Cabinet approves new law on sharing mineral royalties

Apr 16, 2021

In the proposed royalty sharing model, the Government will take 70% and landowners 5%.

Cabinet approves new law on sharing mineral royalties

Martin Kitubi
Journalist @New Vision

Cabinet has approved the Mining and Minerals Bill of 2020 that, among other things, spells out the sharing of mineral royalties.

The Bill, if passed by Parliament, will allow the sub-counties and town councils to share part of the royalties.

According to the proposed royalty sharing model, the Government will take 70% and the district local government 15%.

In addition, sub-counties or town councils will take 10%, whereas landowners or the lawful occupants of the land will take 5%.

Section 98 on Royalties under the Mining Act of 2003, provides for only the Government, local governments and owners or lawful occupiers of land to share the royalties.

Under the current law, the Government takes 80% of the royalties, the district local government 17% and the landowner 3%.

In addition, the current setting required that any disturbance of surface rights of the landowner has to be adequately and fairly compensated.

The new changes were confirmed by Sarah Opendi, the Minister of State for Mineral Development.

According to Opendi, the increase in the local government’s share of royaltwill enable them restore what the mining activities could have destroyed.

“These changes are good. The central government’s proportion of the royalties has been reduced by 10% because the Government wants a significant amount to stay at the local government,” she said.

“What will be left at the local governments will enable them improve roads, maintain schools depending on the royalties got from their respective minerals,” she added, while addressing journalists at the Uganda Media Centre in Kampala on Cabinet’s decision.

Once enacted into law, Opendi said, the revenues generated from the mining industry are expected to increase by 10% of the gross domestic product (GDP).

Following Cabinet’s approval of the Bill, she said the energy and minerals ministry will table the Bill before Parliament before the end of this month, for consideration.

The Bill seeks to repeal and replace the Mining Act of 2003 and replace it with a new legislation on mining and mineral development.

Tough penalties for illegal mining

The proposed Mining and Minerals Bill also provides for tougher penalties, sanctions and fines on illegal mining and non-performing mineral rights.

Anyone, for instance, conducting prospecting, exploration or mining without a mineral right or carrying out artisanal mining without a permit, will be liable on conviction, to a fine not exceeding 50,000 currency points or imprisonment not exceeding seven years or both. Fifty thousand currency points is equivalent to sh1b.

The penalties will cover not only illegal gold miners, but illegal miners of sand, clay and murram, which have since been declared development minerals.

“The country has lost revenue to illegal mining and idle mineral licences. The penalties are restrictive and will reduce illegalities,” the state minister for mineral development said.

Vicent Kedi, the acting commissioner mines at the ministry, however, said the Bill seeks to legalise and streamline artisanal mining and that many will be allowed to progress.

The Bill also recognises artisanal miners, unlike the old Mining Act of 2003. Under the Bill, there will be a progression of artisan miners to small scale, medium and large mining entities,” he said.

He added that they will also be given chance to apply for mining leases that are given to large-scale miners.

Use of mercury

According to the Bill, the use of hazardous chemicals without authorisation will attract a fine of 5,000 currency points, the equivalent of sh100m or imprisonment not exceeding three years or both.

Once the Bill is enacted into law, it will provide for establishment of the Earth Scientists Board to regulate earth scientist and associated professionals.

It provides for the establishment of the Mineral Protection Force as the enforcement arm of the mineral sub-sector with the directorate of geological survey and mines.

What stakeholders say

Stakeholders the New Vision interviewed backed the revised sharing of mineral royalties, saying it empowers local governments.

Don Bwesigye Binyina, the executive director at Africa Centre for Energy and Minerals Policy (ACEMP), said they had recommended a 50/50 sharing model on royalties to empower the local governments on service delivery.

The 50/50 model requires that both government and local governments take an equal share of royalties.

“The mining local communities such as Karamoja, have some of the worst social services such as road network, schools and health facilities. If the Government adopts the 50/50 model, these would be improved,” he said.

Bosco Bukya, the national chairperson of Uganda Artisanal & Small Scale Miners Association, said previously, the sub-counties where the actual mining was taking place were not benefiting from the royalties.

However, both Binyina and Bukya recommended that the Government provide alternatives to mercury and other chemicals used in mines.

In the proposed royalty sharing model, the Government will take 70% and landowners 5%.


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