THE DEEPER YOU DIG

Tanzania 2015 | INDUSTRY & MINING | FOCUS: IRON & COAL

Tanzania's mining sector is most renowned for its production of gold and the indigenously exclusive rare gem Tanzanite, but proven reserves and recent investments could soon propel it to the ranks of the continent's top iron ore and coal producers.

Tancoal Energy Limited—a joint venture between the NDC and a subsidiary of Australia's Intra Energy Corporation—is also involved in a massive coal project in southwestern Tanzania's Ngaka Basin. The vast Ngaka Basin and surrounding sub-basins already have over 200 million tons of proven, high-quality thermal coal, with an expected total reserve of 1 billion tons. These reserves would last for over a century, and production would give Tanzania the capacity to become a coal exporter to the rest of the region. Tancoal currently produces 200,000 tons of coal annually, with an expected target of 500,000 tons by 2015.

Tanzania-China International Mineral Resources Limited (TCIMRL)—a joint venture between Sichuan Hongda Group-SHG of China and Tanzania's National Development Corporation (NDC)—are currently involved in an estimated $2 billion to $3 billion iron ore and coal project at Liganga, in Tanzania's southern district of Ludewa. Sichuan Hongda Group will hold an 80% stake of the joint venture, with the NDC holding the remaining 20%. It is roughly 850 kilometers to the south of Dar es Salaam. Via open cast mining, the mine will have a life of around 70 years. TCIMRL will also mine coal in a 30 square kilometer area with an additional 110 square kilometers still being explored. At current levels, the coal mine could be sustained for over a century, and it will eventually feed into a 600 MW coal power plant that is also part of the project.

Overall, the iron and coal project in Ludewa could directly employ up to 6,000 Tanzanians and an additional 35,000 indirectly. Initial production can begin as early as 2016, with hopes of reaching full production by 2018 or 2019. Full production is projected to bring $1.7 billion annually into Tanzania, and the over one million tons of iron ore produced annually would place the country fourth in total iron ore production on the continent, just behind South Africa.

The development of Tanzania's iron reserves comes just in time, as the country's booming construction sector is creating ever-increasing demands for iron steel. In 2013, iron products contributed 8.3% of national income, and the sub-sector grew by 8.6%.

Recognizing the importance of a strong local steel industry for the national goal of becoming semi-industrialized by 2025, the government has promoted and encouraged the development of the sector. In August 2014, Prime Minister Mizengo Pinda attended the launch event of Kamal Steel's newly-expanded steel plant. The plant has an annual production capacity of 80,000 tons, making it the largest single plant in East Africa and brings the total output of Tanzania's 15 steel plants to 420,000 tons. The current local demand for steel is only 300,000 tons, but with a blooming construction sector and the ongoing developments of major iron deposits, Tanzania is well positioned to propel itself to semi-industrialization via locally-sourced and produced steel.