The cabinet is expected to meet
this week meet to consider whether to lift a ban on semi-processed minerals.
Uganda is among countries like Tanzania, Indonesia that banned the export of raw
There are indications that the
ban has taken a
toll on mining operations since 2013 when President Museveni imposed
a moratorium on the export of unprocessed iron ore and a ban on all others
minerals in February 2015.
companies have been urging the government to lift the ban. They have argued
that Uganda does not have the processing capacity for all of its ore, so, the
ban has forced many to scale back production. Some mining companies
have threatened to suspend operations entirely since the bulk of their revenue comes
from the export of semi-processed minerals, especially gold.
Amidst the concerns, the new Energy and Minerals Minister, Ruth Nankabirwa is faced with a
policy dilemma on whether to maintain the ban or lift it to unlock the sector
was hesitant to reveal whether the ban should be lifted at the time when she has
publicly declared intention to accord the mining sector similar attention to
accorded the oil and gas.
said the question about the ban will be taken by a cabinet meeting this Monday
upon considering a technical briefing paper by the Directorate of Geological
Surveys and Mines -DGSM.
“I will be able to give you
concrete information after a paper I’m presenting to cabinet on Monday is
done,” said Nankabirwa.
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President Museveni in February 2015
suggested a ban on the export of unprocessed and semi-processed-minerals saying
the country was not benefitting from its vast mineral resources.
Museveni, then addressing the NRM
Parliamentary caucus said there was need to put an end to what he described as a
historical mistake of exporting minerals without adding value to them.
Museveni was of the view that
minerals unlike agricultural products were exhaustible and, therefore needed to be sustainably exploited.
The then Minister for Energy and Minerals,
Irene Muloni effected the ban in July 2015. She said while the country needed money
from the export of minerals, it needed to get more value. “Why do we donate raw materials to
the outside world?" asked Muloni then. "We need the money yes. But is it worth donating an item at
maybe 10% of its value? Whereas if you actually processed it here, you are going
to add value, you are going to create jobs for our people. And with value
addition, you are going to earn more as a country,” said Muloni.
As the ban got implemented, it emerged
that some of the mining operations had to scale down on employees and there
were hardly any new investors in the sector. Mining operations were required to add
value to the minerals before export.
Some of the players in the mining
sector had questioned the rationale behind awarding an investor a mining lease
to operate in a situation where there was a complete ban to operate.
The Uganda Chamber of Mines and petroleum has been at the forefront of the campaign
against the ban.
The Chamber brought the same issue to the attention of MPs at
the time when Parliament was considering the Mining and minerals bill 2021, arguing that the government needs to be more systematic in order to help the mining
sector to grow sustainably.
According to the 2019/2020 minerals
sector report by the Directorate of Geological Surveys and Mines, production in menials dropped by
25.6% in 2019/20 compared to 2018/2019.
The drop in production was attributed to ban
on export of unprocessed minerals. The
report said there was a 52% drop in exports in 2019/2020 compared to 2018/2019 financial
The Uganda Chamber of Mines and petroleum
has also been advocating for a case-by-case implementation of the
value addition requirement.
The issue of the need to lift the
ban came up this week as Nankabirwa and technocrats from the Directorate of Geological
Surveys and Mines -DGSM toured some of the mining operations in Eastern
Greenstone Resources Ltd which
now operates Tira Gold Mine (also known as Busitema Gold Mine said it was
facing financial constraints because it cannot export Dore bar gold (partially refined gold bar) to Dubai.
“While there is no written
communication from the DGSM of Government of Uganda, we are made to understand
that no gold can be exported unless it has 99.9% purity” reads part of
statement handed to the Minister by Green Resources Ltd.
Greenstone Resources Ltd reported
producing Dore bar gold with purity ranging from 80-90% to a gold refinery based
in Dubai but it has not exported since the ban was imposed.
Greenstone Resources Ltd Managing
Director, Nimit Patel told the Minister that local gold refineries in Uganda
were reluctant to buy Dore bar from VAT registered miners.
“In 2019 we sold gold dore bar to
Simba Gold refinery based in Uganda, however, GRL was made to pay18% VAT on
this sale transaction,” said Patel.
He revealed that Simba Gold
Refinery had to face thorough audit by URA because as their other purchases
were without VAT. “Since Gold Refineries in Uganda purchase their gold in cash from
non-VAT registered suppliers, they do not want to purchase gold from a VAT registered
to avoid queries by URA,” he said.
One of the technical officers at
the Directorate of Geological Surveys and Mines who asked for anonymity said they
there is a convincing case for lifting the blanket ban.
Minerals State Minister Peter
Lokeris is of the view that some minerals that have had some extent of value
addition should be allowed for export if there is no market in Uganda.
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studies have warned against export restrictions on minerals, say the restrictions
can also have costs for countries employing them; in particular, they can lower
the returns on raw materials production, affecting efficiency costs for the