Eng. Joseph Patrick Okedi, assistant commissioner mining, ministry of energy and mineral development told the New Vision on Wednesday that the company had received a line of credit from a bank in China to begin initial operations
Wagagai Mining (U) is in the process of being granted a 21 year mining lease to set up a large scale gold extraction plant in Busia district.
The mining will take place at Mawero Parish, Butebo sub-county where there are estimates of 12.5 tonnes of mineable gold reserves. It is considered the biggest gold deposit that has been quantified in Uganda for large scale gold mining.
Mine production is targeted for 2020 after completion of construction of the mine. Gold is now the second biggest export for Uganda after coffee according to Bank of Uganda statistics.
Eng. Joseph Patrick Okedi, assistant commissioner mining, ministry of energy and mineral development told the New Vision on Wednesday that the company had received a line of credit from a bank in China to begin initial operations.
The commissioner explained that the lease was granted after the group got the certificate of Environment Impact Assessment from NEMA. They also obtained Memorandum of Understanding (MOUs) for surface rights with land owners in the area.
"We have reviewed their application for the lease and the documents they submitted. They have fulfilled the requirements for the lease. The estimate of the minable reserve they have shown is good which has enabled the bank to advance the money. Their evaluation of known deposits will go on," Okedi said Monday.
The miners have requested government for high voltage power to be provided to the mine site. The commissioner promised that the ministry through Umeme Ltd would do so. He noted that a large mine would produce large quantities of gold compared to what the artisanal miners can produce.
Peter Lokeris, state minister for minerals said last week that the Government had directed the department of geological survey and mines to issue the license to avoid further delays.
Zackary Baguma director geological survey and mines department said there had been delays in issuing the license because they wanted the investor to resolve the land issues with the locals and the district officials. Baguma said they wanted the Busia officials to come clear on the land issues.
Abebe Wodajie, director Wagagai Mining (U) Ltd said they received the mining lease with conditions that they must meet. He said some of the conditions include paying for the surface rights and acquiring the land lease.
Roraima (U) Limited and Elgon Minerals (U) Limited formed a joint venture to create Wagagai Mining (U) Limited to implement the gold mining project in Busia.
Wodajie, an Ethiopian miner is managing director of Roraima while Elgon Minerals is spear headed by Chinese investors.
Wodajie noted that the MOUs with about 400 land owners and within six months they expect the people to be compensated and vacate the place to giving way for construction of the mine that will take two years.
He said the mining would take place underground and not much land would be required on the surface save for construction of office premises and the industrial complex.
On their side they have to compensate people who will be affected by the mining. He said they are in the process of acquiring surface rights. He said the mining would take place underground and would not disturb activities on the surface. He said some land will be needed for office premises and factory facilities.
He encouraged intra Africa trade saying governments in Africa should encourage trade in Africa especially in the mineral commodities because it was a source of income for communities.
He said for example gold from Ethiopia moves illegally from artisanal miners to Somalia and Kenya. He said small scale miners are hard to monitor as they take their gold across the borders. He explained that gold from DR Congo may be moving to Uganda because it peaceful.
"You can move with gold in Uganda because Uganda is safe. Gold moves from unstable countries to stable countries," he said.
Uganda's exports of gold have been increasing from 2015 where it was recorded at $35.73m to 2016 ($339.54m) with a slight decrease in 2017 ($317.93m) according to Bank of Uganda. Comparing coffee exports were recorded in 2015 ($402.63m), 2016 ($371.65m) and 2017($555.44m).
"We need rights to move freely in Africa so you can sell gold anywhere in Africa. If we had a common currency trade in Africa would be easy. In some countries the currency cannot be converted, traders look for currencies that can be converted," he added.
Wodajie said gold from the plant would process gold to between 90%-97% level of purity and transport to a gold refinery where it will be processed to 99.99% level of pure metal.
Gold has been explored, mined and traded in Africa for hundreds of years. Most of the gold is still exported in raw form to refineries in the Middle East, Europe and Asia.
Alain Goetz, chief executive officer of the Entebbe based African Gold Refinery (AGR) said the advantage of refinery is that refined gold bars produced can be considered as a commodity and a currency.
He said the refinery can improve responsible trading of gold in the region. He called for accreditation initiatives that certify gold and silver refinery regulated by the government entities.
"Smugglers are putting passengers in danger by bringing heavy gold bars into the aircraft cabin as hand carriage. AGR works closely with the airlines and insurance companies to have secure procedures and routing for the gold shipments towards markets," Goetz said