AAMEG Africa Awards 2021: Innovation in Corporate Social Development Winner – Walkabout Resources
By AAMEG | 29 September 2021
CREATING A TANZANIAN LEGACY: THE LINDI JUMBO GRAPHITE PROJECT
Walkabout Resources Limited is an innovative African-focussed energy minerals developer headquartered in Western Australia.
Walkabout’s flagship Lindi Jumbo Graphite Project is situated in south-eastern Tanzania, approximately 200km from the port of Mtwara.
The licences are within the highly prospective Mozambique belt, a region that hosts some of the world’s highest-grade coarse flake graphite deposits. The company has taken the project from discovery in October 2015 to the completion of a highly robust Definitive Feasibility Study within 16 months and has been granted a mining lease over the deposit.
Now in construction phase with first production during Q3 2022, the Project is fully funded to production with international market timing and world demand for graphite working in its favour.
The exceptional distribution of large, high-grade graphite flakes within the Lindi Jumbo Project area provides significant competitive advantage in capital and operating cost reduction and in metallurgical performance through the potential production of a sought after, premium natural graphite flake product. The term “Jumbo” in the name has specific reference to the “Jumbo” category of flake graphite while Lindi is a quaint coastal fishing village and the headquarters of the larger, regional administration district.
Lindi Jumbo will contribute premium graphite into the international markets at a time when the electric vehicle industry is creating unprecedented demand for battery products.
Additionally, the development of the Lindi Jumbo mine in a remote, economically challenged region of Tanzania creates the opportunity to uplift the entire region through the adoption of a “local first, national second and international third” mantra for employment, procurement and supply.
Walkabout has been working on the Lindi Project for 5 years and has engaged a Tanzanian First and Locally Owned development philosophy and culture about the mine. This inclusive approach and validation of economic sharing is essential when developing in Africa.
Walkabout operates under the company philosophy “Tanzania First, Local First.” This is better described through the practical application of “Local First, National Second and International Third” when it comes to employment and engagement. On its entrance to Tanzania, Lindi Jumbo LTD – a wholly owned subsidiary of the Company – was structured to function as a fully autonomous local mining and exploration company with an independent accountable board, designed to keep much of the consumable wealth in Tanzania and build strong community ties.
Testament to this, in early 2021, Lindi Jumbo was successful in securing a USD20m project loan facility from CRDB Bank PLC – the largest wholly owned private bank in Tanzania – meeting local content requirements and aligning with the company spirit. Walkabout persisted with negotiating this funding facility for more than a year, seeking the relationship benefits for Tanzania in growing its services sector and reducing significantly the Company’s terms of sovereign risk premiums.
With this company commitment firmly embedded in every aspect of the operations, Lindi Jumbo was in a great position to rapidly adapt the company structure to accommodate unexpected amendments to the mining act in 2017. These amendments saw the government requiring a 16% Free-Carry Interest (FCI) in mining companies and obligations to involve local companies in the project.
As construction continues in 2021, the Company executed the first Material Project Development Agreement for the Bulk Earthworks and Civil Engineering works with TNR Engineering Ltd, a local Tanzanian contractor. 51% of TNR is owned by local Tanzanian shareholders. TNR had already successfully completed a project at Lindi Jumbo in 2019, and will be responsible for providing all labour for mining production operations and associated equipment. The value of this first key mobilisation Agreement is approximately US$5.6 million and its award is aligned with Walkabout’s ‘local first’ policy and extensive due diligence process examining safety, experience and capabilities.
The camp, catering and site logistics contract has been tendered to two Tanzanian Companies with the capacity to Build, Own, Operate and Transfer (BOOT) the accommodation camp, catering, health and training functions The preferred supplier here will engage with locals in setting up micro-farming and services businesses to localise the food, fresh vegetables and other supply chains into the modest accommodation camp.
Engaging with Tanzanian contractors directly benefits small Tanzanian businesses. Contractors will be engaging with local suppliers and industries to fulfill their obligations. Contractors will be directly and indirectly employing and upskilling local Tanzanians with various skill sets and levels, which will in turn financially and socially enrich local communities. Lindi Jumbo is committed to training and developing local skills for the prosperous future of the project and the next generations of Tanzanians.
A Memorandum of Understanding (MOU) that includes the three villages covered by the mining licence – Matambarale, Namikulo and Namilerma – was signed in July 2017. The MOU outlines that where possible and according to skill requirements, the company will choose to employ people from the host villages ahead of anywhere else. The means of selection and open dialogue in respect of unskilled recruitment is laid out in this MOU including the in-village advertising for workers.
The education census completed in 2017 indicates that 64% of the village population have completed primary education, with less than 7% competing secondary education and 29% of people never completing any schooling. 35% of villagers are aged between 6-18 years and 32% are 19-45 years. No English is taught in rural schools. Access to basic English classes will be a key economic enabler for many people. People in the 19-45 age bracket have the potential for gainful employment with Lindi Jumbo.
Upholding our “Local First” philosophy, the Village Council will draft a register of potential employees to be considered for employment. Eligible employees will be interviewed first for possible vacancies. Once the project starts, successful candidates will undergo training provided by the company, with the transfer of knowledge and technological know-how to individuals who identify as being suitable for leadership roles being prioritised.
In addition, all contractors are obliged to employ locally and provide suitable technical and life training aides.
The Lindi Jumbo Company itself is structured in a manner to achieve innovative business localisation and embraces the philosophy of keeping at least 50% of generated wealth in Tanzania for the benefit of Tanzanians. All revenue is repatriated to Tanzanian banks, and all local accounts, contractors, employees, services and goods procured are paid for directly within Tanzania. Only once economic stability is achieved, taxes and duties are levied and loans are repaid, will profit be distributed to shareholders and 16% to the Government of Tanzanian in the form of dividends.
Lindi Jumbo has no foreign employees. It has one Australian director, a Namibian non-executive director, a female Tanzanian Executive Director (Ms Rachel Songo, who has become the ‘face of the business’) and a Tanzanian Company Secretary. Currently, all mine employees are Tanzanian.
Collaboration and Engagement
Lindi Jumbo has always maintained strong relations with surrounding villages and the wider district. We believe that nobody should be left disadvantaged due to the company’s activities. The company has worked with the local community to give them the feeling of belonging rather than foreign invasion and exploitation.
The mining concession covers 6.9km2 and extends to the three hamlets of Mtakuja, Mayanga and Mnamba near the village of Matambarale. This affects 238 farm owners covering 271 farms. Lindi Jumbo conducted a Resettlement Action Plan using a local independent environmental and social consultant.
The Resettlement Action Plan recorded a census of permanent residential structures, cash crops, hardwood trees and other social and land use statistics. Details of the plan were submitted to the Government for a final valuation report which has been completed in line with strict guidelines that protect the rights of individuals and outline the compensation plan for buildings/structures, crops, trees and land, together with allowances for disturbance, travel and accommodation.
In consultation with all parties, the final valuation was signed by the Village Chairman, District Commissioner, Regional Commissioner and the Chief Valuator of the Country. Lindi Jumbo initiated meetings with all farm owners to communicate and work through the Company Farm Owner Contract Agreement. Meetings were conducted in the villages’ own mother tongue (KiSwahili). During this process Lindi Jumbo opened bank accounts for all affected farm owners for distribution of the payment, as well as engaging bank representatives to host interactive workshops for the farmers to learn how to manage their funds. It is envisaged that these people will likely gain paid employment one mining activities commence. A total of US$2.05m was distributed to the affected land holders.
The Company has engaged closely with the local, regional and national stakeholder groups to be a well-known and respected corporate citizen. The Company sponsors and attends all mining and business commercial conventions and publicity seminars in Tanzania and is proud of its Tanzanian heritage.
In 2021, both the Deputy Minister of Mines, Prof Manya, and the Prime Minister, Kassim Majaliwa, visited the Lindi Jumbo mine site and commended the company for the payment of compensation to the affected farmers on time and as agreed.
The Prime Minister will be visiting the site each time he is in Ruangwa and has encouraged villagers to use the mine site as an opportunity to open new businesses.
The Deputy Minister of Mines has publicly stated at one of these meetings that he considers Lindi Jumbo one of the most progressive mining companies in the country and that they fully support the development and the inclusive nature of its stakeholder engagement.
Active engagement and collaboration with the local villages has helped ensure the success of Lindi Jumbo, with the following projects and contributions already completed:
- Water bore drilled and equipped with a hand pump in Matambarale village.
- Donated to the Runangwa police reservist training.
- Donated to the Matambarale village church for construction of ablution facilities.
- Donation of construction material to the Matambarale Village for the Community Islamic Mosque.
- Sponsorship of university registration fees for outstanding students from Matambarale village.
- Donation of construction materials for the new Ruangwa High School.
- Sponsorship of football uniforms and kit for the Namungo Football Club.
- Joint contribution of a new team bus for the Namungo Football Club.
- Donation to the Ruangwa District Office for the Tanzanian Independence Day Celebration.
A Village Trust has been instituted, enabling by means of deferred sale to the village, 5% ownership of Lindi Jumbo. Key stakeholders from the village and district are trustees of the board and will decide where money from dividends will be spent to improve the infrastructure of the village.
This is all in conjunction with the commitment of employing and training local residents and engaging with local farmers and industries for the supply of commodities to the mine site.
Based on the Lindi Jumbo DFS assumptions, the project is forecasted to generate the following over its 24-year mine life:
$41 million (USD) in royalties payable to the Republic of Tanzania
$312 million (USD) in taxes payable to the Republic of Tanzania
$118 million (USD) in Government Dividend (through the 16% government Free-Carry)
Lindi Jumbo is working in conjunction with The District Office of Ruangwa on setting up a foundation to assist students from less fortunate villages to gain access to schooling.
The mine closure plan calls for the handing over of the useful infrastructure to the community and the preparation of the pit for safe and communal recreational use.
The Company believes the operation will expand and that significant companion investment will occur around the centre of wealth created by the exploitation of the mineral endowment.
Walkabout Resources Ltd has contextualized the 17 sustainable development goals for the Lindi Jumbo Graphite Project as represented below:
Lindi Jumbo overcame the Mining Act Amendments of 2017 to present a project that has assimilated into the cultural landscape and adheres to local requirements. Being the first mining project to receive funding and move into the construction phase since the amendments, Lindi Jumbo exemplifies how good governance, acting with social responsibility and considering stakeholders at every level will put a project in good stead wherever they operate.
As a more general statement, Lindi Jumbo has reopened the opportunity for continued mining ventures and investment in the country of Tanzania where once there was doubt that such relationships could be reformed.