Government eyes Sh17.2 trillion as nickel project gets the nod

Thursday October 28 2021
Nickel pic
By Rosemary Mirondo

Dar es Salaam. The government expects to collect an estimated $7.5 billion (Sh17.2 trillion) through various fees and taxes over the next 33 years from the Kabanga nickel mining project.

This comes after the Ministry of Minerals yesterday handed over a mining licence for Kabanga project to Tembo Nickel Corporation Limited (TNCL) which expects to invest a total of $412 million, according to a submitted feasibility study.

Minerals minister Doto Biteko said the feasibility report showed total deposits of 58 million tonnes of nickel.

“The mining operations are expected to be conducted by underground mining method whereby production is expected to reach an average of 600,000 tonnes per annum in the first five years - and, later, increase to 2.2 million tonnes per annum,” he said.

Based on that production rate, the life of the mine is estimated to be 33 years. The concentrates produced from the mine will be transported to refinery which is to be built in Kahama District.

Mr Biteki said the annual production and exports of all the nickel would be worth $854.1 million at current prices for the mineral.

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He also said refined nickel production is projected to average 33,107 tonnes a year, the rough equivalent of $666.5 million in export earnings at current prices; 4,698 tonnes of copper (equivalent to $47.2 million in export earnings at current prices) and 2,509 tonnes of cobalt (equivalent to $140.3 million annually in export earnings at current prices).

“Total revenues are projected to average $228.5 million per year, six percent of which is mining royalty (estimated $1.3 billion); one percent inspection fee (approximately $219.0 million); annual rents (about $33.3 million); service levy ($65.7 million); dividends from 16 percent free carried interest shareholding estimated at $1.4 billion; and withholding tax on 10 percent dividend, amounting to $738.1 million in total.

According to Minister Biteko, the project is expected to provide jobs to 978 people as per the Mining Act (Cap 123) and the Mining (Local Content) Regulations, 2018.

He noted that the revenues will increase every five years. Similarly, the presence of a nickel refinery in Kahama District will add more than 100 jobs.

According to him, the mine expects to use 220 kilovolts of electricity from the national grid in in Ngara District. An alternative source of electricity will be a generator capable of generating eight megawatts of electricity.

Minister Biteko revealed that transportation of concentrates and refined minerals will use the Kahama-Isaka road, the Isaka Malampaka railway, Isaka-Dar es Salaam railway to Dar es Salaam port.

In a related development, the Speaker of the National Assembly, Mr Job Ndugai, said Tanzania has reviewed its extractives laws to ensure that it benefits from the sector.

Tembo Nickel Corporation Limited (TNCL) director Chis Showalter said issuance of Kabanga Special Mining Licence (SML) was a sure sign of confidence which the government has in the project.

“We acknowledge their support and that of the shareholders as we move the project forward. And, with the SML in hand, the project can now accelerate and scale-up,” he said.

The ministry’s permanent secretary, Leonard Masanja, said the 2018/19 TEITI report shows that a total of Sh626.14 billion had been received by the government from the extractives sector.