Kabanga Nickel in Tanzania is WhyAfrica’s Pick Of The Week

It seems that Tanzania is the right address if you are investing in Africa. Image credit: Leon Louw for WhyAfrica

Kabanga Nickel in Tanzania is WhyAfrica’s Pick Of The Week

With Tanzania fast becoming the darling of East Africa again, and with nickel on a high, Kabanga in Tanzania is WhyAfrica’s Pick Of The Week.

By Leon Louw, founder and editor of WhyAfrica    

Global mining giant BHP has finally moved out of its comfort zone to take on a tad more risk by investing in Tanzania, the rising star of Africa.    

BHP’s USD40-million investment in the Kabanga Nickel project, is a good indication of how the wind is currently blowing through the boardrooms of global mining companies. There are several African countries that hosts large deposits of metals like nickel, cobalt, Platinum Group Metals (PGM) and lithium, that can simply no longer be ignored, despite their government’s dubious track records. Tanzania is one of them.

Tanzania, under President Samia Suluhu Hassan, has become the new darling of East Africa, after Hassan moved quickly to lure back foreign investors who forsook the country during the rule of the late John Magufuli early in 2021. Tanzania is fast becoming a top investment destination, and with even more reforms in the pipeline, expect exciting announcement in 2022.

Hassan reshuffled her cabinet last week and made a number of key leadership changes, with the hope of streamlining the decision-making process and improving efficiency.

Hassan’s positive impact on the economy

Hassan’s positive impact on the economy is there for all to see. The country’s economy grew by 5.3% year-on-year in the third quarter of 2021, with the industrial and agricultural sectors driving the expansion.

According to Oxford Economics Africa, local authorities in Tanzania, estimate that real GDP expanded by 5.0% overall in 2021. “Looking at 2022, financial support from the IMF will continue to buoy the economy as well as an improvement in investor sentiment. Large-scale infrastructure projects will facilitate robust growth. We are likely to revise our 2022 real GDP growth forecast to between 4.9% and 5.3%,” says Jacques Nel, head of Africa Macroeconomics at Oxford Economics Africa.

Hassan is certainly riding the wave of optimism and BHP couldn’t have chosen a better time to part with their USD40-million. Under Hassan and her Chama Cha Mapinduzi (CCM) party, the poverty rate in Tanzania has dropped from 28.6% in 2015 to 26.3% in 2020.

According to the African Report relations with the IMF have improved significantly under Hassan and the financier approved a USD372.4-million aid package for the government in 2021 to help it deal with the impact of covid-19.

In 2021, the Tanzanian government started talking to Beijing again. Three of the big Chinese backed projects that got mothballed under Magufuli (the port of Bagamoyo, the Mchuchuma coal mine and the Liganga iron ore project) is back on track although details remain scant.

Infrastructure is a major focus for government and the construction of a standard-gauge railway is under way. In addition, work has started on a 2,115MW dam, while the construction of a crude-oil pipeline to link Tanzania with Uganda’s Lake Albert oilfields is imminent.

Kabanga in a class of its own    

Kabanga is the largest development-ready nickel sulphide deposit in the world. Located in western Tanzania, it has contained in-situ nickel equivalent resources estimated at 1.86 Million tonnes and an in-situ nickel equivalent grade of 3.44%1,2.

According to Chris Showalter, Kabanga Nickel CEO, first production is expected in 2025, targeting minimum annual nickel equivalent production of 65,000 tonnes, with 30+ years life of mine and exploration upside potential.

BHP’s USD40-million investment will accelerate development of Kabanga to produce Class 1 battery-grade nickel, cobalt and copper.

BHP will invest a further USD10-million to progress Lifezone’s low-carbon hydrometallurgical processing technology which is more cost-efficient than smelting and has a significantly lower environmental impact.

According to Showalter, future investment tranches in Kabanga Nickel have been agreed upon, subject to certain conditions, including a second tranche of USD50-million and the right for BHP to make further investment subject to achieving certain agreed milestones.

Full beneficiation of battery grade metals without smelting will be achieved in Tanzania. The Government of Tanzania has a 16% interest through local partnership entity, Tembo Nickel Corporation, Kabanga Nickel Ltd (UK) holds the balance.

Dealing with climate change

“In her address at the COP26 Summit in Glasgow last November, President Samia Suluhu Hassan stressed the need for developed countries to help the African continent with the challenges of climate change. The partnership in Kabanga with the government, and the backing of BHP is an example of how this can be achieved,” says Showalter.

According to Doto Biteko, the Tanzanian Minister of Minerals, Tanzania has a vision to become an important hub for critical decarbonisation minerals. “I am pleased that Kabanga recognises this potential and has invested in our future. We now stand ready to help the world in the production and refining of the crucial metals that society needs, while creating skilled jobs and benefiting the economy of our country,” says Biteko.

According to market analyst Roskill, nickel demand from the Electric Vehicle (EV) sector is expected to grow globally by 2.6 Million tonnes to 2040, up from 92 Kilo tonnes (kt) in 2020, and by 543kt form 17kt in 202 within the European Union

“Underpinning this growth is our expectation for EU27 Original Equipment Manufacturers (OEMs) to increasingly utilise high-nickel cathode chemistries from the mid-to-late 2020s and throughout the 2030s,” the report states.

Kabanga is in the right neighbourhood, it is coming to market at the right time, and there is certainly lots of upside. Kabanga Nickel in Tanzania is WhyAfrica’s Pick Of The Week

Leon Louw is the founder and editor of WhyAfrica. He specialises in natural resources and African affairs.        

WhyAfrica provides you with business intelligence that matters. Africa is our business, and we want it to be yours too. To subscribe to WhyAfrica’s free newsletter or digital magazine, and for more news on Africa, visit the website at www.whyafrica.co.za or send a direct message. WhyAfrica launched its first ever digital magazine in November. If you are interested in contributing or advertising in future issues, please contact me at leon@whyafrica.co.za. We have a wide range of different packages and combo deals to give your company the greatest exposure to a rapidly growing, African readership.       

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