Tanzania: Electric Vehicles Market Opportunity for Tanzania Flourishing Graphite Suppliers

opinion

CONTROLLING the damage from climate change is a foremost test facing the global economy. The Paris Accord aimed to reduce emissions of Carbon Dioxide and other Greenhouse Gases in an endeavour to preserve the average temperature rise under 1.5°C.

Meeting these aspiring goals will require mass embracing of environmental technologies such as renewable power, Carbon Dioxide Capture and Storage, and energy-saving household appliances and industrial equipment. In this perspective, the electrification of road transportation embodies a major opportunity to reduce emissions, especially in a sector that at present believed to accounts for around 14% of global GHG emissions.

On road transportation in particular, importance in graphite as raw material for electrical vehicle is swelling in large part since lithium and battery technology are becoming more common in car manufacturing for energy and construction industry for safety concern.

Taken strategically with long term view, graphite production in Tanzania could join top 10 graphite raw material supplier to mounting lithium and battery technology in the world. As battery technology advances, these lithium batteries are used in everything from phones to electric vehicles, and graphite is one of their key raw materials.

As lithium-ion battery demand grows, graphite demand is also expected to rise. In the face of discussions surrounding clean energy and changes in lithium-ion battery chemistry, many amateurs consider graphite will remain a key raw material in electric vehicles batteries for at least the next decade.

Both synthetic graphite sourced from petroleum coke and natural graphite, in the form of the intermediate product spherical graphite, are graphite products that are used in the anodes of lithium-ion batteries that are argued to be key in the car manufacturing.

Mass acceptance of electric vehicles (EVs) is valued in the years ahead, to be driven mainly by policy incentives, rising incomes, and technological advancements currently being witnessed in the car manufacturing and construction sector especially in developed world.

According to Benchmark Mineral Intelligence, demand for graphite from the battery anode segment could surge by seven times in the next decade as surging electric car trades and the energy storage trend remain to drive the construction of lithium-ion battery mega-factories.

Eyeing over to the supply situation in 2020, China took the top spot for graphite production, with Mozambique and Brazil and Madagascar and India and Russia and Ukraine and Norway and Pakistan and Canada coming in second and third... .tenth, in that order.

For any investor and financier following the sector development, it will come as no surprise that the Asian country is leading the way with China acknowledged to dominate both the mining and refining side of the graphite market.

May possibly Tanzania and located next to Mozambique geographically join these top 10 graphite suppliers in the world? If this being the case, should Tanzania join these 10 top suppliers as yet again raw material suppliers or value added products or finished product i.e. lithium batteries or graphite sheets? Assuming intention is to sale value added final products i.e. batteries of all sizes and uses, what Tanzania need to do to attract investors and financiers to sponsors industrialists to set base in Tanzania? Geologically, based on geological data, is believed to have amongst the best graphite, with not only high grade, but with large flake that attract good market price in the lithium-battery manufacturing business.

But, mass adoption is grounded on the obtainability and affordability of the raw materials required to facilitate this transformation that in my opinion could place Tanzania in the world map as a player in either raw material supplier or a base where finished products could be produced.

To-date, anecdotal research from at least five mining companies indicates that various solicitation for investors searching for banks long-term loans have undertaken investigation to ascertain resource base, with some at proven ore reserve stage, others on probable ore reserves stage, and others on measured, or indicated and inferred stage.

While all these stages are critical for financiers to take risk to extend credit, what could be holding Tanzania first graphite mining from taking off? Could review of mining regulation be the reason or the manner in which we entice investors to see Tanzania as best alternative investment destination in the region? What need to be done in the spirit of industrialisation under 5th phase government and implementation of FYDPIII premeditated to penetrate export market competitively to enable Tanzania strongly be a player in the lithium and battery technology whose demand is on increase? Amidst on how mining sector in Tanzania could be an egg basket for country's sources of revenue, last week, for three days, mining sector in Tanzania accomplished a milestone provided by dialogue on how best mining sector in Tanzania could be brought into its full potential.

Amongst stories that emerged during the discussion were challenges architects in the sector are facing and how these challenges could be talked to discussion on how Tanzania could continue to maintain its position in a list of top five producer of gold in Africa, discussion that in my view reaffirmed the future of gold industry in Tanzania is paying off, thanks to management and supervision of the sector imposed by the government.

While increased revenue collection from the sector year by year seem to have increased for example from 270bn/- in the financial year 2015/16 to 258bn/- in 2019/2020 and there are expectation that for year 2020/21 collection might reach 526bn/ with an average of 43.89bn per month, in my opinion this collection isn't enough.

It isn't enough in my opinion as Tanzania is blessed with other minerals that to be viewed as strategic mineral at the same time for security mineral.

Allude to discussion laboured in the conference, the Ministry of mineral in this financial year is likely to exceed collection target based on collection trend that could be described by effective controlling of mineral sector that is starting to bring positive returns in government collections.

While I do welcome news on increase in revenue collection and reassurance that the recent review of laws and regulations were meant to create a win-win situation between investors and the country, I would like to call upon Tanzanian government to start thinking strategically to capitalize and position to take lead on emerging electric vehicle demand jump.

Tanzania has been best known for its gold production in 2020 being at its peak amongst African gold producing nations. It is also rich in other industrial and technological minerals for instance, rare earth metal such as praseodymium (Pr) neodymium (Nd) that are essential element in energy technology in evolving electrified world. Nickel similar to graphite is a key ingredient for electric car vehicles.

The recent agreement signed by the government to develop Kabanga nickel project believed to develop the world's largest battery-grade nickel sulphide deposit is just on sketch of how Tanzania could be a front-runner in EV supply chain and manufacturing of power storage batteries critical to the car manufacturing sector and construction industry.

In my opinion, step ahead thinking in this sector and willingness to take part in EV value supply chain is timely and appropriate if Tanzania would like to have stake and capture part of global EV sales by 2025. Data shows that in 2021, global EV demand will increase more than 30% versus last year.

Inspiring the mass adoption of EVs with the express intention of replacing sales of Internal Combustion Engine Vehicles within a given time frame is gaining momentum, for instance UK targeting to 2035. Other governments active in sponsoring EVs are Canada, China, Finland, France, Germany, India, Japan, Mexico, Netherlands, Norway, Sweden, the United Kingdom and the United States.

Strategically, line up to soaring EV market demand Tanzania could earn a place in EV supply chain and boost its fiscal sources. Such collection could be grounded on the Government of Tanzania officially circulated regulations concerning graphite concentrate exports, having issued Government Notice 687 of 2020, The Mining Regulations, 2020.

The 2020 regulations repeal the 2019 The Mining Guidelines of 2019. It is my view that improvement in regulation is vital as it switches the 2019 Guidelines to Regulations. Having transparency on export controls for graphite products is a central and timely step for Tanzania in the journey to EV demand.

The government of Tanzania targets that the mining sector should contribute 10% of the GDP by 2025. Much as this is government direction, what it will take to realise its full potential in Tanzania mining sector given the risks associated with these projects and the magnitude of long term fund required? To help realise the goal of 10% of GDP, the type of mineral and the level of investment and manner in which financing is apportioned need to be looked strategically, if the government desire and harness the economic importance of the mining resources for future growth aspirations in Tanzania.

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