Sukulu phosphates signs $240m funding

Guangzhou DongSong Energy Group Company, the company licensed to develop Uganda's Sukulu phosphate project has signed a $240 million financial closure agreement with Industrial and Commercial Bank of China (ICBC) to develop the project.

The financial closure signing on December 4, 2015 makes the phosphate project one of the largest privately-funded mining sector investments in Uganda.

The financial closure reached concludes the process of all project-related financial transactions, finalizing and closing the project financial accounts and releasing the work site. It represents an important step in the projects life cycle.

Information from the Uganda Chamber of Mines and Petroleum indicate that Guangzhou DongSong Energy Group plans to invest and establish a mine and a beneficiation plant with annual capacity of two million tonnes, a phosphate fertilizer plant of annual production of 300,000 tonnes.

They will also set up a sulfuric acid plant of annual production of 400,000 tonnes, a 12MW waste heat-based power generation plant and a steel mill of annual production of 300,000 tonnes.

According to sources, the project will create over 1,000 jobs upon completion. The Sukulu phosphates factory will be in Tororo district.

Full development of the Sukulu project would represent an important step in the minerals sector of Uganda that is still grappling with overhauling legislation to make it competitive, setting up competitive infrastructure in rail and water. This should then rope in steady foreign direct investment in the different stages of the industry.

Critical to the project is also how much of local content is integrated. This means having a requisite number of local Ugandans employed in the project as well as Ugandan companies supplying the needed materials and services.

Guangzhou DongSong Energy Group signed a memorandum of understanding with the Uganda Investment Authority (UIA) in 2015.

The project follows a meeting between President Yoweri Museveni and President XI Jinping of China in Durban, South Africa in August 2015.

The company has been doing an underground study to ascertain the quantity and quality of phosphate in the area alongside land leasing, relocation and compensation of local communities.

"We want experts in oil and gas production, administration and management, agriculturalists, engineering and mining," the company said late last year.

President Museveni last year thanked the company for choosing Uganda and pledged government support for the successful implementation of the project.

"The phosphate deposits in Tororo, if linked with the natural gas deposits in Tanzania, would enable the region to forget about the importation of fertilisers," Museveni said then.