Tanzania Mining Report Q1 2012
- ID: 2019689
- December 2011
- Region: Tanzania
- 51 Pages
- Business Monitor International
Tanzania Mining Report provides industry professionals and strategists, corporate analysts, mining associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Tanzania's mining industry.
The Tanzanian mining industry is relatively small in terms of value, but its importance is highlighted by the fact that mining earns a significant share of the country's export revenues. The mining sector contributes approximately 2.8% to annual GDP, but the government wishes to expand this to 10% by 2025. Major foreign investors in Tanzanian mining include African Barrick Gold and AngloGold Ashanti.
Tanzania is home to deposits of many metals and minerals, including: coal, cobalt, copper, diamonds, gold, nickel, silver and uranium. The country has long been a significant producer of gold (currently Africa's fourth-largest producer) and diamonds. However, in the coming years, BMI also expects coal, nickel and uranium production to become key sub-sectors of Tanzanian mining output. Indeed, BMI has long held the view that coal should become one of the fastest-growing mining sub-sectors in Tanzania over the coming years, as the country looks to coal-fired power stations to offset an energy shortage that is holding back its development. The country could also be in a position to export coal in the future. BMI forecasts rapid growth in gold and nickel production as the country begins to tap some of its mineral wealth. BMI expects Tanzania's gold mining sector to recover from its temporary slowdown and post growth from 2013. Much of this growth will be driven by African Barrick Gold, which has four projects in the country. However, the threat of industrial action remains, given the tension between workers and employers at present. In addition, poor infrastructure could be a significant drag on production growth and may see projects delayed.
Aside from gold, nickel will be a significant driver of the country's mining sector growth. Tanzania's nickel output is set for dramatic growth as development of the north-west of the country commences. This region is home to some of the largest untapped high-grade nickel deposits in the world; several mining projects in the north-west will transform the country's mining sector and reduce Tanzania's dependence on gold as an export earner. In addition, many of these nickel projects are of relatively high grade and cash cost, which make the country even more attractive to investors.
BMI expects Tanzania's mining sector to become less attractive to investors given the country's push to increase regulation and raise taxes on the sector. While other countries, such as Ghana, Peru and South Africa, are also seeking to raise taxes on mining companies, Tanzania is going significantly further with plans to introduce an Australia-style 35% tax on mining companies' profits and raising royalties. These tax rises, combined with a lack of adequate infrastructure and the absence of huge mineral deposits compared with many of its neighbours could push investors elsewhere on the continent.
One further boost to the wider mining sector should come from the news that Chinese firm Sichuan Hongda is to invest US$3bn in the country to build a coal mine at Mchuchuma and an iron ore mine and thermal power station in Liganga. According to an April 2011 report in Tanzania's Business Times newspaper, negotiations between Sichuan Hongda and the country's National Development Corporation are almost at an end, indicating that a contract to build and operate these mines should be signed soon. The same report also quotes a local MP, Deo Filikunjombe, as saying that he is working to ensure that electricity is produced from Mchuchuma coal by 2013 and iron ore mined at Liganga from 2014. According to local media reports, Mchuchuma has some 536mn tons of coal reserves, while Liganga has total reserves of up to 1,200mn tonnes, including iron, vanadium and titanium.
African Barrick Gold dominates the country's mining sector, with four gold mines that account for the vast majority of Tanzania's gold production and a significant share of the government's exports. The company has several expansion plans to drive output growth in gold production. African Barrick has had a troubled time of late, due to problems over strikes, theft and declining grades. SHOW LESS READ MORE >
Tanzania Political SWOT
Tanzania Economic SWOT
Tanzania Business Environment SWOT
Global Mining Outlook
Table: Recent Tax Increases
Table: Largest Coal Projects
Table: Frontier Mining Projects
Industry Trends And Developments
Table: Tanzania - Main Projects
Table: Tanzania's Mining Industry, 2008-2015
Table: African Government Mining Plans
Table: Africa Mining Business Environment Ratings
Industry Forecast Scenario
Table: Major Gold Projects
Table: Gold Output, 2009-2016
Table: Tanzania - Nickel Projects
The Mining Code
African Barrick Gold
Commodity Strategy – Metals Update
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (% change y-o-y)
Business Environment Ratings Methodology
Table: Mining Business Environment Indicators
Table: Weighting Of Components