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* Tanzania to become Africa's 3rd biggest uranium producer
* Govt wants mining sector to contribute more to GDP growth
By Fumbuka Ng'wanakilala
ARUSHA, Tanzania, Oct 24 (Reuters) - Uranium One's Tanzanian unit said it hoped to start building its Mkuju River uranium mine in 2013 and that, once completed, it would propel the east African country into the world's top ten uranium producers.
Mantra Tanzania's managing director Asa Mwaipopo said on Wednesday the Mkuju River project in southern Tanzania had an updated resource of 119.4 million pounds of uranium.
"It will take a two-year period for completing construction work before we start to produce uranium oxide. Tanzania will become number 3 in Africa in uranium production after Niger and Namibia," Mwaipopo told a mining and energy conference in the northern Tanzanian town of Arusha.
"We think we can be the first uranium mine in Tanzania and position Tanzania into the top 10 uranium producing countries globally."
Toronto-listed Uranium One is the operator of the Mkuju River project, which is owned by the Canadian uranium producer's majority shareholder, Russia's JSC Atomredmetzoloto (ARMZ).
ARMZ acquired the Mkuju River project when it bought Mantra Resources last year for around $1 billion. Uranium One has the option to purchase the project and the company aims to buy the asset by mid-2013.
"The project will provide direct and indirect cash flows in Tanzania in excess of $640 million and will provide foreign direct investment (FDI) in excess of $1 billion or equivalent to 4.76 percent of Tanzania's GDP," said Mwaipopo.
Mwaipopo said the project had been delayed by cumbersome regulatory licensing procedures.
Environmental groups had opposed the mine's construction in a world heritage game reserve. Tanzania received U.N. approval for the project to proceed in July.
The project is awaiting an environmental impact assessment certificate and final approval from Tanzania's ministry of energy and minerals.
Tanzania's ministry of natural resources and tourism is also still to give the nod for the proposed uranium mine to operate in the Selous game reserve, but Mwaipopo said the approval was expected soon.
Mantra said the company was also in talks with the Tanzanian government about provisions of the country's new mining legislation, which requires the state to own a stake in strategic mining projects.
He said the grade of the Tanzanian uranium resource was 297 parts per million, with the mine estimated to have a life of 12 years when constructed.
Tanzania's deputy energy and minerals minister, George Simbachawene, told the conference earlier on Wednesday the government wanted to increase the contribution of the mining sector to 10 percent of the GDP by 2025 from 3.3 percent last year.
Australian-based uranium exploration and development company, Uranex, is also prospecting for uranium in south-west Tanzania.
Tanzania, Africa's fourth-largest gold producer also has substantial deposits of coal, nickel, iron ore, diamond and gemstones.