Tanzania to cash in on Kabanga nickel project

Tanzania is set to experience a significant economic boost with the recent announcement of a massive investment in the Kabanga nickel project by Anglo-Australian mining giant, BHP. The project is expected to inject at least $50 million into the country's economy, with the potential for further investments totaling up to $670 million. Joseph Sheffu, Managing Partner at Ernst & Young Tanzania, discussed the implications of this investment in an interview with CNBC Africa. Sheffu highlighted the importance of the Kabanga project, emphasizing the much-needed foreign direct investment (FDI) it would bring to Tanzania. He noted that the country had seen a decline in FDI over the past decade, from $2 billion in 2013 to $1 billion in 2019. Various factors, including unfavorable macroeconomic conditions and challenging business environment, had deterred foreign investors. However, recent changes in government policies and a shift in the regulatory framework have started to attract interest from international investors. One of the key changes that impacted FDI in Tanzania was the revision of the mining act, which introduced new requirements for foreign investors, limiting their ability to seek independent arbitration and imposing stricter regulations on local content and equity ownership. Despite these challenges, the government has been working to address policy concerns and create a more conducive environment for foreign investments. The Kabanga project, which is considered the world's largest development-ready nickel deposit in Tanzania, presents a significant opportunity for the country. Sheffu explained that the project would not only create thousands of direct and indirect employment opportunities but also contribute to the local economy through value addition and beneficiation. By setting up a metallurgical plant in Tanzania, the project aims to process the nickel locally, boosting employment and generating foreign currency inflows. In addition to the economic benefits, the Kabanga project is expected to enhance Tanzania's attractiveness to international investors. Sheffu noted that BHP's decision to invest in Tanzania, despite it being considered a 'red-flagged' country, signifies a vote of confidence in the country's potential. This vote of confidence is likely to attract more investors and improve Tanzania's position in the global investment landscape. The success of the Kabanga project will also depend on the collaboration between local businesses and multinational corporations. Local entrepreneurs are encouraged to partner with established companies that possess the technical expertise and capital required to maximize the opportunities presented by the project. This long-term investment is expected to span over 30 years, with the potential to reach a total investment of nearly a billion dollars. Overall, the Kabanga nickel project represents a game-changing opportunity for Tanzania, signaling a new era of growth and development in the country's mining sector. The project's success will not only benefit the economy but also pave the way for future investments and partnerships that could further propel Tanzania's economic prosperity.