TZ-China in Sh4tr Mchuchuma talks Monday, 17 January 2011 23:01 digg National Development Corporation (NDC) Board Chairman, Dr Chrisant Mzindakaya, exchanges views with Sichuan Hongda Corporation Ltd Chairman, Mr Liu Canglong, during the opening of negotiations between the Tanzanian government and Sichuan Hongda Corporation Ltd teams on Mchuchuma and Liganga projects in Dar es Salaam yesterday.. PHOTO | FIDELIS FELIX By Samuel Kamndaya,The Citizen Reporter Dar es Salaam. A Chinese firm is currently in discussions with the government on a Sh4.35 trillion ($3 billion) investment venture involving the Mchuchuma coal and Liganga iron-ore mining projects.With these negotiations, Tanzania is poised to clinch its highest priced investment deal to date in the mining sector, a development that is expected to ensure the country of more reliable power production. Senior executives from Sichuan Hongda Corporation Ltd and top Tanzanian government officials are currently in closed-door meetings to sort out certain issues before a contract is officially signed. "We expect the discussions will take four days... our aim is to have the contract signed next month in order to pave the way for the actual implementation of the project," the managing director for the government's investment arm - the National Development Corporation (NDC) - Mr Gideon Nassari, said in Dar es Salaam yesterday. This is the first major mining investment project for Tanzania since the global economy started recovering from the crisis of 2009. The crisis saw the cancellation of a $3.5 billion aluminium-smelting project in Kabanga by the US-based Century Company. The Switzerland-based miner Xstrata Plc also halted plans for a $165 million nickel mining and extraction plant. If all goes well, the Mchuchuma-Liganga deal will significantly improve Tanzania's investment image. According to Mr Nassari, the Chinese firm was picked after a rigorous assessment of 48 companies that bid to develop the two projects. He said the bidding process was conducted in a most open manner. It was advertised internationally. "Sichuan Hongda was picked after a team of experts was satisfied that the firm has the financial and technological muscle as well as enough experience and expertise to implement the project," he told journalists shortly before the negotiations started at the Dar es Salaam International Conference Centre. Should the discussions end fruitfully, he said, Sichuan Hongda would send its experts to the project sites so that they verify the volume of coal and iron-ore deposits at Mchuchuma and Liganga respectively. It is expected that the Mchuchuma project may start six months from the contract-signing day while the Liganga project could take a year. This is because the execution of largely dependent on implementation of the Mchuchuma project, since the smelting of iron needs intense heat from coal. Upon completion, a subsidiary company will be formed in which the government will hold shares with the Sichuan Hongda. The number of shares to be owned by the government will depend on the resources attainable by both sites. Tanzanian team at the negotiations comprises senior officials from the ministries of Industries, Trade and Marketing; Finance and Economic Affairs; Land and Human Settlements Development and Works. Others are from Tanzania Electric Supply Company (Tanesco), Attorney General's chambers, the State Mining Corporation and Tanzania Investment Centre. The Sichuan Hongda Corporation Ltd chairman, Mr Liu Canglong, said his company decided to invest in Tanzania after a thorough follow-up on the two projects for the past six year. The cordial relationship between Tanzania and China, which dates back to the days of Mwalimu Julius Nyerere and Chairman Mao Tse-Tung leaderships, also gave his company the courage to undertake such a massive investment. "I have made several trips to Tanzania and I'm satisfied with the business climate…I have also been encouraged by the cordial relationship between Tanzania and China over the decades…I'm convinced we'll succeed here," said Mr Canglong who doubles as vice chairman of China-Africa Business Council. Mchuchuma is estimated to bear 540 million tonnes of coal deposits, which is enough to produce 600MW of electricity for a period of over 100 years. The 600MW will add new vigour to investment in other sectors in a country that is notorious for chronic power rationing, largely due over dependence on hydro sources. Currently, the Tanzania Electric Supply Company (Tanesco) has an installed capacity of 561 MW from its six hydro-plants of Kidatu, Kihansi, Mtera, Pangani, Hale and Nyumba ya Mungu. The state-owned power utility firm also buys electricity from independent power producers, which have an installed capacity of 282 MW. Despite the diversification attempts, the country has found itself in recurrent power shedding due to a host of factors, including breakdown of turbines or transmission lines as well as prolonged droughts.