By TBY | Tanzania | Jan 03, 2018
Despite some problems, Tanzania has everything it needs to power its industries and increase GDP. With new international investments and government policies, Tanzanian industry is on its way to prominence in the region.
Despite being the second-largest economy in the East African Community, Tanzania’s economy has recently gone through a relatively tumultuous period. In 2014, the country was able to move on and make considerable improvements to its GDP. Today, while much of the country’s GDP relates to the nearly 50% of its workforce in agriculture, the Tanzanian industrial sector is quickly gaining steam. Tanzania is estimated to have nearly 2 billion tons of coal reserves, of which at least 25% are proven reserves. Following a survey led by the National Energy Policy of Tanzania, Tanzania’s potential reserves could be as high as 5 billion tons, giving the country the potential to be a major regional coal exporter. According to the most recent information from Tanzania Invest, the country imports as much as 86% of the coal it uses to run its coal fired power plants. Of the country’s total energy capacity from coal-fired power plants, equal to 1,754MW, it provides less than 1% of coal.
The country currently has three primary coal mining operations: the Rukwa Coalfields Project, the Kiwira Coal Mine, and the Ngaka Coal Project, all of which are located in the south and eastern regions of the country, all of which have the potential to produce much greater quantities, giving Tanzania the opportunity for greater energy independence. The Kiwira Coal Mine, a state mining corporation (STAMICO) operation, holds an estimated 35 million tons of reserves. STAMICO has a development plan that will increase output to 1.2 million tons per year in an opencast coal mine, increase underground mining production from 150,000 tons to 300,000 tons, and to build a 200MW thermal power plant. The Ngaka Coal Project is a joint venture between Intra Energy Tanzania Limited and the National Development Corporation of Tanzania, and is operated by Tancoal Energy. The project is anticipated to have a maximum production rate of 5 million tons per year for export and has enough proven reserves to remain profitable for 50 years.
Tanzania’s cement sector has transformed recently, taking a turn from a seller’s to a buyer’s market. According to Global Cement, a monthly industry research publication, Tanzanian cement company Tanga Cement saw a decline in revenue by an impressive 20% YoY, falling to USD75 million in 2016 from USD94 million in 2015. The decline was largely attributed to lowered government spending on infrastructure. Cost cutting, however, allowed the country to actually increase operating earnings despite the decline in revenue, increasing to USD17 million from USD13 million. As of August 2016, the company’s yearly production capacity sat at 1.25 million.
In March 2017, the Chinese Sinoma International Engineering Co. announced plans to build a USD1-billion cement plant in the northern coastal city of Tanga, with a special emphasis on exports. The project will include building a wharf to help increase exports; the plant is hoped to export 70% of the cement it produces to regional countries such as Sudan, Mozambique, Kenya, and Somalia. Tanzania’s mining industry saw serious changes in July 2017, when President John Magufuli signed into law several new bills regarding the industry. The new laws stipulate that government must now own at least 16% in all mining projects, and they also increase the royalties tax from 4 to 6% on silver, platinum, copper, gold, and other minerals. During the announcement, the president also stated Tanzania would not be issuing any new licenses until the country “puts things in order” and said that all existing licenses with foreign investors would be reviewed by the government. In addition, the government now has the power to renegotiate or end contracts for natural resources, without an option for international arbitration.
The mining industry is a major one in the country, employing more than 1 million people. Mining makes a significant impact on the country’s GDP, primarily by extracting copper, silver, and gold, as well as gemstones and some industrial minerals. Tanzania is the continent’s fourth-largest gold miner, behind South Africa, Mali, and Ghana. The country’s gold exports are thought to account for over 2% of global production.