President Yoweri Kaguta Museveni’s new directive banning the exportation of raw minerals from Uganda aims to promote value addition and boost the country’s economy.
“If you cannot process minerals from Uganda, leave them alone, and do not export them. Our children will use them in the future, let them stay in the ground,” President Museveni states in this new directive.
The move, which comes a few days after Museveni appointed Dr. Gerald Banaga-Baingi as the Chief Executive Officer (CEO) of the Uganda National Mining Company, requires all minerals to be processed locally before exportation, although it’s a decision that may have far-reaching consequences for the mining sector.
Economic Implications
The ban is expected to increase revenue for Uganda by processing minerals domestically. For instance, a tonne of unprocessed vermiculite sells for US$25 about Shs91,000, while processed vermiculite can fetch up to US$410 which is around Shs1.5 million. This significant markup highlights the potential economic benefits of processing minerals locally.
Job Creation and Industry Growth
Local processing of minerals could lead to the creation of more jobs in the mining and manufacturing sectors. The Abyssinia Group’s new steel factory in Jinja, for example, is expected to employ 280 people directly and benefit over 1,000 indirectly. The factory aims to produce 75,000 tons of steel annually from locally mined iron ore, contributing to Uganda’s economic growth.
Existing Mineral Deposits
Uganda is rich in mineral deposits, including:
Iron ore: Approximately 312 million tons of high-quality iron ore are available in Kabale, waiting to be exploited.
Manganese, tin, wolfram, beryl, diamonds, and columbite-tantalite: These minerals are also found in significant quantities across the country.
Gold: Uganda is also rich in gold mineral deposits and according to Christopher Legilisho, a Chief Economist with Stanbic Bank Uganda, gold was one of Uganda’s biggest exports last year. It is because of this that president Museveni agreed to the construction of a gold refinery in Uganda so that the country can gain more from exporting refined instead of raw gold.
Challenges and Opportunities
While the ban may pose challenges for some mining companies, it also presents opportunities for local industries to grow and develop. The Uganda Chamber of Mines and Petroleum believes the restrictions on raw mineral exports have transformed the sector positively over the past decade and will continue doing so in future.
Government Support
The government is committed to supporting local industries through value addition. The Minister of State for Energy, Peter Lokeris, reaffirmed the ban on raw mineral exports, emphasizing the goal of promoting local industries. He noted that the government is also working to reduce electricity costs, making it more feasible for companies to process minerals locally.
By processing minerals domestically, Uganda aims to enhance revenue, create employment opportunities, and stimulate economic growth. This initiative reflects the country’s commitment to industrialization and economic self-reliance, ensuring its mineral wealth contributes directly to its development.