The long journey to mineral value addition

By David Mugabe

The arrival of state-owned Shandong Mineral Resources Corporation in Uganda is a big step in the long journey towards the mineral value addition.

Uganda is blessed with one of the oldest rocks on earth which presents great potential for mineral exploitation.

For instance, according to information from the sector’s private sector, over 200 million tonnes of iron ore in Kigezi, South Western Uganda, have been discovered so far with estimates putting the total deposits in the country at over a billion tonnes. Adding value to this huge reserve would make Uganda among the largest global sources of steel products.

The struggle for Africa to get good value from its huge deposit of natural resources and putting an end to the exportation of value to the west in the form of unprocessed goods has been president Yoweri Museveni’s pipe dream for decades. This is why for instance he has slapped a temporary ban on all minerals exports until significant value is added to them as this guarantees more revenues to Uganda.

Shandong Mineral Resources Corporation had revenues of over $1bn in 2014 and are present in Namibia, DRC, Chile, Colombia, and Australia in the field of exploration and Investments in mining.

Through their subsidiaries, they have ten state-of-the-art labs with 60 years of experience, a mineral equipment manufacturing company, training centers, 7,000 employees with 2,000 geologists and almost 90% of all minerals in China have been discovered by them. They also have the third largest gold reserve (offshore) in the world (6500 metric tons).

It is this expertise and the promise of setting up a national central mineral laboratory as well as specialized mining equipment with a mobile mining unit with a view of eventually setting up a manufacturing unit in Uganda that signifies efforts by private sector and government to finally turn potential into value in one of the most endowed countries on earth.

According to Irene Nakalyango, the chief executive of Uganda Chamber of Mines and Petroleum (UCMP), the visit by Shandong is a follow up to a cooperation agreement signed early this year with Uganda Chamber of Mines and Petroleum (UCMP) to invest in different areas of the mining sector in Uganda.
 

Chinese investors with UCMP executive director Irene Nakalyango

Nakalyango explains that the MoU is intended to result in the establishment of a mineral geological exploration as well as specialized mining equipment with a mobile mining unit with a view of eventually setting up a manufacturing unit in Uganda.

“It is a huge step in bringing people with expertise and investment power to our growing minerals sector,” noted Nakalyango. The group according to reports is targeting to invest in exploration of gold, silver, copper, rare earths, Niobium, Tantalite, Tin, Tungsten and Titanium among others.

Though it has demonstrated great promise, Uganda’s mineral sector on the whole, remains largely uncharted. Essentially the country’s mineral occurrences have only been identified through aeromagnetic surveys and other simple means with thorough quantification through exploration still way off.

So significant money is still needed to spend on mineral exploration to define what resources are in the ground and in what capacity. Experts believe earnings from Uganda’s mining sector could even exceed those from oil and gas, once thorough minerals exploration is done and the country moves to the production stage.

Uganda is also blessed with significant reserves of nickel, copper and platinum group metals, gold, silver, niobium, vermiculite, copper, cobalt, lead, zinc, phosphates, marble, limestone, the 3Ts of tin, tantalite & tungsten and rare earth elements/minerals amongst many others.

Over the last 8 months, back and forth discussions including two face-to-face meetings between officials from the Prime Minister’s office and the Uganda Chamber of Mines and Petroleum (UCMP) have gone a long way in trying to do-away with various bottlenecks that have undermined investments in the oil and mining industries.

“In July, the UCMP will host a consultant from United Nations Economics Commission for Africa (UNECA) to present a broad paper on how value addition or beneficiation can best be achieved,” noted Nakalyango.

These deliberations are a continuation of discussions that started in 2013 when President Museveni, challenged the UCMP to add value to Uganda’s minerals, while speaking at the Mineral Wealth Conference and at a meeting he hosted at State House, Entebbe later that year.

For value addition or beneficiation to thrive however, the government would have to guarantee the right environment, the UCMP noted. This meant rationalizing the taxation regime, harmonizing land laws, upping the energy and transport infrastructure amongst many other areas.