Lifezone Metals (NYSE: LZM) says its $942 million (C$1.3 billion) Kabanga nickel project in northwest Tanzania is on track for a 2026 investment decision as Washington and Dodoma deepen talks on political-risk backing and project finance.
The U.S. International Development Finance Corp. (DFC) has completed environmental and social due diligence, and early works – including geotechnical programs, camp upgrades and power and rail logistics – are advancing, CEO Chris Showalter told The Northern Miner.
“Kabanga is a high-grade nickel sulphide project and we sit in the first quartile of the global cost curve,” Showalter said. “Because of the superior grade – and because we’re a non-Russian, non-Indonesian new source of high-grade nickel – we’re right in the lens of Western supply-chain policy.”
After Tanzanian President Samia Suluhu Hassan met acting U.S. ambassador Andrew Lentz, the government said last week the two sides are “moving to finalize major investment agreements.” Lifezone’s Kabanga project is one of three key investments Tanzania says it’s pursuing. The others are a $42-billion liquefied natural gas project and the $300-million Mahenge graphite project, details of which are still being fleshed out.
Location map of the Kabanga nickel project in Tanzania. Credit: Lifezone Metals
Government aid
Both Kabanga and the LNG facility are in their final stages for the government investment funding pending a formal signing. Tanzania framed the push as a modern, private-sector-driven partnership and called for consistent engagement and timely action on pending deals. More than 400 U.S. companies already operate in Tanzania.
Past investors haven’t been convinced of the case for Kabanga. Former owners Glencore (LSE: GLEN) and Barrick Mining (NYSE: B; TSX: ABX) halted the project in 2014 after completing a bankable study amid weak prices as Indonesia began ramping up exports of significant amounts of low-cost, refined nickel.
Showalter links the majors’ pullback to Indonesia’s rapid laterite build-out that swamped the market and left Western assets like BHP’s (NYSE, LSE, ASX: BHP) Nickel West/Kwinana “at the very highest end of the cost curve.”
“Indonesia just had their lunch,” he said. The executive estimated BHP’s break-even near $23,000 per tonne, while Indonesia loses money when it sells nickel for $15,000 per tonne, yet controls a majority of the market. Kabanga’s all-in sustaining costs may be $3.36 per lb. of payable nickel (about $7,408 per tonne) on strong by-product credits and recoveries, according to a feasibility study released in July.
Lifezone shares are still feeling the impact of a volatile nickel market. They closed 3.9% lower on Monday in New York at $3.91 apiece and have have lost 43% this year. The company has a market capitalization of $328 million.
New partner
Lifezone is looking for a new equity partner for Kabanga after buying back BHP’s stake in July. It hired Standard Chartered Bank to help in the search for an investor. It now owns 84% of the project, while the Government of Tanzania has a 16% stake.
Kabanga is an underground nickel sulphide deposit – higher grade and less energy-intensive to process than Indonesia’s surface laterites, which typically require high-pressure acid leach processing methods. That ore-type difference underpins Kabanga’s cost profile.
Kabanga hosts proven and probable reserves of 52.2 million tonnes grading about 2% nickel, 0.27% copper and 0.15% cobalt.
The feasibility study outlines a 3.4-million-tonne-per-year mine and concentrator, delivering an after-tax net present value, at 8% discount, of $1.6 billion and a 23.3% internal rate of return using consensus prices.
Permits
Lifezone holds a special mining licence and is amending its framework agreement with Tanzania to reflect a staged build – mine and concentrator first, with a Tanzanian refinery to follow.
The company still must close a multi-source financing and finalize the amended agreement. The planned refinery would target sulphate or powder end products to cut upfront capital and align with market demand.
The Kabanga project site: Lifezone Metals
Showalter pointed to the last year’s settlement model that underpins Barrick’s return to Tanzania: a government 16% free-carried stake plus taxes and royalties that “nets out near 50/50,” board representation for the state and strong international arbitration with a Singapore seat – further buttressed if U.S. political-risk insurance is applied.
Logistics and power
Kabanga concentrate would be trucked to Kahama and then move on the new Standard Gauge Railway (SGR) to Dar es Salaam for export. The Dar es Salaam–Dodoma SGR section is built by Yapi Merkezi, with later phases pushing toward Lake Victoria and potential links to Burundi and the Democratic Republic of Congo.
Dubai-based logistics company DP World is upgrading and managing capacity at Dar es Salaam’s port – together cutting long-haul trucking, tightening schedules and lowering logistics risk.
Exploration
Lifezone maps four near-mine targets – Safari Link, Safari Extension, Rubona Hill and Block 1 South – with a combined exploration target of 17.5–23.5 million tonnes at 1.9–2.1% nickel-equivalent, positioned to extend the mine life.
A 300-metre step-out hole north of current reserves cut high-grade nickel and Showalter says Safari Extension is next in focus with additional undrilled deposits to the southwest. More than 620 km of historical drilling has been completed on the licence.
Current rigs are handling geotechnical holes to finalize designs; dedicated exploration drilling is slated to follow pre-final investment decision works.
Social
At Kabanga, the mine plan calls for relocating just over 300 households across seven sites, with about 1,400 people affected in total.
Lifezone says it has paid about $14 million in compensation under the International Finance Corporation’s Environmental & Social Sustainability-performance standard to 97% of households so far.
Physical resettlement will start early next year, followed by livelihood-restoration programs.
“The biggest challenge with this project locally is they just want to move faster,” Showalter said.
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