Govt: Our goals in $3 billion Liganga-Mchuchuma deal

The two projects, valued at over $3 billion, are considered strategic for Tanzania’s industrialisation drive. They are expected to generate electricity from coal at Mchuchuma and produce steel at Liganga, reducing import dependence and supplying vital raw materials for construction and manufacturing.

Prof Mkumbo said  among the issues being negotiated with China’s Shudao Investment Group Company Ltd (SDIG) is an increase in Tanzania’s shareholding, currently at 20 percent.

He added that the government was also pressing for iron ore mined at Liganga to be processed locally in order to boost technology transfer, create jobs and maximise earnings from value-added products.

“Since January 2025, the government has been negotiating with SDIG on the contractual provisions it was not satisfied with. The discussions are now at the final stage and we have already agreed on many fundamental issues.”

 Prof Mkumbo said compensation had already been paid to affected communities, meaning the project area is now fully under state ownership.

A long journey

The projects date back to 1996, when the Cabinet approved them under the National Development Corporation (NDC).

In 2007, NDC was directed to seek investors competitively, attracting 48 interested firms. Sichuan Hongda Corporation (SHG) of China won the bid in 2011 and signed a joint venture with NDC to form Tanzania China International Mineral Resources Ltd (TCIMRL), with NDC holding 20 percent.

However, in 2015, the government suspended implementation after establishing that some provisions of the joint venture did not adequately safeguard national interests. A special presidential negotiation team was formed in 2017, but talks failed to reach consensus.

The landscape changed in 2024 when SHG was acquired by SDIG, owned by the provincial government of Sichuan, China. Fresh talks began in early 2025 and Prof Mkumbo said they are now “nearing conclusion”.

Once operational, the Mchuchuma coal plant is expected to ease Tanzania’s energy deficit by stabilising power supply for industries. At the same time, the Liganga steel project will position the country as Africa’s fourth-largest steel producer after South Africa, Egypt and Libya.

“Local steel will significantly lower costs for infrastructure development and attract downstream industries,” Prof Mkumbo said.

He deed that the Liganga-Mchuchuma complex fits into the Dira 2050 development agenda, which aims to grow Tanzania’s economy from its current size of about $80 billion to $1 trillion by 2050.

Wider development drive

Prof Mkumbo stressed that private investment remains key to realising Dira 2050, with government ensuring a conducive business climate and safeguarding national interests. He said the projects are part of a broader portfolio transitioning from the Third Five-Year Development Plan (FYDP III, 2021/22–2025/26) into FYDP IV.

An expert task force chaired by Dr John Mduma has endorsed 12 of 17 ongoing flagship projects for continuation. Completed initiatives include the 2,115MW Julius Nyerere Hydropower Project, 13 major bridges and flyovers and the Mkulazi sugar factory.

Ongoing projects feature the standard gauge railway (SGR), the East African Crude Oil Pipeline (EACOP), the Kilwa Masoko fishing port and hydropower plants at Ruhudji and Rumakali. Others include the Lindi LNG project, Bagamoyo Special Economic Zone, Mnazi Bay gas expansion and the Mchuchuma-Liganga complex itself.

“These are not just projects; they are catalysts. They will create jobs, drive exports, save foreign exchange and position Tanzania as an industrial hub in East Africa,” Prof Mkumbo said.