China and Tanzania are set to work on a $3-billion coal and iron ore construction partnership that will develop the Mchuchuma coal and Liganga iron ore projects in Southern Tanzania.

The project, a collaboration between China's Sichuan Hongda Co. Ltd. and Tanzania's state-run National Development Corporation (NDC), involves the construction of the Liganga iron ore mine and the Mchuchuma integrated coal mine, a 600-megawatt (MW) thermal power station.

The two firms have created a joint venture company for this particular undertaking, the Tanzania China International Mineral Resources (TCMR). Sichuan Hongda will own 80 percent of the joint venture project, while the remaining goes to NDC.

The project is said to be Africa's single-biggest investment so far.

Last year, Tanzania passed a new mining law that allowed the state to own a stake in major mining projects. Immediately after, China sent feelers it wants to improve the coal and iron ore in Liganga and Mchuchuma.

NDC first revealed the $3 billion investment by the Chinese firm January this year. Sichuan Hongda eventually won the bid over 48 other international bids.

The world's biggest user of iron ore, China had been actively scouting potential sites in other countries where it can strike a partnership for coal and iron ore explorations. Seeing Africa's rich bounty, it immediately signed a number of trade agreements with the country to ensure its provision of supplies.

The Liganga area is rich in iron, vanadium and titanium minerals, with reserves are estimated to be between 200 and 1,200 million metric tonnes, according to earlier studies used by NDC. Some 45 million have been in fact drilled. Coal reserves on Mchuchuma, on the other hand, are estimated to be more than 480 million tonnes.

In a report by Tanzania's state-run newspaper Daily News, it quoted Industry and Trade Minister Cyril Chami as saying the NDC may increase its shares to 49 percent after the construction of the coal and iron ore mines have been completed. The report said the provision is contained in the two countries' agreement which they signed on Wednesday.

Chinese banks had loaned at least $600 million to Sichuan Hongda as initial financing fund to start the project. Project implementation is expected to start in the next six months.

Meanwhile, a $1.06 billion loan deal is also expected to be signed this month between China and Tanzania. The loan involves building a natural gas pipeline from Africa's southern part country to its commercial capital, Dar es Salaam.