Govt to set up mineral-buying centres at mines

The Ministry of Energy and Mineral Development is in the process of establishing mineral buying and trading centres at every mine in the country.

According to Agnes Alaba, the acting director of Geological Survey and Mines (DGSM), the mineral buying hubs should ease access to markets for miners, especially the artisanal ones.

Uganda currently has 142 mines. Forty of them are large scale mines, while the rest are small. 

Alaba said the mineral buying centres should also help relevant government institutions to collect revenues from both the companies and the miners.

In addition, they would ease the trading systems without the miners having to move from the mines to the major centres to sell their minerals.

She said this is part of the reforms in the mining sub-sector that are aimed at supporting artisanal miners.

"We are undertaking formalisation of businesses for the artisanal miner. They are the biggest players in terms of numbers in the sector and we want them to benefit.

"One of the biggest challenges for the artisanal and small scale miners is finding markets. We are hopeful that the mineral buying centres will facilitate trade between miners and the buyers," she added.

Uganda has a huge list of minerals, including copper, cobalt, tin, phosphates, vermiculite, diamond, gold, petroleum, chronite, magnetite, uranium and iron ore.

Others are marble limestone, phosphates (apatite and francolite), tungsten, glass sands, beryllium, bismuth, columbite-tantalite, lead and zinc ores, lithium, platinum, rare earth metals, vermiculite, kaolin, bentonite, diatomite, gypsum, salts, feldspar, quartz, pozzolana, dimension stones and gemstones.

According to Alaba, the idea to establish mineral-buying centres, has been adopted from Tanzania, which has greatly benefited from them.

"Tanzania has some of the best policies and practices in the mining sub-sector on the continent. When we benchmarked recently, we bought the idea of the buying centres adopted here," she said.

Currently, she said, the DGSM has developed a paper on the buying of centres and submitted it to the ministry, which will present it before Cabinet for approval.

"We already have mineral beneficiation centres spread across the country, we can incorporate the mineral-buying centres," Alaba said in an interview on the sidelines of the recent annual convention on minerals, which was organised by the Global Rights Alert, Advocates Coalition for Development, Environment (ACODE) and the energy and minerals ministry.

This year's convention discussed sustainable development of mineral wealth in East Africa.

Services to be offered at the hubs

According to Alaba, the mineral buying centres will only be open to registered artisanal miners and licensed traders or companies.

The unregistered miners will be given the option to register at the same centres, she said.

She said many services are expected to be rendered at the centre. They include tax collection by the Uganda Revenue Authority (URA), district local governments for follow-up on payment of royalties.

The centres, Alaba said, will be equipped with mineral testing and measuring equipment and will offer computerised remittance of revenues.

Alaba said there will also be room for financial institutions, such as banks and mobile money services at the buying centres, to facilitate prompt payments.

"Once a mineral is extracted, it will be tested and measured on-site. The trading rates for every mineral will be availed to both miners and buyers, to facilitate proper payment," Alaba said.

"Our artisanal miners won't be moving up and down; payment will be instant through the banking system. We will be computing royalties on-site after comparing the daily mineral production reports. With the mineral buying centres, we will be killing several birds with one stone," she said.

Once this is done, she said, smuggling of minerals will greatly reduce in the country and Uganda will have up-to-date data on the minerals produced.

Mineral smuggling in Uganda         

Without availing figures, Alaba said the country is losing out revenues due to smuggling.

For instance, she said, there is a lot of gold being smuggled from several mines in the country and that it is facilitated by unregulated artisanal mining aided by limited inspection of mines. 

According to her, a lot of wolfram and tin from the western parts of the country are also smuggled to Tanzania and Rwanda, due to a ban on the export of unprocessed minerals.

In 2014, the energy ministry reported that Uganda's minerals are smuggled through the porous borders, into the neighbouring countries.

While Rwanda and Tanzania are the popular endpoints for mineral smugglers in the western region, most minerals in Karamoja and eastern Uganda end up in Kenya.

Karamoja has more than 300 artisanal gold miners, each with the capacity to mine about 27 grammes per day (10kg a year), according to the 2014 energy ministry statistics.

Despite having hundreds of artisanal miners in other areas, such as Busia, Buhweju, Mubende, Kigezi and Namayingo, among others, the country's accurate gold production (exports), are not known.

It has also been reported that the Government has largely relied on the mercy of the mining companies to declare the quantities they have mined, which aids smuggling.

Buying centres in Tanzania

In 2018, the United Republic of Tanzania, introduced mineral buying and trading centres following the amendment of their mining Act.

The country launched a mineral buying and trading centre in the Geita region, known for gold production.

According to Miningtechnology.com an online portal, the centres have enabled Tanzania to formalise the currently flawed trading system, giving small-scale miners access to a government-regulated market, where they can directly and legally trade gold without the necessity of travelling to major cities.

Statistics reported by the portal indicate that Tanzania is Africa's fourth-biggest gold producer.

Its Central Bank shows that the country exported $1.549b worth of gold in 2018, up from $1.541b the previous year.

In addition, mining technology says Tanzanian artisanal miners currently produce around 20 tonnes of gold each year.

However, that is not all, Tanzania has several initiatives for artisanal miners.

Recently, the country passed a law that reduced miners' overall tax obligation to 7%, from the previous 5% withholding tax and 18% value added tax.

What needs to be done

The Bosco Kunya, the chairperson of the Uganda National Association of Artisanal and Small-scale Miners, backs the establishment of mineral buying centres. 

"We have seen it work in Tanzania, we are hopeful it can work here. Finding markets has been one of the challenges for our people. We hope that the exercise is expedited," Kunya said.

However, Kunya also asked the government to expedite the process to enact the new Mining Bill, into law.

"This Bill will empower us to effectively participate in the sector," he said. Dr Paul Bagabo, a senior economist with the Natural Resources Governance Institute, says a lot needs to be done for artisanal miners.

"They also need financial assistance. They are the biggest players in the sector. They should be able to apply for a mining licence, just like it is in Tanzania," Bagabo advised.