The Government has banned the exportation of iron ore in a bid to support the development of the local steel industry, a senior government official has said.
The ban follows President Museveni's October 2012 directive to the energy ministry not to allow any more iron ore exports.
The move is intended to secure adequate raw materials for the local steel mills to match their production capacity.
Edwards Katto, the commissioner for mines in the energy ministry, said the move is also in line with the Government's plan to reconstruct the railway line using locally manufactured steel products.
"There is increasing demand for steel products in the country due to the booming construction sector," Katto said during an interview.
"A big percentage of our iron ore was being exported, leaving some local steel rolling mills to operate below capacity. We expect this to change now that we have stopped the exportation," he said.
Uganda is endowed with a substantial amount of iron ore deposits, especially in the Southwest. A report from the geology department shows that annual iron ore production has been fluctuating from 971.95 tonnes in 2009 to 3,794.74 tonnes (2010). The country mined 2,133.82 tonnes in 2011 and 3,315.95 last year.
But the energy ministry has been granting export permits leading to the exportation on the mineral, especially to china.
There has been tremendous growth in the construction industry due to population increase and the improvement in incomes.
The local demand for steel products is also influenced by the general aggregate demand in the East African region due to Uganda's strategic location in the region.
A 2011 research by Makerere University dons Christopher Senfuka and John Kirabira showed that shortage of raw materials, low product quality and quantity are the major problems facing the Ugandan steel industry.