Mining Investment in Uganda

MINING INVESTMENT IN UGANDA

Mining on Top: Africa – London SummitOne Great George street, Westminster, London 24-26th June 2014

By

Eng Irene Muloni (MP)Minister of Energy and Mineral Development, Uganda

Outline

1. Introduction

2. Mineral Potential of Uganda

3. Legal, Regulatory and Institutional Framework

4. Achievements in Uganda’s Mineral Sector

5. Mining Investment Opportunities

6. Conclusion

Introduction Location

Country Background Information• Total Area: 241,039 sq. km • Land: 197,097 sq. km• Water (lakes, rivers, swamps): 43,942 sq. km• Neighbours: Kenya, Tanzania, Rwanda, Democratic Republic of

Congo and South Sudan• Population: ≈ 35 million• Languages: 37 languages; English is the official language• Literacy: 74%• Climate: Tropical - Subtropical• Temperature: 15 – 30 0 C• Terrain: Highest point is Mt. Ruwenzori crossed by the

Equator at 5,110m above sea level and has snow. The lowest point is Albert Nile at 621m above sea level.

Introduction

Introduction

• Uganda possesses a wealth of metallic and non-metallic minerals due to its diversified geology.

• Uganda’s geology is dominated by old rocks up to 3,100 million years and this is favourable geology for discovery of world class mineral deposits.

• Recently, the Government undertook airborne geophysical surveys covering 80% of the country followed by ground geological mapping, geochemical surveys and mineral resource assessment. As a result, several potential areas for detailed exploration of different mineral commodities have been identified ranging from precious metals, e.g., gold, base metals such as copper and a number of industrial minerals such as limestone/marble.

Uganda’s mineral potential

Metallic mineral resources: Beryllium, Bismuth, Copper, Cobalt, Columbite-Tantalite (Coltan), Gold, Iron, Lead, Lithium, Manganese, Platinum Group of Metals (PGM), Rare Earth Elements (REE), Tin, Uranium and Zinc

Industrial minerals: Bentonite , Clay , Diatomite , Dimension Stones, Feldspar, Glass sands, Graphite, Gypsum, Kaolin, Kyanite, Marble /limestone, Mica, Phosphate (Apatite), Pozzolana, Salt (rock salt, halite), Talc and Vermiculite.

Gemstones: Apatite, Beryl – emerald, aquamarine, heliodor, morganite, Corundum (Ruby, blue sapphire), Fluorite, Garnet, Opal, Quartz (amethyst, rose), Topaz, Tourmaline and Zircon.

Mineral Occurrence map of Uganda

Legal, regulatory and institutional frameworkKey Legal Tools:

• The Constitution of the Republic of Uganda (1995) as ammended 2005;• The Mineral Policy (2001), • The Mining Act (2003); • The Mining Regulations (2004);• The Income Tax Act and VAT Act;

Other applicable Laws:• The National Environmental Management Act;• The Land Act

Legal, regulatory and institutional frameworkMineral Policy, 2001 The Mineral Policy was put in place to guide the country’s Mineral Sector development and its objectives is to:-• To stimulate mineral sector development by promoting private sector participation;• To ensure that mineral wealth supports national economic and social development;• To regularize and improve artisanal and small-scale mining;• To minimize and mitigate the adverse social and environmental impacts of mineral

exploitation;• To remove restrictive practices on women participation and protect children against

mining hazards;• To develop and strengthen local capacity for mineral development; and• To add value to mineral ores and increase mineral trade.

Legal, regulatory and institutional frameworkMining Act, 2003

The Mining Act, 2003 was enacted to operationalize the Mineral Policy. It replaced the Mining Act, 1964 and is internationally competitive and in line with current industry practice, with following principles:-

• Ownership and Control of minerals: Vested in the Government.• Exploration and Exploitation of Minerals through grant of Mineral

licenses/rights to any entity including: Prospecting License, Exploration License, Retention license, Mining Lease, Location License, Mineral Dealers & Goldsmith License.

• It provides for Mineral Agreements with investors for large scale projects.

• Entry is on first-come-first serve basis.

• All mineral rights are granted and revoked by the Commissioner, Department of Geological Survey and Mines (DGSM).

• Any person aggrieved by the decision of the Commissioner’s can appeal to the Minister for an Administrative Review.

• Decisions of the Minister may be subjected to judicial review in the High Court.

• Incase any party is not satisfied with Uganda’s Courts of Law, it can go for International arbitration.

• Environment: The mineral right holder is expected to comply with National Environmental Management Act.

Legal, Regulatory & Institutional Framework

All mineral rights except the Prospecting license attract annual mineral rent, fees, royalty and income tax on profits accruing from production:

• Royalties on gross value is charged as follows: Precious stones(5%); precious and base metals (5%); Industrial minerals - quantity based (Currently @ approx USD 2 per tonne).

• Revenues from royalty are shared by: Government (80%); Local Governments (17%); and Land Owner (3%).

• Compensation: Any disturbance of surface rights of the land owner has to be adequately and fairy compensated.

The Fiscal Regime

Legal, Regulatory & Institutional Framework

LICENCE PURPOSE PERIOD REMARKS

Prospecting Licence

(PL)

To prospect for minerals around the country.

1 year Non-exclusive & not renewable.

Exploration Licence

(EL)

To explore for minerals in an area not more than 500km2.

3 years Renewable two (2) terms of two 2 years each and half area relinquished on each renewal.

Retention Licence

(RL)

Granted to the holder of an EL when the identified mineral deposit can not be exploited due to economic reasons.

3 years Renewable once for 2 years.

Legal, Regulatory & Institutional Framework LICENSE PURPOSE PERIOD REMARKS

Mining Lease

(ML)

For mining operations. 21 years Should not exceed area of Exploration Licence and is renewable for 15 years.

Location Licence

(LL)

For mining operations of a smaller investment where expenditure to achieve production will not exceed 50 currency points (1cp = UGX 20,000 = GBP 4.7)

2 years Granted to citizens of Uganda or in case of corporate, citizen of Uganda holds ≥50% of ownership. Renewable for terms of 2 years each.

Geological maps with mineral potential

• Uganda has generated geological maps with new mineral potential zones at scales: 1:250000 (19 Sheets), 1:100000 (74 Sheets) & 1:50000 (52 Sheets).

• These maps can either be availed at

the Department of Geological Survey and Mines or can be accessed through a Geological and Mineral Information System portal at www.uganda-mining-go.ug:81/ugandaGMIS

Achievements in Uganda’s Mineral Sector

Typical cadastre map at: http://www.flexicadastre.com/uganda/

Mining Cadastre and Registry System (MCRS)

• MCRS was put in place to enhance transparency in licensing of mineral rights.

• A daily updated web based portal on www.flexicadastre.com/Uganda/ has been established to facilitate access to mineral rights information.

• This development has led to increased transparency in mineral licensing and awareness about the mineral potential areas to both local and international investors.

Achievements in Uganda’s Mineral Sector

Simba Mines Ltd.-Gold

First Mining (u) Ltd.-Tin

Zarnack Holdings-Tin

Muhindo enterprise -

koalin

Uganda internal mining –iron ore

Berkley reef -

Wolfram

Great lakes-iron

oreKigezi steel –

Iron ore

Krone Uganda Ltd.-Wolfram

Mineral concession map of South Western- Uganda

Tororo Cement-

Limestone

Tororo Cement-

Limestone

Jan Mangal (u) Ltd-Gold

Greenstone resources Ltd.-gold

Ataco services

Ltd.-Gypsum

Kilembe Mines-

Limestone

Anglo Ugandan Corporation-

Gold

Kisita Mining company

limited-gold

Hima cement Limited-

Limestone

Mining cadastre map showing active mining areas in Uganda

Achievements in Uganda’s Mineral Sector cont’d

Modern Documentation System• A Modern Documentation Centre has been put in place at the Department of

Geological Survey and Mines. It contains geo-information, maps and data in mineral sector and also hosts the mineral sector website: www.uganda-mining.go.ug

Geological Mineral Information System (GMIS)• GMIS has been put in place at the Department of Geological Survey and Mines

and it hosts geological, environmental, seismological and laboratory data. Trained Artisanal and Small Scale Miners (ASMs)• About 1000 ASMs have been trained (40% Women) and as a result they show: i)

increased use of mineral resources; ii) increased awareness in market prices; iii) increased environment awareness related to mining; iv) improved value addition; v) and increased occupational safety and awareness.

• High resolution magnetic data covering 80% of Ugandan area has been acquired.

•Similarly high resolution radiometric (Th, K & U) data covering 80% of the country has been acquired.

• Transient Electromagnetic (TEM) data for selected high mineral prospective areas has also been acquired.

Achievements in Uganda’s Mineral Sector cont’d

Acquisition of airborne geophysical data

Radiometric Ternary map

Analytical signal map

New mineral potential targets• Recent airborne geophysical data integrated with new

geological maps has resulted into eighteen (18) mineral potential targets for further detailed exploration and this is very crucial for potential investors.

1. Iganga gabbro intrusion - Nickel – PGE

2. Zeu (Zombo District)- Gold

3. Moroto area -Chromite–PGE-Marble-gold

4. Kidera (southeast Uganda) - Kimberlite Potential

5. Naigobya Geophysical Anomaly - Ni, Cr, Cu and Co and REE

6. Bukusu carbonatite - Limestone, Phosphate, Iron ore, Titanium,Vermiculite and REE potential

7. Masindi–Karuma Falls area - Ni,Cr,PGE, Fe

8. Kitaka–Buhweju Area Gold

9. Packwach area -Diatomite

10. Kaiso-Tonya-Kaolin-Bentonite clays

11. Mayuge area- Iron

12. Kafunzo area -Nickel

13. Makuutu area – REE & and Uranium

14. Hoima-Kafu area - Gold

15. Kaliro-Ivukula area - Gold

16. Aboke-Alo area - Gold

17. Buhara- Kabale - Iron

18. Butogota –Kanungu - Iron17

18

Achievements in Uganda’s Mineral Sector cont’d

Precious Metals

• Gold, silver, platinum occur in all regions of Uganda.

• 8 million ounces of gold proven.

• Further exploration and evaluation will discover and prove more potential areas for precious metals requiring investment in mechanized mining and processing.

Investment Opportunities in Mining Sector

Gold occurrences in Uganda.

Iron ore

• The new airborne data led to discovery of over 200 million tonnes reserves of iron ore (haematite) in SW of Uganda.

• Over 125 million tonnes of iron ore (magnetite) proven reserves in SE Uganda.

• Feasibility studies to process Ugandan’s iron ore using methane gas (from oil fields) and imported coal to final products are underway.

• This would necessitate to develop a pipeline to transport gas, develop a gas thermal plant to generate power (1000 MW), set up iron ore smelting plants and develop the railway network for cheap transportation.

Investment Opportunities in Mining Sector

Discovered iron ore deposits marked by brown colour lines .

Rare Earth Elements (REE); potential exist in:

• Isolated pegmatites in SW Uganda, Carbonatite centres in Eastern Uganda (Sukulu, Butiriku, Bukusu, Napak) with resources of 74 million tonnes of grade 0.32%.

• Aluminous clays enriched in Scandium, Gallium, Yttrium and REE in Makuutu area (SE Uganda) is estimated at 3 billion tonnes with grades of 23% REE and 27% Alumina.

Investment is required for further evaluation of the potential; and mechanised mining and processing.

Investment Opportunities in Mining Sector

Dimension Stone:

• Over 300 million tonnes of marble occurs in Karamoja region and thousands of millions of dimension stone outcrop all over Uganda.

• Granite, granite gneiss, amphibolites, dolerite and gabbro underlie the geology of Uganda.

• Investment is needed to develop dimension stone, aggregate, premix industry for the booming building industry in the region

Investment Opportunities in Mining Sector

Vermiculite:• About 55 million tonnes of vermiculite occur in Eastern Uganda.

There is a mine developed but there is need to establish processing plants for fertilizers, industrial materials like heat insulators.

Glass Sand:• Over 2 million tonnes of one of the highest qualities of silica sand of

99.95% for manufacturing glass, thus providing a viable investment.

Salt:• Over 22 million tonnes of trona at Katwe in Western Uganda,

providing industrial production opportunities.

Investment Opportunities in Mining Sector

Phosphates:• About 280 million tonnes of phosphates occur in Eastern Uganda.

There is an investor preparing to develop a mine and processing plants for fertilizers, and other industrial products.

Gypsum:• About 2 million tonnes confirmed and there is an available market for

the manufacture of cement and plaster of paris (POP) used in medical applications; and making moulds.

Kaolin:• About 3 million tonnes have been confirmed and this mineral is on

demand from local industries for manufacture of paints, paper, pesticides and ceramics.

Investment Opportunities in Mining Sector

Tungsten:• Over 2 million tonnes of reserves occur in Western and Central

Uganda with grades of wolfram ranging from 0.1% to 69%. There are three mining leases granted to develop this resource.

Tin:• About 2.5 million tonnes of grades 2.5% tin occur Western Uganda.

Two mining leases have been granted to develop this resource

Titanium:• Grade of titanium ranges from 13% to 22% in Eastern Uganda and

this resource is undeveloped.

Investment Opportunities in Mining Sector

Columbite Tantalite (Niobium-Tantalum):

• About 130 million tonnes of Niobium occur at Sukulu in Eastern Uganda; and about 3.5 million tonnes of columbite-tantalite in Ntungamo, Western Uganda.

Other Mineral Commodities include:

• Lead, Lithium, Silver, Zinc, Fieldspar, Kyanite, Diatomite, Nickel, Beryl, Chromite; and Diamond Group of Metals (DGM) are under evaluation to determine the commercial reserves and grades.

Investment Opportunities in Mining Sector

Uranium Over 30 uranium targets have been identified and 10 targets have been priorized for follow up by Government.

A. Kei and Midigo-Kaya Basin, Arua district.

B. Acha-Alo basin-Pakwach district.

C. Zipia, Bibia, Pekelle -Ayugi Basin-Adjumani district

D. Naam-Okora, Ogli and Wol (Pager-Agago-Ogel Basin)-Kitgum district.

E. Karongo-Waki Basin- Masindi

F. Bulyango, Kigozi-Kiizi Basin-Kabarole district.

G. Mpanga-Kahambu Basin Kyatwa (Ndale) -Mpaga Basin, Kyakutama- Basin-Kabarole district.

H. Rubindi, Kashongi -Nyabishekye Basin, Mirama Kababo Basin – Mbarara distrtict.

I. Kinyasano, Nyakibale (Rukungiri District), Kagamba, Ntugamo, Rubare Ntungamo District), Gayaza, Kahirimbi- Mbarara district.

J. Mabale, Kagadi, Isunga, Pachwa, Kabwoya-Hoima district.

Investment Opportunities in Mining Sector

Geothermal energy• Main areas under

exploration are: Buranga, Katwe, Kibiro, Panymur – All in Western Rift Valley.

Investment Opportunities in Mining Sector

Uganda Investment Authority (UIA)• UIA put in place an Investment Code, 1991.• The Code encourages private investment by streamlining procedures and

guaranteeing protection of investors against appropriation. • Foreign individuals and companies - own 100% of a business in Uganda

(Mining companies inclusive).Taxation • Import taxes such as customs duty for all mining equipment is zero-rated.Mineral Certification • Uganda is planning to certify minerals, for example tin, tungsten and

columbite-tantalite in compliance with the Great Lakes initiative. When this process is accomplished, it will be able to trace minerals from mine sites and stages of trade among the Great Lakes member states and subsequently this will minimize conflicts in marketing of the country’s minerals.

Fast tracking Investment and incentives in the Mining Sector

Conclusion • Uganda is richly endowed with mineral resources; the recently

concluded geological, geochemical and airborne geophysical surveys revealed more mineral resources and targets for gold, iron ore and Platinum-Nickel-chromium among others.

• Government intends to develop these resources in partnership with private sector in a sustainable manner.

• Mining Act, 2003 allows partnership (Joint Venture ) in mineral investment and total transfer of the mineral right.

• You are invited to come and invest in Uganda - the next mining destination country for high returns.

Key Government Contacts Hon. Eng. Irene Muloni, MPMinister of Energy and Mineral DevelopmentP. O. Box 7270, Kampala, UgandaTel: +256-414-233331

+256-414-344414Fax: +256-414-234732E-mail: memd@energy.go.ug Website: www.energyandminerals.go.ug

Hon. Peter T. Lokeris, MP Minister of State for Mineral DevelopmentP. O. Box 7270, Kampala, UgandaTel: +256-414-232598

+256-414-343508Fax: +256-414-234732Website: www.energyandminerals.go.ug

Mr. Fred A. Kabagambe KaliisaPermanent Secretary, Ministry of Energy and Mineral DevelopmentP. O. Box 7270, Kampala, UgandaTel: +256-414-234733Fax: +256-414-234732

Website: www.energyandminerals.go.ug

Mr. Edwards KattoCommissioner Department of Geological Survey and MinesPlot 21-29 Johnstone Road P. O. Box 9, Entebbe, UgandaTel: +256-414-323432Fax: +256-414-320364E-mail: dgsm@minerals.go.ugWebsite: www.uganda-mining.go.ug

Thank you!