BHP exits $942 million Tanzania nickel project, partner Lifezone says
The NYSE-listed company will acquire BHP's 17% equity interest in Kabanga Nickel Limited (KNL), the majority owner of the Kabanga Nickel Project in northwestern Tanzania, Lifezone said in a filing late on Friday.
The company issued a report on Friday that put pre-production capital costs for the project at $942 million and life of mine costs at $2.49 billion. It is expected to produce around 50,000 metric tons of nickel annually once fully ramped up, a process that will take six years including construction. A final investment decision on the project is due next year.
BHP had agreed in 2022 to make an investment of as much as $100 million in the nickel mine and processing facilities if certain conditions were met.
BHP still considers Kabanga to be one of the world's best undeveloped nickel sulphide projects, said a source with knowledge of the matter, but the uncertain nickel market outlook and the miner's capital allocation framework have made investments in greenfield nickel projects challenging.
A BHP spokesperson declined to comment.
BHP has shifted its view on nickel on the back of a boom in output from Indonesia in recent years. It put its Australian Nickel West operations on care and maintenance last year due to a poor outlook for nickel prices, and a decision on the future of those operations is due by early 2027.
As a result of the transaction, Lifezone now owns 100% of KNL, which in turn holds an 84% interest in Tembo Nickel Corporation Limited (TNCL), the Tanzanian operating company for the Kabanga Nickel Project.
The remaining 16% of TNCL is held by Tanzania's government. All existing agreements with BHP have been terminated and Lifezone has also assumed full control of 100% of the offtake from the Kabanga Nickel Project, it said.
(This story has been corrected to fix the project capital costs to $942 million pre-production from $2.5 billion life of mine development costs in the headline and paragraphs 1 and 3)
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