Uganda is Over the Moon After Discovery of Huge Gold Deposits

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Uganda is Over the Moon After Discovery of Huge Gold Deposits
Uganda is Over the Moon After Discovery of Huge Gold Deposits

By Faridah N Kulumba

Africa-Press – Uganda. On 7th June 2022, the President of the Republic of Uganda Yoweri Kaguta Museveni Tibuhaburwa during his State-of-the-Nation Address announced that Uganda has struck a deposit of million tonnes of gold that would fetch the country more than USD12 trillion. If the computations are accurate, it would suggest the new gold find would topple the estimated windfall from oil still in the ground in the Albertine region.

Estimates

President Museveni revealed that his country has struck a deposit of 31 million tonnes of gold ore, with extractable pure gold estimated to gross 320,000 tonnes and net 320,158 tonnes. The gold-endowed parts of Uganda include Alupe in Busia and Karamoja, both in eastern Uganda; Kameleng, Kisita, and Ngugo in Kassanda District in the central region, and, Bushenyi’s Tiira area in western Uganda.

Payment

Ugandan Technocrats in the Ministry of Energy and Mineral Development had informed the Cabinet that the country was positioned to get slightly under USD700 million in royalty payments, with the investors poised to cash in on the windfall.

Declaration on gold export

President Museveni declared that the time for Uganda to ship unprocessed exports is over. Citing six local gold refineries, among them Africa Gold Refinery in Entebbe that the United States sanctioned in March over illicit sources of its gold, President Museveni declared that the time for Uganda to ship unprocessed exports is over.

Mining processes

Chinese-run firm, Wagagai, which picked its name from the highest peak of Mt Elgon, is expected to mine and refine at least 5,000 kilograms of gold a day in Busia by the close of this year, according to the Ministry of Energy and Mineral Development spokesperson Solomon Muyita. The district has about 2,000 artisanal miners, adding to thousands more eking a living in Karamoja and Kassanda by engaging in rudimentary extraction of precious gems, leading to health hazards and collision with enforcement personnel.

Foreign companies shares

The company will compulsorily acquire a 15 percent stake in every mining operation and investors will be required to sign a production-sharing agreement with the government of Uganda. Previously investors were given mining production licenses on a first-come, first-served basis.

Benefits to the economy

It remained unclear what the immediate and long-term impact of the expected gold windfall would be on the economy where more billions of dollars are expected to flow when the country starts extracting oil likey in 2025.

Uganda’s gold exports have been on the rise since opening the Africa Gold Refinery in Entebbe, according to official records. For instance, in 2019 and 2020, the country exported gold worth USD1.9 billion to the United Arab Emirates, USD1.4 billion to South Korea, and USD28.7 million to Hong Kong. In contrast, Uganda imported nearly USD2 billion worth of gold, making it the 18th largest gold importer in the world, accoding to Cabinet record.

Other minerals in Uganda

According to official records, Uganda is endowed with atleast 27 minerals, including gold, copper, cobalt and Tin. Others include limestone, gemstones, marble, nickel, and tantalite.

Mining new bill

On February 17, Ugandan members of parliament sat for several hours making deliberations on the Mineral and Minerals Bill, 2021, which they enacted late in the evening as darkness gathered. The speed at which legislators enacted the Bill appeared to have caught sections of the public unawares.

License fines

Whereas it was proposed in the original Bill that an individual or corporate entity mining without a license be fined Shs1 billion, or be jailed for five years of both, lawmakers maintained the prison term but slashed the penalty to 500million. In order to start any business in mining, other than buying and swelling.

One has to first obtain a prospecting license, according to information on the Directorate of Geological Survey and Mines website. After prospecting, one can then apply for an explanation license, a mining lease, or a location license for proven deposits. Ownership can be 100 percent local or a joint partnership with at least 51 percent local.

Sharing revenues

A key provision in the new Act, which is pending presidential assent to become law, is about revenue sharing. It provided that whenever a mineral is discovered, the government will take 70 percent of the revenue, a district local government will take 15 percent, while the sub-county or town council is given 10 percent and the owner of the land will be given only 5 percent.

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