The last decade has provided both challenges and opportunities for Tanzanian mining companies and the industry in general. Throughout the challenges, Australian mining companies have remained steadfastly committed to progressing their assets in Tanzania. This patience, commitment and persistence is starting to bear major fruit.
In January 2020, the Government of Tanzania and Barrick (the largest mining investor in Tanzania) reached wholesale agreement regarding a new structure for Barrick’s investment in the country. This approach and the documents that underpinned it (including the use of a framework agreement and the issuance of a 16% undilutable free carried interest to the Government) created a whole new model for, and opened an exciting new chapter in, the Tanzanian mining industry.
A growing number of Australian mining companies have now signed framework agreements (and agreed the details of shareholding/investment arrangements) with the Government of Tanzania – including Black Rock Mining, Strandline and Orecorp in 2021; and Peak Rare Earths, Ecograf and Evolution Energy Minerals in 2023. Negotiations are also ongoing for a number of others.
The vast majority of these companies will be operating in the critical minerals space, with a particular focus on graphite and rare earths. Based on these projects, it is predicted that Tanzania will be the world’s second largest producer of graphite by 2028 (second only to China, the current global leader).
Bowmans recently advised Walkabout Resources plc (an Australian mining company with a Tanzanian graphite asset) on a USD 25 million debt financing. Although a relatively modest ticket size by industry standards, this was the first successful international debt financing for a Tanzania-based mining project in more than 15 years. The funds were sourced in the City of London and will provide Walkabout with enough money to finish building its mine in Southern Tanzania. The mine is expected to enter production within the coming months and will be Tanzania’s first new mining project of significance in almost 20 years.
Following this watershed moment, we now expect to see many more ASX-listed projects complete their fundraising cycles and get mines in Tanzania constructed and into production over the next 12 to 24 months. This will play a crucial part in realising Tanzania’s desired role at the forefront of the critical minerals industry and as a key player in the global energy transition.
This is an extremely exciting time for the industry, with mining now contributing almost 10% of GDP. It is also clear that the partnership between Tanzania and Australia is of paramount importance.
Australian companies have supported Tanzania through a challenging decade. Now is the time for all parties to reap the rewards.
