25 December 2012

Uganda: Revival of Mine Will Spur Economic Growth

Kampala, Uganda — Ugandans living in Kasese town (western Uganda) will have the opportunity to smile if Kilembe copper mines resumes work.

Kasese is one of the known districts in the country not because of the Rwenzori mountains or the rare tribes of the Bakonzo, Basongora, Banyabindi and Batwa but due to copper deposits in the areas that were discovered in the early 1906 by Italy's Duc D'Abruzzi Expedition and E.J. Wayland.

After the expedition the first major attempt to exploit the copper started in 1926 by Tanganyika Concessions Ltd who were granted a concession of about 250 square miles.

In 1927 a prospector named D. Magee searched the area for the company and pinpointed the mineral outcrop which led to the discovery of the ore bodies which were worked by Kilembe Mines Ltd (KML).

Tanganyika Concessions Ltd dug about 10,000 feet of surface trenches along the mountain slopes to find the limits of the outcrop and then between 1928 and 1932, developed over 9,000 feet of underground

However work at Kilembe mines at that time was extremely difficult Peter Wamumbere a former worker at the mines told East African Business Week.

He says most of the work had to be done by hand as there were no roads to bring in equipments and the price of copper was very low.

"The price of copper dropped and world economic conditions deteriorated and during the 1930's the company suspended work.

"Tanganyika Concessions Ltd abandoned their work in 1934. Their Exclusive Prospecting License (EPL) then reverted to the government," he said.

According to Fred Kyakonye the General Manager of Kilembe Mines during the 1930s the copper industry was contributing about 30% to the country's GDP.

Its why the government decided to buy all the shares from the mining company.

He adds that it created total problem to the mining sector because after twenty years the company started experiencing shortfalls due to machines getting old.

According to Kyakonye this time was characterized by hard economic situations, inflation was too high for the management to continue operating the company and even the finance policy that existed at that time was also not conducive for the Canadian investor.

All the money from exports was supposed to be banked with the Bank Of Uganda so it was the BOU to decide which percentage should go to the mining company both in local and in foreign currency.

Kyakonye stresses that this the time when the company required a lot of dollars to pay its foreign staff and also to buy machine (spare parts) and the price for copper was too low at the international market.

"When the Canadian Government realized that the copper business was not performing well they opted to sell it to the Government of Uganda in 1975, this acted as the second phase for the collapsing of the mining industry because the first mistake government did was not to employ well educated people," he says.

Kyakonye was optimistic that Kilembe mines revival by government and partners will lead to economic development because the copper deposits are still there in plenty.

"Copper business is now booming since its price has gone up today," he says. "The price for one tone of copper is $8000 dollars on the international market."

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