BHP exits Tanzanian nickel project for $83mln, partner Lifezone gains full control

BHP Group has opted to sell its 17% equity interest in the $942 million Kabanga nickel project in Tanzania to partner Lifezone Metals for up to $83 million. The decision comes as BHP shifts its view on nickel due to a boom in output from Indonesia and a poor outlook for nickel prices. Lifezone now owns 100% of Kabanga Nickel Limited, the majority owner of the project.

BHP Group has sold its 17% equity interest in the $942 million Kabanga nickel project in Tanzania to partner Lifezone Metals for up to $83 million. The decision comes as BHP shifts its view on nickel due to a boom in output from Indonesia and a poor outlook for nickel prices. Lifezone now owns 100% of Kabanga Nickel Limited, the majority owner of the project [1].

The Kabanga Nickel Project, located in northwestern Tanzania, is expected to produce around 50,000 metric tons of nickel annually once fully ramped up, a process that will take six years including construction. The project's development costs are estimated at $2.49 billion, and a final investment decision is due next year [2].

BHP had initially agreed to invest up to $100 million in the project in 2022 if certain conditions were met. However, the company has since put its Australian Nickel West operations on care and maintenance due to a poor outlook for nickel prices and a decision on the future of these operations is due in early 2027 [3].

Lifezone's acquisition of BHP's stake comes at a time when the nickel market is highly volatile. Nickel prices have swung between $15,000 and $25,000 per tonne in 2025, driven by geopolitical tensions, overcapacity in Indonesia, and shifting demand from the EV sector. Despite these challenges, Kabanga's low all-in sustaining costs of $2.71 per pound position it as a first-mover in a market where cost discipline is paramount [2].

The strategic rationale behind Lifezone's acquisition includes control, cost efficiency, and vertical integration. By eliminating BHP's stake, Lifezone removes a potential drag on decision-making and aligns ownership with its vertically integrated vision. The project's hydrometallurgical refinery, which will produce battery-grade nickel sulfate and cobalt sulfate, is now fully under Lifezone's control [2].

However, the project is not without its risks. Tanzania's regulatory environment carries risks of policy shifts or delays in permitting. The government's 16% stake in the project means a portion of profits will go to state coffers. Additionally, the Resettlement Action Plan (RAP) is a critical milestone—failure to meet IFC Performance Standards could trigger a reduction in BHP's payment and delay production [2].

Investment implications for Lifezone are significant. The company's consolidation of control reduces operational friction and positions it to capture 100% of the project's upside. However, the project's success hinges on Lifezone's ability to secure financing, navigate regulatory hurdles, and maintain its cost discipline in a volatile market [2].

For investors willing to stomach short-term volatility, Kabanga represents a compelling long-term opportunity. However, diversification and close monitoring of metal prices and ESG metrics are essential [2].

References:
[1] https://www.reuters.com/world/africa/bhp-exits-25-billion-tanzania-nickel-project-partner-lifezone-says-2025-07-21/
[2] https://www.ainvest.com/news/lifezone-metals-strategic-takeover-bhp-stake-kabanga-nickel-project-high-stakes-play-battery-critical-minerals-sector-2507/
[3] https://energynews.oedigital.com/mineral-resources/2025/07/20/bhp-exits-25-billion-tanzania-nickel-project-partner-lifezone-says