Tanzania changes approach in Liganga, Mchuchuma talks

Industry and Trade deputy minister Exaud Kigahe told The Citizen that the government is now in country-to-country discussions to reach an agreement regarding the investment.

“We expect China will find another company to take over the project, or if not, we will search for another investor,” he said.

Mr Kigahe added that despite the ongoing discussions, there has been no official communication confirming that the initial investor has withdrawn.

Earlier in the year, Mr Kigahe said Tanzania was ready to finalise the process and start implementation of the project.

“The challenge we are facing is that the major investors do not come to the negotiation meetings,” he said.

This comes after President Samia Suluhu Hassan directed the Ministry of Industry and Trade, along with the Ministry of Planning and Investment to expedite the acquisition process for a company that will facilitate the launch of the Liganga and Mchuchuma projects.

The project, situated in the Ludewa district of the Njombe region, aims to provide essential raw materials for Saturn Corporation Limited’s large vehicle assembly plant in Kigamboni, Dar es Salaam, and other industries.

However, TCIMRL deputy CEO Eric Mwingira told The Citizen that the negotiations on the project are still ongoing. “Currently, the initial investors left the management and new ones came in,” he said.

Mr Mwingira added that since the project was stalling, the investors are currently in China, and there is one representative in Tanzania making follow-ups.

“The company is still here, and we are continuing with the discussions.”

Earlier in the year, Mr Mwingira told The Citizen that the company still holds a valid development contract.

However, he noted that the government has not yet gazetted the agreed-upon tax incentives, essential for initiating the project’s implementation.

Further reports highlight that the Ministry of Finance and Planning was yet to publish the granted investment incentives approved by NISC and enshrined in the two signed performance contracts in the Government Gazette to make them legally operational as required by law.

Mr Mwingira had said the project has taken a long time, and the government approved the tax incentives they sought, but it is yet to work on them and gazette them as legal.

“The project, whose contract was signed in 2011, investors are calling on the government to endorse the tax incentives, including 10 years of relief for the project that would be running between 50 and 100 years.”

Further, reports indicate that they are seeking tax incentives on exercise duty for import duty on the cargo or materials to be imported for construction, as well as incentives on spare parts and machinery, as well as relief taxes on fuel.

Reports show that they are continuing with negotiations, and there is great indication that the government will accept their requests. “Initially, the negotiations were under the government negotiating team, but currently, they have been moved to a committee under the Permanent Secretary in the Ministry of Industry and Trade.

The mother company, Sichuan Hongda Group Limited (SHG), discharged its part of the contract by carrying out the geological exploration and environmental and social impact assessment, study, valuation for purposes of compensation of the project-affected people, research, and development for smelting technology to the tune of about $70 million.

The capitalised exploration cost consumed a lot of resources because of the complexity of the mineralogical constitution when it comes to the separation of titanium from iron ore and design for an industrial complex. Based on the developments, TCIMRL applied for and was granted two Special Mining Licenses (SML) for both the Liganga Iron Ore and Mchuchuma Coal projects.

Reports show that immediately after the grant of the licence, TCIMRL started negotiations with the government in 2014 through the National Investment Steering Committee (NISC) on the granting of investment incentives for the Mchuchuma and Liganga projects under the provisions of the Tanzania Investment Act (Cap 38). After concerted negotiations, the performance contract was signed in June 2014, which provided some investment incentives for the project.

Further reports show that the government introduced Parliament an amendment to the Tanzania Investment Act CAP 38 through the Finance Act, 2015, in which they introduced the “Special Strategic Investor Status,” where the Finance Act 2015 amended section 20 of the Tanzania Investment Act by adding subsections (5) to (9).

The Finance Act 2015 was signed into law and according to the amendment, the government may identify and grant Special Strategic Investment Status to projects that have a minimum investment capital of less than $300 million and investment capital transactions that are undertaken through registered local financial and insurance institutions.