Tanzania revives $3 billion Mchuchuma, Liganga project

Dar es Salaam. After more than a decade of delays, the government has launched a new feasibility study for the long-stalled $3 billion Mchuchuma and Liganga projects in Ludewa District, Njombe Region.

National Development Corporation (NDC) managing director Nicolaus Shombe told The Citizen that the updated study began at the end of July and is expected to take at least six months. The project is expected to commence within three years after the study’s completion.

“We are conducting an update of the initial feasibility study, as it was done years ago and many factors have changed, particularly technology,” he said.

The review is being conducted in collaboration with the Sichuan Hongda Group (SHG), the project’s investors, as well as the Minerals Commission and the NDC. It will examine project viability, technology, infrastructure and market conditions.

The government last December revealed ongoing discussions with the Chinese government to identify a new investor, amid concerns over the capacity of the current investor, Tanzania China International Mineral Resource Ltd. (TCIMRL), to execute the project.

Dr Shombe said previous delays were largely caused by business challenges faced by the former investor, which significantly affected their capacity to deliver.

"We have now agreed that, within three years of completing the feasibility study, the investor will be required to construct key infrastructure at the mine, including a processing plant, railway and other related facilities. Once that infrastructure is in place, we expect production to begin within the same period,” he said.

President Samia Suluhu Hassan had earlier directed the Ministry of Industry and Trade and Ministry of Planning and Investment to fast-track the acquisition process for a new investor to revive the project.

The Mchuchuma and Liganga project is expected to supply essential raw materials, including iron and coal, to support industrial development, particularly for the Saturn Corporation Limited vehicle assembly plant in Kigamboni, Dar es Salaam.

However, TCIMRL deputy CEO Eric Mwingira told The Citizen that SHG, the parent company, remains actively engaged with the project. “Although the initial management left, the new management is still engaging with the government. The company has not exited the project,” he said.

Mr Mwingira also noted that while the government approved essential tax incentives, they have yet to be gazetted, a key step in making them legally binding.

The project contract was signed in 2011 and TCIMRL still holds two valid Special Mining Licences (SMLs) for the Mchuchuma coal and Liganga iron ore deposits.

Mr Mwingira emphasised that the company is seeking government endorsement of a 10-year tax relief package and additional incentives, including exemptions on import duties for construction materials, spare parts, machinery and fuel.

Negotiations, previously handled by the government’s investment negotiation team, are now managed under the Trade and Industry permanent secretary.

SHG has already invested approximately $70 million in geological exploration, environmental and social impact assessments, compensation valuations and smelting technology research.

In 2014, a performance contract was signed granting certain investment incentives under the Tanzania Investment Act (CAP. 38). The Finance Act of 2015 further amended the Act to introduce “Special Strategic Investor Status,” targeting projects with significant economic impact.

Despite the delays, the government insists it remains committed to seeing the Mchuchuma and Liganga project take off while balancing investor demands with national interests.