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Uganda’s locked up mineral wealth, fortunes

Tibet-Hima workers in a workshop at Kilembe copper mines, Kasese, western Uganda. The mining industry is in desperate need of investment. Independent/Ronald Musoke
Tibet-Hima workers in a workshop at Kilembe copper mines, Kasese, western Uganda. The mining industry is in desperate need of investment. PHOTO INDEPENDENT/Ronald Musoke

Deloitte noted that between 2008 and 2017, infrastructure spending in emerging economies alone is expected to total $21.5 billion. But also growth in India and several countries in Southeast Asia could arguably offset slowing demand from China.

Deloitte’s report says by partnering with junior mining companies that currently hold large unexplored or unutilised mining reserves, cash flow positive companies may be able to explore at lower costs than in the past, potentially resettling a portion of their cost base.

A good model, Deloitte adds could be that of mining giants, Rio Tinto’s recent move to provide junior miners with access to its resource assessment technology in an effort to help them identify the best Greenfield exploration projects. This initiative alone will not alter market dynamics but it represents a step in the right direction, warns Deloitte.

Edwards Katto, the technocrat who oversees Uganda’s sector, remains optimistic about Uganda’s prospects of attracting investors into the sector.

Katto, the director of the Directorate of Geological Survey and Mines, told the conference that despite the global gloom in the sector, he is quite excited by what is currently happening in the local mining industry.

He said interest in Uganda’s mining has grown over the last five years, thanks to availability of geological, geophysical and geochemical data, which in the past was not available. Katto noted that, for instance, 12 years ago in 2004, there were just 190 mining licence holders in Uganda.

That number has since grown to 700 of which 490 are exploration licences today. In the last five years, the government has also attracted mining and beneficiation industries into the country, thus paying heed to President Museveni’s position of value addition to Uganda’s mineral wealth within Uganda’s borders.

Uganda has attracted a $15 million state-of-the-art gold refinery, which is a first in sub-Saharan Africa. The refinery based in Entebbe, has a daily processing capacity of about 200kg with up to 99.9% purity.

Katto, probably referring to ongoing investments in gold mines in Mubende and Busia, albeit on a small scale, said the refinery should give people who have been exploring and mining gold in a ‘laissez faire manner’ the push to work harder.

There have also been investments into marble exploitation from Karamoja and now high-quality tiles are being manufactured here in Kampala. Katto said, “soon or later, the country will stop importing tiles from Spain and Italy.”

In Kasese, western Uganda, a consortium of eight Chinese companies have since 2013 been refurbishing the Kilembe Copper Mines at a cost that could potentially hit the $175 million mark once the rehabilitation is completed while in Tororo, eastern Uganda, plans are underway to develop the Sukulu phosphate mines to make fertilizers  in the next four years.

Not far away from Tororo, in Manafwa District, a vermiculite mining company has been established and Uganda hopes to become the biggest exporter of vermiculite—an important mineral used in the manufacture of fertilizers.

Katto added that a nickel and copper mine in northern Uganda is also in the final stages of being launched by SIPA Exploration Uganda Ltd.

Still, Uganda’s mining sector is not fully exploited and there are many opportunities for potential investors including; exploration, beneficiation and other infrastructure development projects.

Going forward, an exploration department within the Directorate of Geological Survey and Mines was suggested as the best bet for kick-starting Uganda’s mining sector with Kaijuka saying incentives to this department under the public –private partnership are a must. “We want the mining sector to become the biggest contributor to Uganda’s GDP,” he said.

But Emmanuel Jengo, the executive secretary of the Tanzania Chamber of Mines and Energy and his DR Congo counterpart Simon Tuma-Watu, who also chairs the Mining Industries Association of Southern Africa emphasized the importance of having a good mining laws and policies.

Jengo said before Tanzania amended its 1979 Mining Act, the country had failed to attract serious investors for close to 20 years. That, however, changed after the country came up with the 1997 Mineral Policy and Mining Act, 1998.

“There were just nine prospecting licences in 1990 but that number is 4,000 prospecting licences today.”

Jengo said it is not a miracle that Tanzania’s fortunes have since changed.

“A government must have targeted policies to attract investors.” He noted that thanks, to the good mining laws, Tanzania’s mining sector now contributes about 3.3% of GDP to the economy.

Katto said Uganda’s mineral policy and laws are under being revised to make Uganda’s legal framework internationally competitive. It caters for research and development as well as local content to ensure that Ugandans participate in the sector meaningfully. The policy also tries to address land-related acquisition that will finally cut out extortion.

“The policy will really make Uganda move its economy ahead,” Katto said.

Still, amending the laws is not enough; transparency in the application of the laws is equally critical noted one delegate from Frontier Resource Group. Eugene Marais noted that artisanal and small scale miners who are often classified as “disorganized and rowdy” could be organized into cooperatives and helped to automate so as to increase the profitability of their operations.

Daniel Petterson, the Country CEO for Hima Cement, a subsidiary of Lafarge/Holcim, said emphasis should be on training technicians such that Uganda becomes self-reliant. Uganda is lagging behind when it comes to attracting multinational corporations in the mineral sector partly because of lack of skilled manpower.

“Some skills need hands on there is no short cut,” he said.

Don Bwesigye Binyina, the executive director of the African Centre for Mineral Policy (ACEMP) argued that the mining industry in Uganda is littered with speculative investors who unnecessarily hold onto exploration licences even when they lack both technological and knowledge competences. That too will need to change quickly, he said.

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editor@independent.co.ug

 

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