Why it is costly to ignore mineral value addition

MINERALS

By Jim Mugunga

President Yoweri Museveni did it and so - as in today's speak - I will also did it and say that it is stupid for Uganda to disregard value addition in mineral exploitation.

He said the NRM Government recently made a decision to build a gold processing plant in Entebbe to ensure the national mineral resources are only exploited with value addition.

The President added that under his watch, he would not allow the shipment of raw resources out of the country. Years ago, he would have added that these raw materials may as well stay underground, since the minerals do not rot and Uganda's boundaries are fixed. So, either our partners recognise the importance of supporting our preferred value addition ways, or we wait until we have developed our own desired capabilities.

Up until the mid-1980s, copper, for example, was the major natural resource exploited in Uganda. Huge rocks were blasted underneath glacier endowed Mt. Rwenzori, crashed into relatively smaller particles as the starting process to eventual shipping. As a result of this process, rock impurities were dumped in designated places, for cleaning, milling and floatation, among others. This was rudimentary value-addition, estimated at about 33%, but not good enough to maximise returns on copper production. 

The demand to ship out the raw materials to meet growing needs of the colonial masters' evolving society in Europe necessitated that a railway line be built for ease of transportation. In addition, a smelter was built in Masese-Jinja, near the only source of power then, Owen Falls Dam.

The smelter made it easy for copper to be extracted from the concentrate and hence shipped away as copper ingots, with further value-addition at 95% purity. Back then, this is the closest to the real deal that Uganda got.

Available information, however, shows that in the process, other minerals such as gold, silver and nickel have may have been clandestinely recovered but were never declared. Thus Uganda lost deserved foreign exchange income and this is where President Museveni's concerns are partly rooted.

The other area of major concern is lack of wholesome exploitation of Uganda's cobalt, a metal related to copper. Geologists refer to cobalt as "a hard, shiny and greyish metal, never found as a stand-alone but in the table between iron and nickel or copper" Simply, cobalt is usually produced as a byproduct of nickel and copper mining activities. In 2017, about 69% of the world's cobalt was mined as a copper by-product and 29% as a nickel by-product. This in part explains why this mineral's home in Uganda is naturally Kilembe in Kasese district. Indeed, the 2012 world resources records show that Kasese featured in 16th position, at 556 metric tonnes of cobalt metal deposits.

However, to realise the potential of cobalt as a product of our copper, one needs to focus on the uses and benefits. The majority of high end industrial operations thrive on applications that necessitate high temperature performance. The aerospace, automotive, military and automation industries rely on cobalt for advanced, high temperature and high strength magnet operations.

Due to its high temperature resistance at upwards of 1,490 degrees centigrade, cobalt is added to alloys containing balanced additions of other metallic elements to ensure superior creep resistance, excellent surface stability as well as high corrosion and oxidation resistance. It is because of these characteristics that cobalt bearing super alloys are essential in the hottest parts of gas turbines for power generation, aircraft, industrial and medical related applications.

Cobalt is also used in porcelain, ceramics, paints, inks and enamelware. It is also added to colour glass as a de-colouriser, suppressing the yellow that tint glass would otherwise have due to iron contamination.

Cobalt is a critical component in the cathode of rechargeable lithium-ion batteries. These batteries are used in portable electronics, energy storage systems and electric vehicles, among others. Other documented uses and benefits include cobalt salts and compounds used to dry oil-based paints, inks and varnishes.

It is crucial in promoting adhesion between rubber and the brass plated steel as used in radial tyres. Fine cobalt powders act as binding material in tools used in steel cutting; in mining, oil and gas drilling and construction.

Cobalt is also used in petro-chemical and plastic industries and to remove sulphur during the refining of oil and gas. The potential uses of this Kilemb- based product are enormous and no wonder the appetite by potential investors is growing by the day.

Not surprisingly, the once little-known element, cobalt, is rapidly rising in price. Prices for the metal more than doubled in 2017 over the previous year, according to the US Geological Survey. Some companies have responded to the jump by looking for ways to secure stocks for their own supply chains. Apple recently announced that it is trying to procure its cobalt directly from miners. Automakers such as BMW and Volkswagen have also reportedly been taking similar steps.

Demand for cobalt in vehicle battery materials is expected to grow over 40% in 2018, according to UK-based cobalt trading firm Darton Commodities. Electric and hybrid vehicle adoption in China, as it tries to sort out its pollution issues, is also pushing the demand for cobalt up.

The push for maximising value addition is not limited to merely gaining copper-cobalt purity. Beneficiation should become core to national transformation, through industrialisation, full value commodities trade and socio-economic empowerment. As an independent nation with a technologically savvy educated generation, there is no excuse or reason for us to not exploit the full potential of our mineral resources.

Therefore, by adding just one further step of value addition to copper ingots and cobalt through refining, Uganda will attain above 99.5% purity, hence maximising dollar value and placing the Pearl of Africa in the driving seat. In addition, we will gain downstream capacity to cheaply make copper and cobalt by-products that would enable the country to become more self-sufficient.

In a recent Reuters interview, the CEO of materials company Umicore, Marc Grynberg, said, "… there isn't a better element than cobalt to make the stuff stable … so (while) you hear about designing out cobalt, this is not going to happen in the next three decades. It simply does not work."

In conclusion, Uganda's President is justified to use the term stupidity in reference to any attempts to ship out the country's raw mineral resources without beneficiation.

All players in the mineral sector should get on board, so that the country can achieve this vision sooner than later.

The writer is a communications expert and spokesperson of the Ministry of Finance, Planning and Economic Development