{australien_flagge}Since Tanzania’s new President Samia Suluhu Hassan has been in power, she has ensured a strengthening of political and social stability in the East African country and, among other things, proclaimed the goal that mining should account for 10% of Tanzania’s economic output by 2025. This has not only attracted new investment from international resource companies such as BHP and Shell, but also led the U.S. to strengthen its strategic relationship with the Tanzanian government just recently, including a visit by Vice President Kamala Harris, emphasizing the country’s importance as an emerging major supplier of critical raw materials for lithium-ion batteries for use in electric vehicles.
{australien_flagge}Since Tanzania’s new President Samia Suluhu Hassan has been in power, she has ensured a strengthening of political and social stability in the East African country and, among other things, proclaimed the goal that mining should account for 10% of Tanzania’s economic output by 2025. This has not only attracted new investment from international resource companies such as BHP and Shell, but also led the U.S. to strengthen its strategic relationship with the Tanzanian government just recently, including a visit by Vice President Kamala Harris, emphasizing the country’s importance as an emerging major supplier of critical raw materials for lithium-ion batteries for use in electric vehicles.
One of these critical minerals is the graphite used in battery anodes, which Australia’s EcoGraf Limited (WKN A2PW0M / ASX EGR) plans to mine at its already advanced Epanko project in Tanzania. Yesterday, April 17, 2023, EcoGraf reached an important milestone on its way to this goal, which has already taken several years. In the presence of President Hassan, the Minister of Minerals Dotto Biteko and, among others, representatives of the German and US embassies, a framework agreement for the development and operation of the Epanko graphite project was officially signed between the company and the Tanzanian government!
The framework agreement covers a number of extremely important points, one of which is that the newly established company Duma TanzGraphite is to develop and operate Epanko. This company is 84% owned by EcoGraf, while the government of Tanzania holds a free 16% stake in Duma TanzGraphite.
Existing Epanko licenses, project permits, environmental permits, relocation plans and financial balances will also be transferred from EcoGraf’s wholly owned subsidiary TanzGraphite to Duma TanzGraphite, with these transfers being non-taxable. In addition, the Framework Agreement provides that Duma TanzGraphite will receive a new “Special Mining License” that will extend for the entire operating life of the Epanko Project!
As EcoGraf points out, the granting of this license is one of the crucial preconditions that potential financiers of the project, which include Germany’s KfW IPEX-Bank, want to see fulfilled. And EcoGraf and the government of Tanzania will now work together to obtain financing for the development of the Epanko project. Which should also be helped by the fact that the Tanzanian government will facilitate approvals and permits for the development and operation of Epanko under the framework agreement.
The agreement also provides that EcoGraf will appoint Chairman and CEO of Duma TanzGraphite, while the company’s Board of Directors will initially consist of three representatives from EcoGraf and two representation from the Government of Tanzania.
Conclusion: Today’s official signing of the framework agreement between EcoGraf and the Tanzanian government truly deserves the term “milestone”. After a long hiatus and some recent progress, the development of Epanko should now be able to pick up more speed, with the next big goal, besides the granting of the Special Mining License, then being project financing.
In any case, the signing of the framework agreement comes in an extremely positive environment for battery raw materials such as graphite, as demand for electric vehicles is still forecast to increase dramatically in the coming years. In addition, new credit criteria for clean vehicles have just been issued in the U.S. under the Inflation Reduction Act to strengthen supply chains of critical minerals. The EU also announced further measures to support EU supply chains in this area, while the government of South Korea announced legislation requiring that 50% of all critical and battery materials be sourced outside of China. Whereas, of course, these are just a few examples of the legislation supporting the electric mobility sector around the world.
In any case, it will now be exciting to see what EcoGraf makes of the template that is the signing of the framework agreement with Tanzania. If further progress is made in the near future, this should also be reflected in the share price performance. Because as has been shown by the reaction of the markets, the interest in EcoGraf is still or again high, despite all the risks that exist in any case.
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