East African Mining News Unearthing Mining Opportunities in East Africa
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In a bold counter-cyclical move that defies the global slump in nickel prices, New York Stock Exchange-listed Lifezone Metals is forging ahead with its ambitious Kabanga project in Tanzania. This integrated nickel operation, set to become the East African nation’s first, is a high-stakes gamble on the future of the metal, and a significant boost to Tanzania’s aspirations for domestic value addition in its burgeoning mining sector.
The decision to press on comes as the nickel market continues to bleed. Futures are currently languishing at $15,120 per ton on the London Metal Exchange, a staggering 68% plunge from their heady 2022 peak of $48,000. This dramatic decline, largely attributed to an overwhelming supply glut spearheaded by Indonesia, has forced mining giants like BHP and First Quantum to suspend operations in Australia. Yet, Lifezone is doubling down on its investment in Kabanga, which will house Tanzania’s maiden nickel refinery.
“The nickel market has faced significant challenges due to Indonesia’s supply domination impacting prices, causing us to reengineer our Kabanga development plans,” Lifezone CEO Chris Showalter conceded earlier this month, acknowledging the turbulent waters the company is navigating.
Despite the headwinds, the company is on the cusp of finalising a definitive feasibility study based on an impressive 22-year mining plan. The initial five years of the project will see the mine’s output exported in concentrated form, while the crucial refinery, a cornerstone of Tanzania’s value-addition strategy, takes shape. Once operational, this state-of-the-art facility is projected to churn out a substantial 50,000 tonnes of nickel sulfate annually, alongside smaller but valuable quantities of copper cathodes and cobalt sulfate.
According to Lifezone’s June 2 update, the Kabanga mine is expected to yield a formidable 1.15 million tonnes of nickel over its 22-year lifespan. The upfront investment for both the mine and refinery is estimated at a cool $991 million, a figure predicated on a nickel price of $8.49 per pound (approximately $18,000 per ton) – a price point comfortably above current market realities, indicating a long-term strategic view. The project boasts an attractive after-tax internal rate of return of 22.9% and a post-tax net present value of a hefty $2.37 billion, signalling strong potential returns if market conditions eventually rebound.
Lifezone has been quick to reiterate its commitment to “responsible development and long-term value creation.” This aligns perfectly with Tanzania’s government, which in April 2024 announced a pivotal policy shift: new mining licenses would be directly tied to commitments for local processing – a clear signal of the nation’s intent to capture more value from its mineral wealth. The Tanzanian government holds a significant 16% stake in the Kabanga project, with Lifezone Metals owning the majority 69.7% and mining behemoth BHP holding the remaining 14.3%.
A summary of the project’s definitive feasibility study is eagerly awaited in July. Industry observers will be scrutinising the report for details on the development timeline and, crucially, Lifezone’s strategies to weather the continued softness in nickel prices, especially as Indonesia shows no signs of slowing its supply expansion. For Tanzania, Kabanga represents a significant leap forward in its industrialisation ambitions. For Lifezone, it’s a calculated, multi-billion-dollar bet on the future of a vital global commodity.
