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Tanzania to Start $3b Mining/Power Project in 2015

Posted by September 25, 2014

Tanzania will start construction next year of a long-planned $3 billion coal and iron ore mine and a 600-megawatt coal-fired power plant, a spokesman for the state development agency said on Thursday.

The projects, on a site some 900 km (540 miles) southwest of commercial capital Dar es Salaam, were initially set out three years ago under a joint venture deal with a Chinese company.

They are part of plans to increase the east African country's coal-fired power generation capacity and exports, exploiting its 5 billion tonnes of coal reserves.

East Africa's second-biggest economy suffers from frequent blackouts due to supply shortfalls, forcing most businesses and wealthy people to have stand-by generators, and is trying to ease the constraints cited as a barrier to economic growth.

Tanzania already produces coal from two mines, mainly for power generation. Coal production is part of its broader energy strategy, which includes exploiting recent big natural gas finds off its southern coast.

China's Sichuan Hongda Co Ltd signed a $3 billion deal with Tanzania in 2011 to mine coal and iron ore and build the coal-fired power plant, a deal that marked China's growing economic presence in the country.

Under the agreement, the coal mine and electricity generation project are expected to cost $1.3 billion, while the iron ore mine will cost $1.7 billion.

Abel Ngapemba, spokesman for the National Development Corp (NDC), said Tanzania plans to raise its stake in the venture to 49 percent from 20 percent, as envisaged it could do in the original deal.

"We expect the project to be completed in 2018/19," he said.

The mine has the country's biggest iron ore reserves at more than 1.2 billion tonnes, mostly destined for export, and reserves of 526 million tonnes of coal for local electricity generation.

Tanzania passed legislation in 2010 that allows the government to own a stake in strategic mining projects.

Ngapemba said the NDC had also received bids for a separate project that aims to build the country's first soda ash extraction plant, capable of producing about 1 million tonnes a year.

However, conservationists have said the project could harm flamingo populations in Tanzania's Lake Natron and have demanded an independent environmental study. Ngapemba said an environmental assessment would be done before the project is implemented.

(By Fumbuka Ng'wanakilala, Editing by James Macharia and David Holmes)


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