There are both great expectations and anxious trepidation about Uganda’s oil and gas sector and the wider mining industry.
Elly Karuhanga is the Chairman of the Uganda Chamber of Mines and Petroleum (UCMP) and also the President of Tullow Oil Uganda. Edward Ssekika asked Karuhanga about the future of mining in the country.
The mining sector faces a lot of challenges including land issues and limited infrastructure. What, then, are the prospects of real growth in the industry?
Difficulties in easily accessing land remain the biggest hindrance to the development of mining in Uganda. There are issues of access, compensations and utilization of land. We at the Chamber of Mines and Petroleum are very concerned.
We are working hand in hand with the ministry of Energy and Mineral Development and the department of Geological Survey and Mines and other stakeholders to get these issues sorted out such that we can fully exploit what mother nature has given us.
The Uganda Chamber of Mines and Petroleum is organizing the second Mineral Wealth Conference in October; do you see it tackling some of these issues?
We sincerely do hope that the MWC 2013, slated for October 1st and 2nd, can help address these issues. President Museveni is expected to address the conference, accompanied by key government representatives from the Energy and Foreign Affairs ministries, Bank of Uganda, Uganda Investment Authority and Uganda Revenue Authority.
This, I believe, demonstrates serious political will to drive the mining sector forward with good laws and a conducive investment environment. In Tororo, phosphates cannot be exploited because the population occupies the land where they occur.
Who compensates these people? Is it the miner or government? I think it’s the responsibility of government to sensitize the mining communities about the law and also put in place compensating models which work. Like studies have always shown, we are not very different from DR Congo in terms of mineral composition.
Our quantities may be smaller but we have all sorts of minerals here that, if adequately exploited, can transform this country ten-fold. The conference’s theme is “Investing in Uganda’s flourishing mining industry” and hence the idea is to attract the big mining firms to invest - first, in the exploration process since this is the stage we are at now.
We needed big foreign money to get our oil out of the ground and the same will be needed for our minerals. That’s why we are calling on all the licence holders in Uganda to fully participate in the Mineral Wealth Conference in October and maybe strike partnership deals with the international mining stakeholders that will be in attendance.
The support service providers like bankers, lawyers, equipment suppliers, geologists, insurers (Uganda Insurers Association) plus academics and students are also invited to participate. Going forward, this annual summit should be able to attract the right type of companies to invest in our mining sector and subsequently transform Uganda.
There is also the issue of blood minerals from the Democratic Republic of Congo finding their way into Uganda...
Smuggling of DR Congo minerals through Uganda not only distorts our country’s mining statistics and therefore revenues, but it also prolongs conflicts like we are seeing across the Congo border. Our prayer is that the new laws which will see all regional minerals tagged to avoid the unfortunate Sierra Leone scenario of ‘blood diamonds’ may help address this smuggling issue.
We are also losers on the environment, because almost all the mining is not environmentally controlled. In places like Buwheju for instance, the abuse subjected to the land and environment by illegal gold miners is shocking. We would rather not mine at all than destroy our environment. So, if we don’t control this, the whole country will one day become one big pit without control.
How much is the country losing to illicit mining?
No one knows really; from Karamoja to Buhweju to Mubende and Busia, illegal mining is thriving and a lot of would-be revenues are being lost by the state. Fortunately, serious mining has not yet started, but if we don’t control these illegalities early, it will be a big loss for the country.
Luckily, Uganda Revenue Authority is moving fast to assess the losses the country is making through illicit mining and smuggling. In fact that’s why they are partnering with us at the Mineral Wealth Conference where they will share some of the steps they are taking to address this problem.
Many important licences are idle; how will the big investors you are targeting at the MWC2013 access these licences?
It is good that a lot of these prospecting and exploration licences are in the hands of Ugandans. The problem is that many of these Ugandans lack the capacity to fully exploit them, hence the need to seek financially and technically strong partners.
Roofings which for instance invested over $40 million in one of the biggest steel rolling mills in East Africa, should not be struggling to access raw materials. But it is, because those with the iron ore exploration licences are just seated on them; hoping to resell them for big money one day. Many licences are in the wrong hands, having been unfairly obtained.
We need sobriety. Fortunately, most of the licences are soon expiring and we hope the right people will subsequently assess them now that the department of Geological Survey and Mines has been streamlined. We are happy with the divestiture of Kilembe; it was a clear and transparent process.
Kilembe’s divestiture was handled well, why can’t the oil licensing and land issues be addressed the same way?
The Uganda Chamber of Mines and Petroleum is saying that the time is now to exploit this great opportunity that mining presents us. Revenues from our mineral deposits will far outstrip those from oil. There is willingness by the business community to take the bull by the horns and the political leaders should also move with us.
Uganda is not the only place with minerals; so, the few companies in the world with the means to invest in mining should not be driven away but should instead be encouraged to bring their moneys here. Infrastructural investments for one are key in encouraging investment. I am glad that roads and electricity are being given due attention by government.
Where do you see Uganda’s mining industry in the next five to ten years?
I think Uganda is going to be a shocker to the world. We need just a little bit of attention from our leaders. I was very happy when the president streamlined three things; education, infrastructure and oil. We need mining to be added to this and we will be set.
By attending the Mineral Wealth Conference, President Museveni is telling us that his government is ready to emphasize serious mining in the country. This is very encouraging.