Tanzania: Bhp Buys Stake in Tanzanian Nickel Deposit

BHP will buy a minority stake in a Tanzanian nickel project, as the world's biggest miner seeks to expand in commodities that will be central to the green-energy transition. Kabanga is a development-ready, high-grade nickel sulphide deposit located in the Ngara District in Kagera Region.

It is estimated to have more than 1.52 million tonnes of nickel. BHP, a global resources company and producer of various commodities, including copper and uranium, copper smelter, copper refinery and precious metals will initially invest 40 million US dollars (about 92bn/-) in Kabanga Nickel and 10 million US dollars (about 23bn/-) in Lifezone, which owns the processing technology, the smaller company said in a statement.

The company will take an 8.9 per cent equity stake in Kabanga Nickel from its initial investment and raise its stake to 17.8 per cent after making an additional 50 million US dollars investment. BHP's purchase of a stake in Kabanga values the project at 658 million US dollars. Kabanga Nickel CEO Chris Showalter said: "We are delighted to announce this partnership with BHP.

It highlights the world-class nature of the Kabanga deposit and its importance in helping meet the crucial decarbonization challenge facing the world today. "BHP is the ideal partner for Kabanga Nickel, bringing significant advantages and expertise that will enable us to move ahead with the project.

The investment reflects the project's strong ESG credentials and its role in improving environmental performance throughout the nickel value chain," he said. Showalter further said BHP's funding support of Lifezone's hydromet technology - the future of sustainable metals processing - will drive progress towards a greener world.

"Through the development of Kabanga and Lifezone hydrometer, Tanzania will have a growing role in the supply of the battery metals needed to move to a global low carbon economy," he said.

BHP's investment in Kabanga Nickel comes less than a month after the commodities giant bowed out after a bidding war for Noront Resources, which owns nickel deposits in Canada. Nickel, traditionally used to make stainless steel, is also a key component in lithiumion batteries, allowing vehicle manufacturers to reduce the use of cobalt, which is more expensive and has a less transparent supply chain.

A return to Africa marks a shift in strategy for BHP, which has operated mainly in more developed countries in recent years. The company sold its last mining asset in Africa -- the rights to develop an iron ore deposit in Guinea in 2019 to focus on Australia, Canada and Chile.

While Kabanga holds a huge nickel deposit, it's particularly attractive because of the company's plans to use hydrometallurgical technology, which allows the smelting of nickel in a more environment-friendly way.

Kabanga is seeking to raise funding for the project and plans to start operating in 2025, producing about 40,000 tonnes of nickel, 6,000 tonnes of copper and 3,000 tonnes of cobalt.

BHP's focus on nickel represents a turnaround from less than a decade ago. The company had planned to exit the nickel business to focus on other commodities and put its Nickel West unit in Australia up for sale in 2014. Today, BHP has identified metal as one of its priorities "future-facing" commodities as the company shifts away from fossil fuels.

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