Tanzania has signed crucial mining agreements for rare earth minerals and graphite, as the demand for these minerals is set to increase with the growing interest in electric vehicles and advanced technologies. The global reserves of rare earth minerals stand at 130 million metric tons, and China currently dominates the market, holding the largest reserves of 44 million metric tons. But even as the top player, China remains committed to maintaining its substantial reserves hence companies reliant on rare earth minerals are now seeking alternative sources, and Tanzania has emerged as a potential producer following agreements worth $667 million with Australian companies.
These agreements are expected to benefit Tanzania significantly, as its geographic location offers advantages such as mineral beneficiation and reliable transportation channels. The country will also gain from taxes, tariffs, job creation, infrastructure development, technological advancement, technical expertise, and corporate social responsibility. Joint venture companies established through negotiations with Australian firms will provide opportunities for Tanzanians to work both locally and internationally.
During the signing ceremony, the president urged artisanal miners to supply local factories instead of smuggling minerals, which face raw material shortages. She also encouraged the exploration of local content opportunities to boost revenue and called on district and regional authorities to support the projects' smooth operation.
The mining sector contributed 9.7% to Tanzania's GDP in 2021 and played a crucial role in generating foreign exchange. The agreements with the three Australian companies involve significant investments and offer Tanzania a unique arrangement of 16% non-dilutable free carried interest shares. These projects are anticipated to generate considerable economic benefits for both investors and the Tanzanian government.
The Chairman of the Special Negotiation Team, Prof Palamagamba Kabudi, highlighted the involvement of three companies in the agreements, including Peak Rare Earth, which will focus on rare earth elements in the Songwe Region through two joint venture companies, Mamba Minerals Corporation, and Mamba Refinery Corporation. The government will accumulate 16% non-dilutable free carried interest shares in these projects, making Tanzania the only country with such an arrangement.
Initial investments for the projects are valued at millions of US dollars, with substantial gross sales expected over their lifetimes. The signed contracts include a framework agreement on economic benefits sharing, shareholders agreement, memorandum and articles of association, as well as a draft joint financial model that will be modified as needed.