18 March 2014

Uganda: Investor Wants Ban On Iron Ore Lifted

Uganda International Mining Company Limited (UIMCL), one of the firms exploring for iron ore in the country, has asked the government to lift the ban slapped on exporting the mineral two years ago.

Meeting with Prime Minister Amama Mbabazi last week, a company director, Ashok Mustapare, said lifting the ban would enable them sustain operations and make a return on the investments they have made so far. In October 2012, President Museveni banned the exportation of iron ore.

Based in Rugando, Kanungu district, UIMCL says it has so far invested $7.5m (approximately Shs 18.7bn) in the project. The government issued the company with an exploration licence and a 20-year mining lease on 262 acres in Rugando.

The area has an estimated 55 million tons of iron ore deposits, according to a press statement from the prime minister's office. The mining lease allows the company to extract not less than 700,000 tons annually, against the local market demand of 84,000 tons every year.

According to a press statement, Mbabazi reiterated government's position on the ban of iron ore exports to "support the development of the local steel industry and also promote the policy of adding value to all our exports."

Steel is made from iron and carbon. Mbabazi added that the ban was meant to prevent the depletion of the iron ore, since government is focusing on developing the iron and steel industry.

"We are endeavouring to add value because it makes a difference in terms of revenue collection and employment opportunities," the prime minister said.

Relating the incident to what is happening in the oil industry, Mbabazi said that government moved cautiously and decided to build a refinery rather than export crude oil.

"It is better to wait until we build the capacity to add value to our products before we export them rather than export raw materials," he said.

The statement added that the government planned to build a railway line connecting to the iron ore deposits and a gas pipeline to Lake Kivu in Rwanda to tap the gas, which will be used as a source of energy for industrial use.

Uganda has huge deposits of iron ore in the southwest, eastern and northeastern parts of the country whose exploitation has been hampered by lack of sufficient infrastructure and energy.

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