The Chinese Government seem to like mining in Tanzania:

Analysis of investment prospects of mining and related industries in Tanzania

Time: 2018-08-17 Source: Personnel Department (Retired Cadres)

              Analysis of investment prospects of mining and related industries in Tanzania

O Introduction

Tanzania is located in eastern Africa and south of the equator. It borders Kenya and Uganda in the north, Zambia, Malawi and Mozambique in the south, Rwanda, Burundi and Congo (Kin) in the west, and the Indian Ocean in the east. The coastline of the mainland is 840 km long . It is important to abide by Eastern Africa and Southeast Africa. At the estuary, the strategic position is outstanding III. With a land area of 945,000 km ² , the total population of the country in 2016 was 55.57 million.

Tanzania has special mineralization conditions and rich mineral resources. It is considered to be the fourth largest resource country in Africa after South Africa, Zimbabwe and Namibia . Gold, diamond, gemstone and nickel (copper, cobalt) polymetallic are its dominant mineral resources. Resources also have great potential. In recent years, the mining industry has become a fast-growing industry in Tanzania. In 2012, the growth rate was 7.8%. For the first time, it exceeded the GDP growth rate of 6.7%. The output value of the mining industry in 2016 was about 4% of GDP. It is expected that the output value of the mining industry will be 2025. Reach 10% of GDP.

At present, the development of mining in Tanzania environment by gradually mature, some of China's mining companies have moved into Tanzania mineral exploration and development . In addition, there are some Chinese companies in Tanzania engaged in infrastructure, such as ports, roads, gas pipelines and treatment plants, power plants and transmission and the construction of electric lines and the like. This paper mainly introduces the mineral resource endowment in Tanzania, the development of mining and related industries, and the status quo of Chinese investment in Tanzania and the analysis of the mining investment environment, risks and opportunities in Tanzania, with a view to the development of mining and related industries. Chinese companies and companies have certain reference and reference.

1 Mineral resource endowment

Located in the eastern part of the African plate, Tanzania is a member of the Dodomalabong block in the southern part of the East African Craton. It is rich in mineral resources such as gold, diamond, nickel, copper and cobalt. It has good potential for discovering world-class minerals . Tanzania is Africa. The four major resource countries have identified major minerals including gold, diamonds, nickel, iron, uranium, coal, natural gas and various gemstones. It is known that the proven reserves of gold are 2 222 t, accounting for 3.9% of the global total, and several large gold deposits are developed in the Victoria Lake area. The proven ore reserves of diamonds are 2.5 million tons (6.5 karat/t), accounting for approximately 2.3% of the world's total, mainly in the province of Hianga. Gem is the third-largest mineral resource in Tanzania after gold and diamonds. It is especially famous for its “Tanzan Blue” produced at the foot of Kilimanjaro. It is the only gem in the world with proven reserves of 12.6 million. t. The proven reserves of nickel ore are 4.05 million tons, accounting for about 5.1% of the global share. Kabanga on the border of Tanzania and Burundi is a large nickel-zinc-mining deposit located in Kagela, Ngar. pull (the Ngara) to zone. In addition, Tanzania's natural gas and uranium minerals also have great resource potential. The following is information on the reserves of major mineral resources in Tanzania.

2 Status of development of mining and related industries in Tanzania

2.1 Exploration of traditional minerals such as gold, uranium, copper and nickel is reduced, and prospecting work such as lithium, ilmenite, graphite and coal is on the rise.

The survey of mineral resources in Tanzania is relatively weak. Except for the northwestern region, the basic surveys in other regions are relatively low. Prior to 1990, Tanzania’s limited geological survey was completed by the State Mining Corporation (STAMICO) and the Geological Survey. The promulgation of the mineral policy in 1998 and 2010 promoted the exploration activities in the country. However, after 2012, due to the decline of the global mining industry and the decline in the price of mineral products, Tanzania's exploration budget for mineral resources began to shrink rapidly. The exploration budget for 2016 was only US$67 million, accounting for only 0.14% of GDP. Tanzania has long been the key support of gold, uranium, copper, nickel, diamond and platinum group metals and other mineral exploration, especially for investment in gold exploration of absolute dominance, but from after 2010, Tanzania also started lithium, Prospecting work for minerals such as ferrotitanium, graphite and coal, and increasing investment in exploration funds for these minerals. In recent years, a number of Australian companies have also shown great enthusiasm and significant investments in prospecting exploration for lithium, ilmenite, graphite and coal in Tanzania, such as Uranium One Inc. Conducting uranium exploration, Strandline Resources Limited and Rio Tinto for ilmenite exploration, Prospect Resources Limited and lack Rock Mining Limited for graphite exploration, Walkabout Resources Limited, Cokal Limited and Intra Energy Corporation Limited for coal exploration, etc. A large number of deposits such as the Mohanga lithium deposit, the Mafia, Kiswere, Kitambula and Bagamoyo West ilmenite deposits, the Chiliogali, Makonde and Nachingwea graphite deposits, and the Lindi, Lunguya and Mafia coal deposits.

2.2 Tanzania's mining development is controlled by Western developed companies and is dominated by gold mining.

Larger mines in Tanzania are mainly controlled by companies in countries such as Australia, Canada, the United Kingdom , the United States and South Africa, such as the Brieang Hulu Gold Mine, the Gaeta Gold Mine, the Williamson Diamond Mine, the Kabanga Nickel Mine, etc., while the state-owned And private mines are smaller. At present, except for the large-scale development of mineral resources such as gold, diamond, gemstone, nickel, iron and natural gas, most of the other mineral resources have not been effectively exploited. Among them, the development of gold plays an important role in the mining industry in Tanzania, and its output value accounts for more than 85% of the total output value of the country's mining industry . Gold has a mining history of more than 50 years, but the amount of mining is less than 10% of the storage. According to the statistics of the World Bureau of Metal Statistics, in the past 10 years, Tanzania's annual gold output has been stable at around 40 t. In 2016, gold production was 44 t, accounting for 1.6% of global gold production. It is second only to South Africa and Ghana in Africa. third.

Almost all of the gold produced in Tanzania is used for export in exchange for foreign exchange. Gold is the largest export-oriented minerals in Tanzania. Secondly, the export of diamonds and gemstones also creates a certain foreign exchange income for Tanzania. Other minerals have not been formed due to development or are directly used for domestic consumption, and exports are less. In 2015/16, Tanzania’s exports of mineral products accounted for 27.6% of total merchandise exports, of which gold. Exports accounted for 24.9% of total merchandise exports, accounting for more than 90% of total mineral exports.

2.3 As a key basin for exploration and development in East Africa, Tanzania has broad prospects for oil and gas resources development.

The coastal basin of Tanzania is one of the six oil-discovery basins on the east coast of Africa (a total of 13 basins). It is also the key basin for exploration and development in East Africa. In recent years, the British BG Group, Ophir Group, and Statoil International oil and gas companies such as Petrobras and Tanzania Petroleum Development Corporation have increased their oil and gas exploration and development efforts in Tanzania (especially in the eastern coastal areas of Tanzania), and have discovered Mnazi Bay (about RM3 trillion in reserves). ~ 5 trillion ft ³ ), Songo Songo (reserves about 1 trillion to 2 trillion ft ³ ), Mkuranga (about 200 billion ft ³ reserves), Kiliwani ( about 70 billion ft ³ reserves ) and More than 10 natural gas fields, such as Pweza, have been commercialized in the two gas fields of Songgosongo and Mnaz Bay. The natural gas currently mined is mainly used for domestic power generation. With the further development of Tanzania's oil and gas resources, the natural gas export market has great potential. According to the Bank of Tanzania, LNG will become the main driving force for Tanzania's 2025 middle-income countries. However, there is still no commercial oil production in Tanzania, and all the oil and its products are imported from the country. Oil has become the second largest category of imported goods in Tanzania. In 2016, Tanzania imported oil costs of US$ 107 million, accounting for 14.8% of total annual imports . Tanzanian government in order to achieve rapid growth in natural gas output in the country and ending in the history of no crude oil production, issued a series of preferential policies for oil and gas development, future broad prospects for oil and gas development in Tanzania.

2.4 The smelting and processing industry has great development potential and is expected to develop in the future.

Tanzania's smelting and processing industry is backward. It has long been exporting ore raw materials or primary mineral products, and imports finished products. In 2006, the first gold smelter was completed and put into operation in the industrial zone of Dar es Salaam, Tanzania. However, due to its limited smelting capacity, the gold mined in Tanzania is still mainly in the form of ore or concentrate. Export. In addition, Tanzania does not currently have a copper mine that is mined separately. Copper ore is an associated product of gold mining, with an annual output of only 60,000 tons, and the relevant analysis department said that the amount of copper ore needed to maintain a copper smelter's profit is required. At least about 150,000 tons, there is economic feasibility in the smelting of copper mines in Tanzania. Therefore, there is no copper smelter in Tanzania, and all the copper ore mined is exported to foreign countries for smelting. Tanzania currently has 28 steel mills, iron and steel production capacity is only 400,000 t, while demand in more than 1 million t, more than half of the steel cancellation fees need to be imported.

In order to ensure that mineral value-added activities are carried out in China, the Tanzanian government has banned the export of ore such as gold, copper, nickel and silver since March 2, 2017, and encouraged investors to carry out mineral processing activities, especially smelting and refining minerals. On the one hand, this initiative has caused some mining companies to be trapped when exporting mined ore products for export into foreign countries. For example, Acacia Mining (which owns two mines in Bulyanhulu and Buzwagi) said that the ore export ban The company will lose $1 million a day, and on the other hand will also stimulate them to build mineral processing plants in Tanzania. With the future of Tanzania copper mine exploration into mining infrastructure and roads, railways and other facilities to improve the recovery of previous mining should not be developed, copper ore production will increase, coupled with the Tanzanian government support, built copper in Tanzania The smelter will become viable. As the gold ore is not exported, the Tanzania Gold Mine Development Company will strive to expand the smelting and processing capacity of gold or build a new gold smelter. Tanzania's steel production capacity is low, and the country needs a large amount of steel to develop infrastructure. In addition, in recent years, Tanzania's domestic exploration of ilmenite has been increasing, and it is expected to achieve a large prospecting breakthrough. Investment is imperative. Overall, the smelting and processing industry in Tanzania is expected to achieve better development in the future.

3 Investment status of Chinese-funded enterprises in mining and related industries in Tanzania

Although a small 3.1-based development mineral rights, but mine industry investment potential large

In 2015, the prices of various major mineral products in the world have experienced a large-scale decline, and the operating pressure of Western mining companies in Tanzania has become increasingly apparent. Some Chinese companies have taken the opportunity to integrate into Tanzania's mineral exploration and development through acquisition, holding, or joint development. As the price of mineral products has risen, they have received good results. At present, there are dozens of mining investment and exploration companies in Tanzania in China, but mainly engaged in small-scale mining rights, mining rights cooperation, exploration and prospecting. The large-scale mining rights involved in Chinese enterprises are basically in the exploration stage, and a few projects have entered the preparatory stage of development.

Mchuchuma Coal Mine (coal reserves of 428 million tons) developed by Tanzhong International Mineral Resources Co., Ltd. (80% owned by Hongda Group and 20% owned by NDC) and Liganga Iron Mine (with coal reserves of 428 million tons) The iron ore reserve of 126 million tons) is the largest mining project in China to date in Tanzania. It is still in the infrastructure construction stage. After completion, it will produce 3 million tons of iron per year and sell 600 MW to Tanzanian power supply company (Tanesco). electric power.

3.2 Energy and electricity investment has an obvious trend in forming an industrial chain with broad prospects

Tanzania is short of electricity and is dominated by hydropower. In recent years, affected by the arid climate, Tanzania’s electricity supply has been worse. The Tanzanian government plans to invest US$1.9 billion annually by 2025 to increase the installed capacity of power generation from the current 1,500 MW to 10,000 MW by using natural gas and coal to end the domestic power shortage. Therefore, Tanzania's energy and power market has broad investment prospects. In recent years, China and Tanzania have been increasingly cooperating in the energy field, especially in the field of natural gas power generation. It is expected to form a comprehensive project chain of natural gas development-natural gas transmission-natural gas power generation-electric power transmission. At the same time, in the fields of wind power, coal power and other fields, cooperation between the two countries is gradually being carried out.

Mtwala to Dar es Salaam gas pipeline (542 km, actually built 535 km) and two natural gas treatment plant projects in Songgosongo and Mtitz Bay, undertaken by China Petroleum Technology Development Corporation , 2013 7 Construction started in the month and was successfully put into operation in September 2015. The project provides sufficient fuel energy for downstream natural gas power stations and is known as the “Energy Tanzan Railway” in the new era. At present, the power projects tracked by Chinese enterprises include K3, K4 natural gas power station project, Mchuchuma-Ligangjia coal-iron-electricity integration project, Songea hydropower project, Kiweiner coal-fired power project, Singida wind power project, Mbe Asia to Kigoma's Northwest Power Grid project.

4 Tanzania Investment Environment Analysis

Tanzania has a stable society, a superior geographical location, rich mineral resources, and good relations with China. Overall, the investment environment is better.

4.1 The relationship between China and Tanzania is good and has a good foundation for cooperation.

There is a deep friendship between China and Tanzania, and Tanzania is China's main recipient of aid in Africa. Since2015, China has become the fourth largest exporter and the second largest importer of Tanzania. As of May 2017, China’s total investment in Tanzania has reached 2.5 billion US dollars, becoming the second largest source of investment for Tanzania after India. . The two sides have close cooperation in infrastructure construction and mining development. At the same time, Tanzania, as one of the first pilot countries in China-Africa capacity cooperation, will have even greater investment opportunities and potential in the future.

4.2 Political and economic stability, loose mining policy

Tanzania’s domestic political situation is stable. In recent years, the economy has grown rapidly, and GDP growth has been around 7% for a long time. Tanzanian government attach importance to the development of mining, management of the mining industry is relatively standardized, relevant laws and regulations relatively sound, was included in the Tanzanian mining preferential investment fields. The preferential policies for foreign investment include: 1 foreign-funded enterprises can enjoy 100% capital return; 2 foreign shareholders' dividends and dividends can be remitted freely after tax payment; 3 exempt from income tax before capital investment is recovered; 4 exempt capital goods Import duties; 5 fixed investment such as mining equipment and factory buildings are depreciated by 20%; 6 new mines are exempted from the first five years of dividend withholding tax.

5 Mining investment risks and opportunities coexist

5.1 Low level of geological work, potential for prospecting

Although the geological prospecting activities in Tanzania started earlier, they mainly focused on the exploration and development of minerals such as gold and diamond. In addition, due to the Tanzanian government financial constraints, slow progress in geological survey work for a long time, the overall research studies degree is not enough, there is a certain risk of mining development. At the same time, there are a large number of prospecting blanks in Tanzania. In the future, the exploration and development of oil and gas will also become the focus, which also provides a good opportunity for Chinese companies to conduct prospecting exploration in Tanzania.

5.2 Infrastructure is backward, and infrastructure investment space is broad

Tanzania's infrastructure is generally backward, roads and railways are in disrepair, and operating capacity is poor. The port's throughput can't meet Tanzania's growing international trade. Power development is extremely backward, electrification rate is low, and electricity prices are high (about Uganda). , Kenya and other neighboring countries 2 to 3 times), frequent and limited power occurrences, seriously affecting the development of Tanzanian mining. Chinese enterprises to invest heavily in priority Tanzania-based roads, railways and electricity and other infrastructure construction, well prepared for the future into its mining industry.

5.3 Lack of technology and talent to provide opportunities for Chinese technology output

Large-scale mineral resources exploration and development activities require strong technical and professional talent support. Tanzanian nationals are generally under-educated, labor quality is generally low, and mining-related technologies and talents are in short supply, which restricts their large-scale domestic Mining development. Chinese-funded enterprises can provide technology to Tanzania, occupy high-end in the mining industry chain, and help them cultivate talents, establish a good corporate image, and achieve long-term cooperation and mutual benefit.

5.4 Exchange rate risk

Tanzanian local currency exchange rate changes more frequent, easier monetary losses when companies export, it is timely precautions against investors in Tan Van measures.

6 Investment advice

1) Oil and gas exploration and development. Chinese-funded enterprises may consider the exploration and development of oil and gas resources in the eastern coastal areas of Tanzania, and cooperate with Tanzania in the LNG business field to share a piece of their rich oil and gas resources.

2) Solid minerals. Tanzania's gold mine is rich in resources and has a good development foundation. Investors can gradually enter the Tan mining market from the exploration and development of gold mines. Chinese companies can also be aimed at the opportunity to invest Tanzanian exploration and development of uranium Virginia, ilmenite, graphite and coal and the like.

3) Smelting and processing industry. In response to the Tanzanian ore export ban, Chinese-funded enterprises can set up gold refineries or smelters in Tanzania, build copper smelters according to the amount of copper concentrates, etc.; Tanzania's steel market is not saturated, and Chinese-funded enterprises can also build steel plants in Tanzania. .

4) Energy and electricity. In the future, Tanzania has a large space for power upgrades. Chinese-funded enterprises have a certain investment base in this field and should continue to follow up and expand the construction of power plants, transmission lines and gas pipelines.

5) Infrastructure. Tanzania's infrastructure is backward. China is relatively mature in infrastructure construction and has the advantage of technology and talent. Chinese-funded enterprises can choose to invest in this field.

7 Conclusion

Through the in-depth analysis of Tanzania's mining and related industry development status, the status of investment of Chinese-funded enterprises in Tann Mining and related industries, and the investment environment and mining investment risks and opportunities in Tanzania, the following conclusions are drawn.

1) The exploration intensity of traditional minerals such as gold, uranium, copper and nickel in Tanzania has decreased, while the investment in prospecting such as lithium, ilmenite, graphite and coal has increased.

2) Tanzania's mining development is controlled by companies in Australia, the United Kingdom, Canada, South Africa and the United States, and is mainly based on the development of gold mines.

3) The coastal basin of Tanzania is the key basin for prospecting and exploration in East Africa, and the future development of oil and gas resources is promising.

4) Affected by factors such as the export ban on ore and the development of infrastructure, the smelting and processing industry of Tanzania's gold, copper and steel will be greatly developed in the future .

5) At present, Chinese-funded enterprises are still focusing on the development of small-scale mineral rights, and the mining investment potential needs to be further explored.

6) Tanzania has a broad space for energy and power upgrading. Chinese-funded enterprises have more investment projects. In the future, it is expected to form an upstream, middle and lower-end industrial chain around power development.

7) Tanzania has a good investment environment, and its exploration and development of mineral resources such as oil and gas and gold mines, as well as smelting and processing of gold, copper and steel, as well as the construction and transformation of infrastructure such as roads, railways, ports, energy and electricity, etc. Investment prospects.

Excerpt from China Mining , Vol. 26, No. 11 of 2017

http://www.hebgt.gov.cn/heb/gk/kjxx/gjjl/201534119600310.html