Australian firm granted licence to mine Tanzania graphite

Thursday November 24 2016

Graphite mining in Tanzania. PHOTO | FILE

Tanzania has granted Australia Stock Exchange-listed Graphex Mining Ltd a 10-year mining licence for graphite deposits discovered at Chilalo area in Nachingwea.

The licensing on November 14 by Energy and Minerals Minister Sospeter Muhongo will now make Tanzania one of the world’s major graphite exporters alongside China.

Commodities futures markets predict that a tonne of high quality graphite will cost about $6,175 from 2020.

Global demand for graphite is expected to double in a decade as the world pushes for greener technologies in transport and energy.

“Securing the mining licence is a significant step towards our objective of commencing project development and commercial production at Chilalo. It derisks the project,’” said Graphex’s managing director Phil Hoskins.

Feasibility studies show that Graphex intends to produce 69,000 tonnes of graphite annually and will invest $74 million in infrastructure and production facilities.


Mr Hoskins said the firm was negotiating off-take and financing agreements with CN Docking Joint Investment & Development, a subsidiary of China National Building Materials and China Gold Group Investment Co. Ltd.

“The expected conclusion of technical due diligence in the near term will allow these negotiations to move to a more advanced stage,” Mr Hoskins said.

Although China produces about 70 per cent of the world’s graphite, it is discouraging export of the ore through a 20 per cent tax, 17 per cent Valued Added Tax and an export licensing system.

The restrictions could benefit Tanzania, which is also developing another graphite mine at Nachu in Ruangwa. The $210 million project by Magnis Resources of Australia targets annual production of 240,000 tonnes of graphite concentrate annually for at least 15 years.

Tanzania’s other major graphite deposits are found in Epanko in Mahenge and Morogoro, Tanga and Merelani in Arusha, which are owned by Kibaran Resources Ltd, also of Australia.

Magnis last year signed off-take agreements with two Chinese Companies — Sinoma and Sinosteel — covering 180,000 tonnes of graphite annually when production starts — tentatively mid next year.

Magnis Resource has also started negotiations with China Railway 24th Bureau Group, a subsidiary of China Railway Construction Corporation Ltd, which built Tazara, for engineering, procurement, construction and contract mining. Posco Engineering & Construction of South Korea has been tasked to arrange financing of the project.

In a note to investors, Magnis put the operating margin for Nachu at $1,791 per tonne and net present earnings at $1.69 billion.