Investors are frustrated by the falling price of nickel in the world market for more than 10 years now. PHOTO | FILE
What you need to know:
According to analysts, the investors have been frustrated by the falling price of nickel in the world market for more than 10 years now.
The planned sale of Kabanga comes amid concerns by the Tanzanian government over delays of the project’s take-off, since its acquisition, first unilaterally by Barrick Gold in 1999.
Up to 2007, the Kabanga investors still had high hopes in the project.
Despite spending over $250 million in the Kabanga Nickel Project in northwestern Tanzania, Barrick Gold Corporation and Glencore Plc are said to be seeking an investor on whom to offload the project.
According to analysts, the investors have been frustrated by the falling price of nickel in the world market for more than 10 years now.
“There is no hope for the future price of pure nickel after the Chinese invented nickel pig iron,” said Aloyce Masele, a Tanzanian metal products dealer living in the UK.
Glencore is also reported to be concerned about high initial capital costs attached to the project while Barrick Gold has been struggling to pay off its debt of $9.1 billion.
The planned sale of Kabanga comes amid concerns by the Tanzanian government over delays of the project’s take-off, since its acquisition, first unilaterally by Barrick Gold in 1999. In 2004, Barrick Gold formed a partnership with Canadian-based Falconbridgeon. In 2006, Falconbridge was acquired by Xstrata PLC of Switzerland, which was later acquired by Glencore Plc in 2013.
In June, a Tanzanian government delegation, while on a trip to Canada voiced their concern over the delays in the project to Glencore chief executive Stephen Flewelling.
Mr Flewelling said that they had put more than $250 million into the project and promised mining activities were likely to start between 2018 and 2020. The pressure by the government is as a result of non-fulfilled previous promises by the Kabanga investors.
In January 2014, a government-owned newspaper carried a story under the headline: Tanzania: Kabanga Nickel Project to Open Soon. The article quoted the Minister for Energy and Minerals, Sospeter Muhongo saying that government was soon to buy shares in the Kabanga venture which would later be sold to the public.
Up to 2007, the Kabanga investors still had high hopes in the project. In February that year, then Barrick’s partner, Xstrata Nickel, committed a further $95 million for pre-feasibility studies on top of the initial $50 million that they had spent on updating the resource model for the project.
Ian Pearce, then CEO of Xstrata Nickel and Greg Wilkins, then Barrick president and CEO had described Kabanga project as having the potential of becoming a world class nickel sulphide deposit.
