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Nickel by Musongati: East African Region Project Group, a remake of BMM?

Two months have passed. Nothing says that the company East African Region Project Group paid the first tranche of funds to the Central Bank as agreed in the memorandum of understanding. There was talk that this memorandum would lapse after 2 months without transfers of these required amounts.

On March 29, 2022, the Burundian Minister of Hydraulics, Energy and Mines, Ibrahim Uwizeye, had signed a memorandum of understanding with the Russian company East African Region Project Group concerning the execution of the investment project for exploit the Musongati nickel deposit and associated minerals in Rutana province.

This memorandum was signed after the revocation of the nickel exploitation permit granted to BMM International in 2014 for non-compliance with the clauses of the contract.

The Council of Ministers of March 22, 2022 had specified that this memorandum of understanding will have a duration of two months. “Exceeding this deadline, without transfer of the funds of the first tranche to the Central Bank, this memorandum will become null and void”.

Apparently the first installment is still pending

Asked if the company has already disbursed the first installment of the funds, Minister Uwizeye did not give a clear answer: “What you need to know is that it has not yet been given a license operating. To benefit from this permit, they must bring money so that we are sure that they have means”.

The Minister in charge of Mines informs that the company must pay the first installment to the Central Bank and wait with the government on its use. “Without that, no permit. We noticed that the country had lost a lot. We stay on our position. We will analyze the situation. If they haven’t paid the first installment, they can leave. This does not prevent us from looking for other investors”.

According to the said Council of Ministers, this company must disburse an amount of 1.5 billion US dollars per year as a financial subsidy for a period of 10 years, that is 15 billion US dollars.

According to the distribution made of this sum, East African Region Project Group will pay annually for 10 years an amount of 500 million US dollars, or 33.3% to the State of Burundi, according to the terms of the memorandum of understanding.

This amount must be accounted for as State budget revenue as the Musongati nickel royalty. In addition, 15% of these funds will be used for public interest projects initiated by the parties and finally 51.7% will be used for nickel mining.

Source: IWACU Burundi