Uganda National Mining Company to be capitalized with sh500b

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The Uganda National Mining Company (UNMC) will be capitalised with up to sh500b over a five-year period.

This was revealed by President Yoweri Museveni as he delivered the State of the Nation address at Kololo Independence Grounds yesterday.

Mining is one of the four anchor sectors that the government is banking on to grow Uganda’s economy 10-fold to $500b by 2040. Other sectors are tourism, agro-industrialisation and science, technology and innovation.

UNMC is a state-owned company whose shareholders include the ministry of energy & mineral development and the ministry of finance, planning and economic development, with shareholding of 51% and 49% respectively.

It was established under the Mining and Minerals Act, 2022, to, among others, manage the State’s commercial interests in the minerals subsector and participate in joint ventures in which it holds an interest on behalf of the State.

Uganda’s Mining and Mineral Policy 2018 shows that the country’s mineral resources have attracted increased foreign direct investments from $5m (about sh18b) in 2003 to over $800m (about sh2.9 trillion) in 2017.

However, the government has only earned taxes and royalties from these mining ventures.

Now the government is targeting to increase the benefits it derives from the mining ventures by owning at least a 15% stake in medium-scale and large-scale mining ventures across the country.

“This is to ensure that as we attract foreign capital, the country benefits directly, in addition to what’s happening in the sector,” Museveni said.

The government is currently using redevelopment of Kilembe Mines as the litmus test in the implementation of this new arrangement, where it signs mineral production sharing agreements with investors.

In the mineral production sharing agreement arrangement, the Government, as the owner of the minerals, grants the right to conduct mining operations to a developer and Government shares in the production in kind or in value.

Under this arrangement, the developer provides the financial resources, technology, and skills to develop the resource, while the Government provides the exclusive right or licence to the developer.

This means that the government takes part in the actual development of minerals, unlike the former regime, where this was left for the investors.

“By directly being involved in the operations of the project, the UNMC acquires technical knowledge from the operator. The Government is also able to improve and grow its regulation of the sector and create more jobs,” Irene Batebe, the energy ministry permanent secretary, said recently.

Uganda has mineral deposits across the country, including chromite, lead, lithium, silver, zinc, diatomite, manganese, uranium, iron ore, vermiculite, limestone and marble, gold, granite, aluminium clay, phosphates.

“From these resources, Uganda has the opportunity to industrialise quickly with the acquisition of technology and specialised skills development,” Museveni said.

He added that the government will in the next financial year prioritise the quantification of the remaining mineral resources, strengthening of the minerals tracking system to improve transparency and establishing the governance framework and fiscal rule for the mining sector.