African Critical Mineral Competition: U.S.-Invested Kabanga Nickel Project in Tanzania Reduces Costs by 5% to $942 Million

¬ Lifezone Metals will invest $942 million in the Kabanga Nickel Project in Tanzania over 18 years;

¬ Despite weak nickel prices, the project targets revenue of $14.1 billion with a payback period of 4.5 years;

¬ Tanzania holds a 16% stake and is expected to receive $3.6 billion in taxes and royalties.

The U.S. mining company Lifezone Metals currently plans to invest $942 million to develop the Kabanga Nickel Project in Tanzania. This latest figure is included in the feasibility study summary released on Friday, July 18, which is about 5% less than the initial estimate of $991 million.

The $942 million investment covers all pre-production costs for the future mine and its dedicated processing plant. It is expected that the Kabanga project will produce 902,000 tons of nickel over the 18-year operational period. Additionally, the project will also produce 134,000 tons of copper and 69,000 tons of cobalt as by-products annually.

Lifezone Metals expects this investment to generate $14.1 billion in revenue over the 18-year operational period. The company expects to recoup the investment within 4.5 years after the mine starts production. The post-tax net present value (NPV) is $15.8 billion, and the internal rate of return (IRR) is 23.3%, based on a nickel price of $8.49 per pound, which is generally lower.

Adapting to Market Conditions

This adjustment to the project's initial cost was made following Lifezone's announcement to "re-design" the original mine plan in response to falling nickel prices. Currently, the metal is trading at $15,096 per ton on the London Metal Exchange, down about 68% from the peak of $48,000 in 2022. Despite the sluggish market due to oversupply, Lifezone still intends to proceed with the project.

This decision contrasts sharply with the approaches of BHP and First Quantum, which have suspended their nickel operations in Australia in 2024.

Looking ahead, Lifezone plans to initiate the project financing process, aiming to make a final investment decision by 2026. Although specific financing options under consideration have not been disclosed, the U.S. International Development Finance Corporation (DFC) has already issued a letter of intent expressing willingness to provide a loan for the development of the Kabanga project in 2024.

In addition to financing, Lifezone needs to obtain the necessary mining licenses from the Tanzanian authorities. The Tanzanian government holds a 16% stake in the project, while Lifezone Metals holds the remaining 84%. In addition to its stake, Dodoma is expected to receive $1.2 billion in royalties and other taxes, as well as $2.4 billion in corporate income tax.

Source: ecofinagency

Original: https://www.toutiao.com/article/1838245131759691/

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