal from South Africa. South Africa coal was being sold from Richards Bay and landed in Tanzania and oth­er East African states at a cheaper rate compared to domestic coal. The main reason for the low prices was the lack of tariffs on imported Coal, but also the challenges of transporting coal from the mine to the customers. The transpor­tation costs made domestic coal more expensive compared to tariff free Coal transported by rail to the ports in South Africa.

This trend changed when his Excel­lency, the President of Tanzania, Dr. John Pombe Magufuli took a step to ban Coal importation. From there onwards, Tancoal saw a growing market from the domestic industries. Some companies converted from charcoal to using Tan­coal thermal coal - a big contributor in saving of forests. Additionally the deci­sion by the President also helped the emerging of other coal mining compa­nies in Tanzania, both small and medi­um sized.

Most of the coal from Tancoal is sold domestically to industries where it is used in furnaces/kilns in their produc­tion process. Tancoal sells 75% of its Coal produced to the Domestic market, within Tanzania. Our main customers are Cement industries, Gypsum indus­tries, Ceramics industries and other product factories.

The main cement industries which form the majority of our domestic cus­tomers include Tanga Cement, Lake Cement, Mbeya Cement and Dangote Cement. The other domestic customers (not cement) include; Keda Tanzania Limited, Knauf Tanzania Limited, Say­ona Limited and 21st Century Textile limited, to mention just a few.

Tancoal is also looking to include a huge prospective cement company in its customer’s portfolio which is earmarked to start construction soon. This custom­er would be a game changer for Tancoal with tipped annual consumption on the average of 1.2milion tons.

Export Market for Tancoal

Tancoal exports 25% of monthly coal production, to customers within East Africa, including Uganda, Rwanda and Kenya. Again mostly, these sales are to Cement and ceramics industries. The export market is still small due to the competition from Coal from Richards Bay, South Africa, especially for the coastal potential customers.

There however, remains huge interest in Tancoal Coal from many potential customers, from Ethiopia, Madagascar and Turkey.

Tancoal’s export competitiveness is limited by the high transportation costs involved to haul the Coal from the mine site to Mtwara port. We understand that the Government has plans to construct the Southern railway through to Mtwara and this would greatly boost exports and hence earning the country good forex.

Growing Coal mining in Tanzania

Thank you to the ban on the impor­tation of Coal made by his Excellency the President of Tanzania, Dr. John Pombe Magufuli; the country has seen growing coal mining activities. Tancoal is not the only coal mining company in the country, there are other companies, small and medium which are operation­al. Thus the ban on coal importation not only helped Tancoal, but a number of other companies who we now share the market with.

Tancoal has increased its Coal pro­duction and sales to more than double in the past four (4) years. The quanti­ty of coal sold between June 2014 to July 2015 was 237,735.93. Tancoal sold a total of 520,950.00 of Coal from June 2018 to date (Ten months). This is more than double the quantity of Coal sold in the year 2014/2015. This increase in demand and therefore increased sale is mainly attributed to the decision of the President, mentioned earlier.

Government Revenue and Taxes

Tancoal paid to the Ministry of Min­erals from year 2016 to Date, the sum of Tshs 5,312,998,094.57 being Royalties, Inspection Fees and Export Permits. With increased sales and possibility of more export markets, this amount will increase in the near future. Tancoal further paid to the Tanzania Revenue Authority (TRA) taxes, from 2016 to date as follows: - Pay As You Earn (PAYE): Tshs 4,717,335,991.63; Withholding Tax: Tshs 1,756,336,429.03; Skills Development Levy (SDL): Tshs 1,094,096,922.23; VAT: Tshs 11,478,546,081.38; VAT on Import­ed Purchase: Tshs 650,429,995.00; Cor­porate Tax- AMT: Tshs 398,217,239.

In addition, Tancoal has paid Service Levy to the Mbinga Municipal Council from 2016 to date in the tune of Tshs 622,942,104.11. Tancoal customers have, on the other hand, paid levies to the Mbinga Municipal Council from 2018 to date to the tune of Tshs 1,288,506,860/=.

Tancoal and Industrialization

Tancoal assurances in supplying Coal makes potential industries invest in Tanzania, example Keda Tanzania. Also, Hengyuan Cement which might be the biggest cement producer in Tanzania is in the pipeline. Tancoal supplies Coal to cement industries which is used to manufacture Cement which is in turn used for construction of other industries and big projects in the country which all bolster industrialization. For exam­ple the SGR, Stiegler’s Gorge, Bridges, Roads, etc.

Tancoal supplies Coal to various other industries, such as Gypsum, Ceramics and other manufacturing industries, all of which widens the industrialization drive and supports the economy of the country.

Local content support

Tancoal has and continues to be a big supporter of local content, even before this requirement was enacted into law. Tancoal engages local suppliers and/ or contractors on all its operations as much as possible. Only for items and/or supplies which are not available locally, which are imported for Tancoal opera­tions and these are mostly spare parts for the equipment and explosives used in the mining operations.

Tancoal has 191 direct employees and out of these, 189 employees are Tanzani­ans, with only two expatriates. Tancoal is proud of the Tanzanian workforce and supports them massively. Tancoal sup­pliers and contractors directly employ a combined 228 employees, most of whom are Tanzanians. These numbers do not include the indirect employments creat­ed by Tancoal and its contractors.

Tancoal recruits mostly from the communities surrounding the mine and within the region and thus giving direct and indirect employment to the neigh­bours to the mine.

Corporate Social Responsibility (CSR)

Tancoal works very closely with the village leaders and other local Govern­ment authorities around the mine in order to achieve a vibrant and practical CSR. The changes to the mining laws made CSR a legal obligation upon min­ing companies and Tancoal is compli­ant with the law and has had its CSR plan approved by the local authorities. The CSR activities are closely discussed and chosen by the local authorities and together with Tancoal keeps a close monitoring and control of the projects approved. The CSR activities have prov­en to be worthwhile in their economic, social and cultural impact to the com­munities concerned.

Tancoal supports an organization of women around the mine, named Mbal­awala Women Organization (MWO). With the support of Tancoal, the Organ­ization among other activities, makes Coal Briquettes which is an alternative to charcoal and firewood in cooking for various institutions as well as for domes­tic use. The Coal briquettes are sold across the country and will be available at the ongoing SabaSaba Trade Fair in Dar es Salaam, under the Tancoal booth. The Organization is composed and run by women from the villages around the mine and has seen great success in recent days in terms of empowering the women in the areas concerned.

Tancoal’s idea was to empower the women around the mine, first by train­ing them to various activities and also to enable them economically which gives them a voice for themselves and their families. MWO also engages in small scale farming and gardening activities from which they supply the mine with the necessary vegetables and other crops needed by the mine. MWO also provides meals and sanitary services to Tancoal Mine and its contractors at the mine sites and Sales Point.

Tancoal and the Environment

Tancoal keeps a strict policy and procedures when it comes to the envi­ronment and works very close to the authorities concerned to ensure that the company’s activities do not harm the environment. Mining activities are conducted according to mining plans to ensure that best practices are achieved.

Water from the mine is well controlled and underground and stream water is constantly checked to ensure that they remain safe for use. Tancoal maintains a laboratory at the mine which makes it easier to keep strict control over the safety of water.

Tancoal maintains a trees nursery which are used in the rehabilitation pro­grams by the mine. The trees are also given to the various local authorities and institutions for planting on various occa­sions to ensure that the environment around the mine is improved.

Saba Saba Trade Fair

Tancoal is participating in the ongoing Saba Saba Trade Fair in Dar es Salaam under the umbrella of our partners, the National Development Corporation (NDC). Tancoal is fully participating in the trade fair which is a chance for the masses to learn more about Coal and Tancoal operations. Visitors visiting the 77 are most welcome to our booth.