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ANALYSIS: Messing with Uganda’s minerals

Workers of Tibet Hima,a Chinese concession, drill a copper-rich section of Kilembe mines in Kasese in 2015. INDEPENDENT/RONALD MUSOKE

How people close to President Museveni rip country of minerals

Kampala, Uganda | RONALD MUSOKE & HAGGAI MATSIKO | Moses Kamuntu is a dealer in minerals.  To clinch one of his deals, he allegedly paid US$10,000 to a third party to get a meeting with President Yoweri Museveni. Then he circumvented a presidential ban on iron ore exports; avoided taxes/ royalties by exporting minerals as samples; and dodged regulations in order to re-export Congolese minerals labeled as Ugandan.

In another case, a small group of Belgian and Ugandan businessmen, with close ties to President Museveni were found to be shipping hundreds of millions of dollars’ worth of gold from Uganda, apparently paying barely any taxes and failing to disclose the origins of the gold.

Barnabas Taremwa, a brother-in-law to Museveni’s brother Gen. Caleb Akandwanaho aka Salim Saleh, reportedly told Global Witness, an international anti-corruption campaigner,  that some of the gold refined in Uganda comes from DR Congo, and that he had helped negotiate the company’s huge tax breaks with the government.

Global Witness reveals that African Gold Refinery (AGR) has processed and exported over US$200 million worth of gold from Uganda, paying only half a million dollars in tax and failing to publish information about where it came from.

These details and more are contained in a new report by Global Witness. Titled `Undermined: How corruption, mismanagement and political influence is undermining investment in Uganda’s mining sector and threatening people and environment,’  the report was released in June causing a stir in the mining sector because of the names it puts at the centre of the hemorrhage in Uganda’s mining sector.

Gen. Saleh, his wife Jovia Saleh and sister-in-law, Kellen Kayonga, brother-in-law, Barnabas Taremwa, former Energy PS, Kabagambe Kaliisa, and former Energy Minister, Richard Kaijuka, are some of the players named in the report.  There are also international investors, politicians and technocrats at the Directorate of Geological Survey and Mines (DGSM).

Another case cited involved top government officials, including a former minister who allegedly received millions of dollars in bribes to influence the award of a 25-year copper mining concession deal for the copper deposits worth $26 billion at Kilembe Mines to a Chinese consortium.

According to reports, having got the deal in 2013, the Chinese concessioners, Tibet Industry Company Ltd, were supposed to invest $175m into the facility, create over 3000 jobs and pay government millions in taxes and royalties.

But because they bribed their way to the deal, proper due diligence was not done about them, and now it has emerged that they do not have capacity, are unable to pay even $1 million a year in government loyalties or invest the funds required to revive the facility.

Uganda has an estimated 4.1 million tonnes of copper in its Kilembe mines located west of the country.  At the current price of US$6500 a ton, that could be worth $26 billion. That money is over half of the US$50 billion that Uganda hopes to earn from its 6.5 billion barrels of oil.

Yet even that is a very tiny fraction of the value of Uganda’s mineral wealth, which could be well over a trillion dollars if you consider that just two mineral rich areas—Makuutu in Busoga and Sukulu in Tororo—have an estimated combined mineral wealth valued at about $ 800 billion or 16 times what Uganda could make from its oil.

Most of this value, however, remains untapped and not benefitting Ugandans. But even when it is tapped, it is at risk from corruption, mismanagement and political, according to Global Witness.

“Poorly qualified companies can win licenses based on their connections, at the expense of well-qualified and conscientious companies,” the Global witness report  notes, “The underpayment or complete failure to pay taxes, mineral rents and royalties by many of those operating in the sector deprives the public coffers of millions of dollars a year. This affects the provision of basic services for ordinary Ugandans and further obstructs proper oversight and regulation of the industry.”

Interestingly, according to the Global Witness report, officials at DGSM claimed that President Museveni had asked them to work with Tibet Industry Company Ltd.

2 comments

  1. Those are the ones known. The fact is that when your father is a thief, he can’t punnish you if you all coincidently meet in someone’s garden.

  2. Corruption everywhere!

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