Geza Ulole
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Tanzania to become a top producer of graphite
TanzaniaEnergy
Economic News
26 Feb 2018
Ongoing foreign investment is setting Tanzania up to become one of the largest graphite producers worldwide, despite concerns over the new mining law.
In mid-January Volt Resources, an Australian flake graphite development firm focused on Tanzania, raised $4.7m in capital to help fast-track the initial stage of its flagship Bunyu graphite project.
The funds – raised through a structured bond issue on the Dar es Salam Stock Exchange – will be used in the first production phase of the project, whose output is expected to reach 400,000 tonnes per annum (tpa) of ore and 20,000 tpa of graphite products. The graphite extracted from Bunyu will be used to make battery anodes as well as flame-retardant building materials.
Soon after raising the capital, Volt Resources submitted an environmental and social impact statement for the project. First-stage feasibility studies are expected to finish in the first quarter of 2018, and the company is currently preparing its mining licence application, which marks the last step before works can begin.
Multiple graphite projects under development following 2015-16 discovery
Bunyu is the largest of several graphite projects to launch in Tanzania in recent years, following the discovery in 2015-16 of substantial graphite deposits in the country’s south-east by mainly Australia-based developers.
In addition to the Bunyu project, Volt Resources is developing the Namangale project, which has the capacity to produce 100,000 tpa of graphite.
Magnis Resources, meanwhile, is developing the Nachu project, which has a 240,000-tpa capacity and a lifespan of 15 years, while Kibaran Resources is developing the Epanko project, with the capacity to produce 44,000 tpa.
Once fully operational, the projects should position Tanzania one of the top-three graphite producers in the world.
The global graphite market was worth $15.8bn in 2016, according to market research firm Future Market Insights, and is forecast to see a compound annual growth rate of 6.7% through to 2027, driven in part by demand for Lithium-ion batteries, which are used in a range of products, including electric cars. In 2016 China was the largest producer of graphite, at 780,000 tpa, while India came in second, with 170,000 tpa, and Brazil third, with 80,000 tpa.
Developing downstream graphite
Volt also has initiatives in the pipeline to advance its downstream capabilities. In May 2017 it revealed plans to process graphite from the Namangale site, and production is slated to come on-line in the middle of this year. In the mine’s first production phase, between 10,000 and 20,000 tpa of graphite will be processed for export, mainly to China and the US.
Volt is not the only company to ramp up operations in refining and processing graphite. In 2015 Magnis Resources, another Australian firm, became the first company outside of the special export zones (SEZs) to be granted a special mining licence to develop an advanced graphite processing plant with SEZ status.
The plant, operated by subsidiary Magnis Technologies Tanzania, will process 200,000 tonnes of graphite concentrate per year from the Nachu project in south-east Tanzania.
Benefits of SEZ status include a 10-year exemption from corporate tax, and levies on machinery, equipment and construction materials for the development of SEZ infrastructure, in addition to exemption from payment of withholding tax on rent, dividends and interest for 10 years.
Concerns over new mining law eased
The recent acceleration of activity both upstream and downstream will come as welcome news to the investment community following concerns over new mining legislation that came into effect in mid-July.
The bill stipulates that the government will have a 16% stake in all mining projects – a move President John Magufuli said was an attempt to “safeguard natural resource wealth” and crack down on tax evasion. Royalties on revenue were also increased from 4% to 6%.
With the acquired right for the government to renegotiate project contracts, and temporary halts imposed on new mining licences, the law introduced uncertainty into the sector and stoked concerns that planned projects could see delays.
Many initiatives in the graphite sector – notably the Bunyu project – have nonetheless resumed according to plan.
Graphite projects to promote broader economic growth
Planned and ongoing projects to develop the sector’s entire value chain are key to the government’s plans to develop the extractive sector and drive broader economic growth.
The new projects coming on-line both in the field and at smelters are expected to boost employment and increase mining’s contribution to GDP, which accounted for 3.7% in 2014, or $1.78bn, according to the latest available data. Under its Tanzania Development Vision 2025 blueprint, the government aims to increase this to 10%.
Tanzania to become a top producer of graphite
TanzaniaEnergy
Economic News
26 Feb 2018
Ongoing foreign investment is setting Tanzania up to become one of the largest graphite producers worldwide, despite concerns over the new mining law.
In mid-January Volt Resources, an Australian flake graphite development firm focused on Tanzania, raised $4.7m in capital to help fast-track the initial stage of its flagship Bunyu graphite project.
The funds – raised through a structured bond issue on the Dar es Salam Stock Exchange – will be used in the first production phase of the project, whose output is expected to reach 400,000 tonnes per annum (tpa) of ore and 20,000 tpa of graphite products. The graphite extracted from Bunyu will be used to make battery anodes as well as flame-retardant building materials.
Soon after raising the capital, Volt Resources submitted an environmental and social impact statement for the project. First-stage feasibility studies are expected to finish in the first quarter of 2018, and the company is currently preparing its mining licence application, which marks the last step before works can begin.
Multiple graphite projects under development following 2015-16 discovery
Bunyu is the largest of several graphite projects to launch in Tanzania in recent years, following the discovery in 2015-16 of substantial graphite deposits in the country’s south-east by mainly Australia-based developers.
In addition to the Bunyu project, Volt Resources is developing the Namangale project, which has the capacity to produce 100,000 tpa of graphite.
Magnis Resources, meanwhile, is developing the Nachu project, which has a 240,000-tpa capacity and a lifespan of 15 years, while Kibaran Resources is developing the Epanko project, with the capacity to produce 44,000 tpa.
Once fully operational, the projects should position Tanzania one of the top-three graphite producers in the world.
The global graphite market was worth $15.8bn in 2016, according to market research firm Future Market Insights, and is forecast to see a compound annual growth rate of 6.7% through to 2027, driven in part by demand for Lithium-ion batteries, which are used in a range of products, including electric cars. In 2016 China was the largest producer of graphite, at 780,000 tpa, while India came in second, with 170,000 tpa, and Brazil third, with 80,000 tpa.
Developing downstream graphite
Volt also has initiatives in the pipeline to advance its downstream capabilities. In May 2017 it revealed plans to process graphite from the Namangale site, and production is slated to come on-line in the middle of this year. In the mine’s first production phase, between 10,000 and 20,000 tpa of graphite will be processed for export, mainly to China and the US.
Volt is not the only company to ramp up operations in refining and processing graphite. In 2015 Magnis Resources, another Australian firm, became the first company outside of the special export zones (SEZs) to be granted a special mining licence to develop an advanced graphite processing plant with SEZ status.
The plant, operated by subsidiary Magnis Technologies Tanzania, will process 200,000 tonnes of graphite concentrate per year from the Nachu project in south-east Tanzania.
Benefits of SEZ status include a 10-year exemption from corporate tax, and levies on machinery, equipment and construction materials for the development of SEZ infrastructure, in addition to exemption from payment of withholding tax on rent, dividends and interest for 10 years.
Concerns over new mining law eased
The recent acceleration of activity both upstream and downstream will come as welcome news to the investment community following concerns over new mining legislation that came into effect in mid-July.
The bill stipulates that the government will have a 16% stake in all mining projects – a move President John Magufuli said was an attempt to “safeguard natural resource wealth” and crack down on tax evasion. Royalties on revenue were also increased from 4% to 6%.
With the acquired right for the government to renegotiate project contracts, and temporary halts imposed on new mining licences, the law introduced uncertainty into the sector and stoked concerns that planned projects could see delays.
Many initiatives in the graphite sector – notably the Bunyu project – have nonetheless resumed according to plan.
Graphite projects to promote broader economic growth
Planned and ongoing projects to develop the sector’s entire value chain are key to the government’s plans to develop the extractive sector and drive broader economic growth.
The new projects coming on-line both in the field and at smelters are expected to boost employment and increase mining’s contribution to GDP, which accounted for 3.7% in 2014, or $1.78bn, according to the latest available data. Under its Tanzania Development Vision 2025 blueprint, the government aims to increase this to 10%.
Tanzania to become a top producer of graphite
