British miner Kabanga Nickel, formerly known as LZ Nickel, has inked a framework agreement with the government of Tanzania to develop the world's largest battery-grade nickel sulphide deposit in the country's northwest.
As part of the deal, the parties have created a joint company called Tembo Nickel Corp., which will mine, process and refine class 1 nickel with cobalt and copper co-products.
Kabanga Nickel is the new entity's majority owner with an 84% stake. Tanzania owns the remaining 16%, which is the government's usual stake in all of the country's mining projects.
Economic benefits from the Kabanga nickel project, formerly owned by Barrick Gold (TSX: ABX; NYSE: GOLD) and Glencore (LSE: GLEN), will be shared equally between the two shareholders, the parties said in the statement.
Tanzania, Africa's fourth-largest gold producer, has sought in recent years higher revenues from its vast mineral resources by overhauling the fiscal and regulatory regime of its mining sector.
Barrick and Glencore lost the nickel project in 2018, when President John Magufuli's administration revoked their retention license, along with 10 others.
The move followed the suspension of new mining permits and the passing of two bills giving Dar es Salaam the right to renegotiate or revoke existing licenses.
The Kabanga project hosts an in situ resource of 58 million tonnes at 2.62% nickel, containing more than 1.52 million tonnes (3.30 billion pounds) of nickel, a key ingredient for the making of electric vehicles (EVs).
The company said the deposit also has significant amounts of cobalt and copper and has a 30-year mine life.
Kabanga Nickel noted it will acquire all the project data and information from Barrick and Glencore, including a 2014 draft feasibility study report and subsequent updates.
It also said it would build a hydrometallurgical (hydromet) plant, which is expected to reduce the carbon footprint and minimize environmental impacts, as well as lower capital and production costs.
"The project aims to develop the country's vision of adding value to all minerals and to expand refineries beyond Kabanga that will make Tanzania a regional and central hub for East and central Africa that will process minerals in Africa," the company's vice chairman, Chris von Christierson, said in the signing ceremony.
Fitch Solutions has forecast nickel mine production to grow by 8.3% this year from 2020, boosted by rising prices.