Nickel explorer given one-year ultimatum to start mining

Dodoma. The government has issued a one-year ultimatum to the operator of Kabanga Nickel Project in Kagera for the company to continue with exploration activities lest the license be given to another explorer, the government has said.

Responding to a question from Ms Oliver Semuguruka (Special Seats - CCM), the deputy minister for energy and minerals, Dr Medadi Kalemani said the company has failed to start mining due to a drop in global prices, noting however that the government wants the project to kick off sooner than later.

“As government, we want the investor to finish explorations and start mining within one year, failing which, the government will revoke the license and offer it to another investor,” he said.

In her main question, Ms Semuguruka had who wanted to know when Kabanga Nickel Company will begin its operations after conducting exploration activities for a long time.

According to Dr Medadi, though the company has conducted exploration activities for many years, it is yet to determine the economic viability of the discovered nickel so far.

He said during the past few years, nickel prices have dropped from $11 per Pound in 2010 to an average of $4 per Pound in 2014.

He however said that upon completion, the Kabanga Nickel Company is expected to offer 1,455 jobs to Tanzanians during the construction phase and 800 during actual production period.

Reports showed last year that Barrick Gold Corporation and Glencore Plc would seek for an investor into the project despite spending over $250 million since exploration started.

The investors, reports show, have been frustrated by the falling price of nickel in the world market for more than 10 years now.

Glencore is also reported to be concerned about high initial capital costs attached to the project while Barrick Gold has been struggling to pay off its debt of $9.1 billion.

Tanzania has always been concerned by delays of the project’s take-off, since its acquisition, first unilaterally by Barrick Gold in 1999. In 2004, Barrick Gold formed a partnership with Canadian-based Falconbridgeon. In 2006, Falconbridge was acquired by Xstrata PLC of Switzerland, which was later acquired by Glencore Plc in 2013.

In June, a Tanzanian government delegation, while on a trip to Canada voiced their concern over the delays in the project to Glencore chief executive Stephen Flewelling.