The electric vehicles filling our cities and the vast data centres powering the Artificial Intelligence (AI) revolution share one thing in common – a massive need for critical minerals.
Demand for aluminium, lithium, graphite and rare earth metals is increasing exponentially, as the economy witnesses a renewed commodities super cycle.
Historically, China, Brazil, Indonesia and Australia have been the established giants in the global critical minerals industry. These countries not only enjoy substantial deposits of minerals but have also created an entire ecosystem for processing them for industrial application.
More recently, a new East African nation, which was once a footnote in the global mining industry, is increasingly making its way to centre stage: Tanzania.
Despite holding 30% of the world’s critical minerals, African countries have not been able to lead in the critical minerals industry.
Poor governance and a lack of advanced infrastructure have meant exploration remains still slow, with processing largely outsourced to Asia.
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For example, the Democratic Republic of the Congo extracts just over 76% of the world’s cobalt, but processes only a small fraction of this metal domestically, instead exporting most of it as raw ore.
Tanzania, for its part, is looking to even out these odds and establish itself as a major player in the mining and processing of critical minerals.
The country holds considerable volumes of graphite, nickel, copper, gold, uranium and rare earth elements and has the policy agenda to leverage this as part of a dramatic economic transformation.
Last year, President Samia Suluhu Hassan announced a national critical minerals strategy, focused on ensuring reliable supply of critical minerals, stimulating exploration, and fostering innovation, all while championing sustainable and responsible mining practices.
This placed mining at the centre stage of the country’s economic transformation. Tanzania holds abundant supply of praseodymium, neodymium, as well as 6% of the world’s graphite.
Lithium batteries, which underpin renewable energy storage and electric transport, cannot function without their graphite component.
Earlier in 2023, Tanzania initiated the Ngualla Project under the leadership of minerals giant Peak Rare Earths, exploring one of the largest and highest-grade undeveloped neodymium and praseodymium deposits in the world.
In October last year, the government also launched the Mahenge Graphite Project, which aims to produce 60,000 tons of natural graphite annually, while also exploring the country’s exceptional rare earth reserves at scale.
More recently in May, officials announced newly identified deposits of neodymium and praseodymium located in the Njombe Region, suggesting the extent of the country’s resources is not yet fully known.
All these projects will involve the crushing, milling, and flotation of the raw ore into concentrate, on sites in the country itself.
Tanzania’s leadership understands that the country can become Africa’s central processing hub, while climbing the value chain through smelting, refining and manufacturing of medium-use products.
The ingredients that make the country ideal for this take off, including industrial capacity, abundant energy, trade and export infrastructure, a stable regulatory and political environment, and attracting global capital, have been aggressively pursued by the government.
The groundwork for this has long been in the making. The Tazara Railway which connects the country to the Zambian copper belt, operational since the 1970s, is undergoing an ambitious Chinese-led modernisation.
The Bagamoyo Harbour under construction is set to be East Africa’s largest and aims to handle 20 million containers annually by 2045.
The country’s recently discovered LNG deposits, Africa’s sixth largest, are being explored with a US$42 billion onshore liquefaction plant in Lindi run in collaboration with Shell and Equinor.
Few developing countries in the region have the political and economic means to see these projects through.
Tanzania’s ambitions impact far beyond its national borders. As the US-China rivalry poses a risk over international trade and export bans threaten the flow of materials essential to the energy transition, the country’s combination of vast resources, openness and reliability make it a key player in the global supply chain. Tanzania offers its partners a neutral and reliable supplier.
This is not just an opportunity for mineral importers. The upgrades to infrastructure, education and industrial capabilities in the country mean Tanzania’s processing and refining facilities will become a dominant sector in the regional economy.
For investors, this means enormous growth potential while also providing an opportunity to assist the developmental leap of East Africa’s second largest country.
Tanzania’s critical mineral agenda is a rare unambiguous win for the global economy. It may supply the world with the materials for a clean energy transition and de-risk major supply chains from unstable partners.
Africa’s economic future and the global energy transition rarely point in the same direction, but when considering Tanzania – they do.