Power Line Agreements De-Risk Mahenge but Execution Challenges Loom

Transforming Energy Access in Mahenge

Black Rock Mining Limited, through its 84%-owned subsidiary Faru Graphite Corporation, has reached a significant milestone by signing two critical agreements with Tanzania Electric Supply Company Limited (TANESCO). These agreements set the stage for the construction of a new 220kV power line and substation, which will connect the Mahenge Graphite Project to Tanzania’s hydro-dominated electricity grid.

The power infrastructure, estimated at US$40 million, will be built by Faru and then transferred to TANESCO upon completion. This arrangement not only ensures the project’s access to competitively priced, renewable energy but also represents a transformative development for the entire Mahenge region, promising broader economic benefits beyond the mine itself.

Financial and Strategic Implications

Under the Power Supply Agreement, Faru will recoup the capital expenditure through a repayment schedule over the first four years of mine production. Notably, this repayment plan is more accelerated than previously forecasted, providing Faru with earlier cash flow availability for debt servicing while reducing TANESCO’s interest burden. This mutually beneficial structure exemplifies a pragmatic public-private partnership model.

The project cost remains consistent with the enhanced Definitive Feasibility Study (eDFS) update released in October 2022, reinforcing the financial discipline and predictability of the Mahenge development. Additionally, the power line’s funding is planned through a US$179 million facilities agreement, subject to customary conditions including equity contributions and environmental approvals.

Environmental Credentials and Regional Impact

Access to hydro-dominated grid power significantly enhances the environmental profile of Mahenge’s graphite products, positioning them with a lower carbon footprint compared to many global peers. This green advantage is increasingly important in the graphite market, where sustainability credentials can influence customer and investor preferences.

Beyond the mine, the new power line will extend TANESCO’s reach, opening opportunities for local businesses and communities in the Mahenge region. Black Rock’s CEO John de Vries highlighted the broader developmental benefits, describing the agreements as a “win-win solution” that underscores the potential of public-private partnerships to deliver meaningful national progress.

Looking Ahead

With these agreements now signed, Black Rock has cleared a major de-risking hurdle, satisfying key conditions precedent for project lenders and moving closer to construction readiness. The company continues to work through financing and regulatory milestones, aiming to unlock the full potential of one of the world’s largest graphite reserves.