Sichuan Hongda Co. Ltd, has signed a deal worth $3 billion for a coal and iron ore mining in Tanzania. The Chinese company is one of many that are seeking a steady supply of raw materials from Africa to support its demand due to industrialization.
Dr Chrisant Mzindakaya and Mr Liu Canglog, the chairpersons of the NDC and Sichuan Hongda Group boards of directors, respectively, signed the agreement in Dar es Salaam in the presence of Vice President of the country Mohamed Gharib Bilal.
This particular deal will involve the construction of the Mchuchuma integrated coal mine, a 600-megawatt thermal power station and the Liganga iron ore mine in southern Tanzania. The investment made by the Sichuan Hongda Co is being called the single largest investment deal in east Africa.
The deal will see the formation of a new joint venture company called Tanzania China International Mineral Resources. Sichuan Hongda Co will own 80% stake in the joint venture which accomplishes all this while the National Development Corporation, a Tanzania state run agency will own the remaining 20% stake in the joint venture.
Trade Minister Cyril Chami said that the NDC had an option to increase its share to 49% once the Chinese company had recovered its initial cost of investment. Sichuan Hongda had already secured $600 million initial financing from Chinese banks to launch the investment, with execution of the projects probably starting within the next six months.