Tanzania canceled 11 mining retention licenses in the East African country last week, but Glencore and Barrick Gold expect the government to issue their Kabanga nickel project a prospecting license.
Tanzania canceled 11 mining retention licenses last week, but Glencore (LSE:GLEN) and Barrick Gold (TSX:ABX,NYSE:ABX) expect the government to issue their Kabanga nickel project a prospecting license.
“In order to transition to the new license structure implemented in January, the project partners have applied for a prospecting license covering the same area as the retention license” that was canceled last week, Reuter quotes Barrick as saying in a statement.
A retention license is issued to a company that has identified mining targets in a prospecting area, but cannot immediately access the resources, allowing the company to hold onto those assets while it waits for better conditions, like a resurgent market or better infrastructure.
Glencore and Barrick’s project in Northwestern Tanzania was the subject of a draft feasibility study in 2014.
According to Glencore, the project wasn’t developed then because of declining nickel market conditions, so the joint venture partners opted for a retention license.
If Glencore and Barrick had plans to keep the project alive they were going to have to apply for another license anyway — the canceled license was due to expire in 2019.
The decision is just another chapter in a story of uncertainty for miners not only in Tanzania but across Africa, with many governments on the continent looking to claw back control of their mineral assets.
In Glencore’s 2017 report on its resources and reserves, the company describes the Kabanga project as having a potential mine life of 30 years from the start of operations.
The two companies have not provided a timeline on when they will receive the hoped-for prospecting license.
In early 2015, Glencore and Barrick decided to commence a sales process for their combined interest in Kabanga — a process that both companies are still working on.
Glencore’s share price was down 0.23 percent on the London Stock Exchange at GBX 385.2 on Monday (May 14), while Barrick’s share price was up 0.12 percent on the Toronto Stock Exchange at C$17.25.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.