The scramble for critical minerals is a window of opportunity that is likely to reward early movers
As major powers such as the US and China compete for access to critical minerals to feed their expanding technology, defence and clean energy industries, Tanzania occupies a strategic position.
Firstly, Tanzania is endowed with both large quantities of critical minerals which include nickel and graphite and important energy resources such as natural gas and potentially oil. Secondly, as a non-aligned state which strives for balance in its diplomatic ties, Tanzania is likely to benefit from its calculated engagement with both sides.
After all, no major or middle power would benefit from isolating a largely stable African state with lucrative extractive resources and a history of progressive policies.
Thirdly, Tanzania has learned bitter lessons from its failure, particularly in the 1990’s and 2000s, to secure equitable benefits from its large-scale metals and gemstones industry.
Although well-positioned, questions remain as to whether Tanzania will be able to optimise its benefits from the global demand for critical minerals.
The scramble for critical minerals is a window of opportunity that is likely to reward early movers but may close as competitors secure their supply chains.
Despite its strategic advantages, Tanzania’s critical minerals sector is still in its infancy and inching forward at a relatively slow pace.
In 2024, the government announced plans to develop a dedicated critical minerals strategy. A year later, authorities reiterated that completing the strategy is a priority, but gave no firm timeline.
This means important decisions continue to be made without a centralised and overarching vision.
There is also a policy coherence issue. Some of the key pillars of the draft national strategy are in-country beneficiation, stronger local content, mandatory government participation and investment in robust geological surveys.
These building blocks are already embedded in various legal and policy frameworks.
However, there are instances where the government has not exercised its mandated participation or consistently enforced compliance.
This could be due to lack of shared understanding and inter-agency coordination challenges. A national strategy and its implementation frameworks would easily address these shortcomings.
The Geological Survey of Tanzania has documented various critical minerals reserves in the country.
Based on the current knowledge of reserves and existing investments, Tanzania is poised to become a major producer of graphite, nickel and rare earths and could acquire significant financial benefits and geopolitical leverage.
In Africa, South Africa and Mozambique are the leading producers of nickel and graphite, respectively.
However, most of South Africa’s nickel is extracted as by-product while Tanzania’s nickel, particularly in reserves near Lake Victoria, occurs as primary ore and is regarded as higher grade.
Most rare earths concessions in Africa are still in the early to mid-stages of development, a reality which gives Tanzania a chance to become a notable and potentially a major player in the continent.
To acquire a leading player status, Tanzania needs to refine its sector governance framework and bring important projects over the line earlier than other countries.
Majority of concessions for significant graphite and rare earths reserves in Tanzania are held by Australian companies while those for nickel are held by Western-based firms.
As stated earlier, the high demand for critical minerals presents Tanzania with a strategic opportunity. However, the country’s ability to harness this opportunity depends on its determination to avoid past mistakes while moving swiftly.
The recent decision to update mining local content regulations to close loopholes is a welcome example of attempts to learn from past errors.
Nonetheless, local content tends to benefit elites due to entry barriers for ordinary entrepreneurs. As Tanzania develops a strategy for its critical minerals, it is important to set a higher bar for sub-national benefits.
Apart from environmental and social effects, most critical minerals concessions are located in relatively impoverished areas. A robust sub-national benefits framework would reduce local disputes and enhance investor’s social licence.
Observations made in this article are not confined to the management of critical minerals. In its attempt to avoid past mistakes, the government has prioritised caution while seeking inter-agency consensus as it negotiates with the prospective investors of the liquefied natural gas project.
Unfortunately, inter-agency coordination challenges and diversity of viewpoints has contributed to delays. There is a strong case for policy makers in government to streamline processes and maximise efficiency.
