The Australia based Black Rock Mining has confirmed that has secured two credit facilities totaling 100bn/- ($40 million) from CRDB Bank Plc for the construction of Mahenge graphite mine located in Ulanga district in Morogoro region.

The CRDB Bank’s credit financing is part of $153 million required debt financing by the company holding the majority stake of the project, through its wholly owned UK subsidiary Mahenge Resources Limited with 84 percent, to facilitate the construction works of the mine.

According to a feasibility study released in 2022, the company reported that a total of $222 million needed initially to develop the mine. 

The Mahenge graphite mine is currently managed through Faru Graphite Corporation, a joint venture of which the government of Tanzania owns undiluted free-carried interest shareholding of 16 percent, through the agreed deal in December 2021 to consolidate its mining licenses into a Special Mining License (SML), which was issued in September 2022. 

Besides the loans secured from CRDB, in November last year, the Development Bank of Southern Africa (DBSA Black Rock approved a loan of up to $59.6 million loan for Mahenge project.

However, the approval was subject to legal documentation being concluded and executed in accordance with the terms and conditions set out in the approval.

The company expected the lender Board approvals from several potential lenders to be notified to the Company during Q4 2023.

In addition, Black Rock also expected $40 million from South Korean group POSC, which it will get in exchange for shares.

However, the company has explained that the conclusion of these various financing arrangements remains subject to final documentation.

"Several significant milestones aimed at minimizing risks await us, and this placement should provide the company with sufficient cash reserves to finalize loan and contract documentation before the FID, as well as to work towards completing a transaction as part of the partnership process where we aim to sell a stake in the project," commented Black Rock CEO John De Vries.

In September last year, Black Rock Mining also signed a memorandum of understanding agreement with its strategic partner Posco International in Dar es Salaam, pertaining to graphite supply from Module 2 of the Mahenge project.

Under the non-binding agreement, POSCO will purchase fine graphite from the planned production of the Mahenge Module 2 project.

In exchange, POSCO promised to make an additional investment of up to $40m in Black Rock Mining or a stake of 19.99 percent.

In a press statement after the signing, Black Rock said: “The agreement builds on the strategic partnership between Black Rock and POSCO, which is working towards developing the Mahenge graphite project to provide a significant new source of natural graphite into a highly dependent global market driven by clean energy demand.”

“POSCO’s confirmed interest in Mahenge Module 2 also represents a major de-risking milestone for the company, providing increased confidence for all of our stakeholders, as well as improved visibility on funding and our pathway to production,” noted Black Rock CEO John De Vries.

The Mahenge mine, which is scheduled to begin production in 2026, is expected to deliver up to 340,000 tonnes of graphite concentrate annually over 24 years and will help better position Tanzania and Africa, in the global graphite market. 

Benchmark Mineral Intelligence forecasts that the Africa will take over China as the world’s top graphite supplier by 2026. Most of the continent’s output by 2026 would come from Mozambique, Madagascar and Tanzania.

Data show that three countries host more than 44 metric tons of the combined reserve base, with Mozambique hosting the world's largest graphite deposit at the Balama project in the Cabo Delgado province.

According to the same source, 11.4 percent of global graphite production is expected to come from Tanzania by 2030, against 0.6 percent in 2022.

The total worldwide production of graphite was an estimated 1.6 million metric tons in 2023, led by China, which produced an estimated 1.23 million metric tons.

Not only is China the world's leading producer of graphite, but also the country with the largest graphite reserves across the globe, at an estimated 78 million metric tons.

It is closely followed by Brazil, which held an additional 74 million metric tons worth of graphite reserves.

Total global reserves of graphite were estimated to be 323.8 million tonnes, with Tanzania accounting for about 5 percent of them.