Why Tanzania must act fast on Mchuchuma–Liganga projects

According to the World Steel Association’s Short Range Outlook, Africa’s demand for raw and semi-finished steel is expected to grow at an annual rate of 2.2 percent until 2035.

The growth is already visible in construction, transport, manufacturing and energy. For Tanzania, which imports large volumes of industrial inputs, the opportunity is both economic and strategic.

The country’s import bill reached $17.7 billion in the year ending September 2025, up from $16.8 billion the previous year, according to the Bank of Tanzania.

A significant share includes processed metals and construction materials that could be produced locally if the country leveraged its own mineral reserves.

Tanzania holds an estimated 126 million tonnes of iron ore at Liganga and about 428 million tonnes of coal at Mchuchuma. Experts say these resources could underpin a domestic steel industry, but caution that time is running out.

Several analysts told The Citizen that Tanzania risks being locked out of future markets as global climate and trade regulations become stricter.

“Time is not on our side,” independent economist Oscar Mkude said yesterday. “If we delay, we will keep saying we have resources but failed to use them at the right moment.”

Mr Mkude said Tanzania must prioritise supporting infrastructure—railways, roads and industrial facilities—to enable mining and smelting. Doing so would reduce import costs, generate foreign exchange and create new industries.

The government says it is close to making progress. In September, Minister of State for Planning and Investment Prof Kitila Mkumbo said Tanzania and its Chinese partner, Shudao Investment Group Company Ltd, were finalising revised agreements after months of negotiations.

He said revenue-sharing, technology transfer and local employment terms had largely been settled.

The projects, valued at over $3 billion, were designated as strategic under the national blueprint Dira 2050, launched in July 2025, which places mineral processing and industrialisation at the centre of economic transformation.

He said 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.

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

But local economists argue that political will remains key. Regional competitors such as Kenya and Uganda are also positioning themselves for the steel market.

University of Dar es Salaam economist Dr Wilhelm Ngasamiaku said further delays would undermine the trade balance. “Almost every sector relies on steel.

If investors fail to deliver, government agencies like NDC and Stamico should form SPVs with the private sector, similar to the Mkulazi model,” he said.

University of Dodoma lecturer Dr Lutengano Mwinuka warned that delays slow economic growth and weaken citizen welfare. He said Tanzania continues exporting raw coal and iron ore instead of processing them locally, even as climate regulations tighten.

“The potential exists, but we have not fully tapped it,” Dr Mwinuka said. “If we do not move quickly, we risk losing markets and failing to industrialise at the right time.”

He added that the stakes are particularly high for Ludewa, where infrastructure is limited but the projects could turn the area into an industrial hub and stimulate growth across the southern corridor.