Uganda is rich in essential mineral resources that could drive its transition to a green economy. The country possesses large deposits of gold, uranium, limestone, marble, graphite, iron, copper, and cobalt, among others.
While these minerals significantly boosted Uganda’s economy in the 1950s and 1960s, contributing up to 35% of export earnings, the mining sector’s contribution has now dropped to below 3%.
In 2021, the sector accounted for 2.3% of Uganda’s GDP, according to Ministry of Finance.
This decline is partly due to the export of unprocessed minerals, the prevalence of artisanal miners, especially in gold mining areas like Buhweju and Mubende, as well as the influence of foreigners, government insiders, illegal miners, and smugglers.
But what should be done to revive Uganda’s mining industry?
The chairman of Uganda Chamber of Mines and Petroleum, Sir Richard Kaijuka says that without significant investment in exploration and value addition, the country will struggle to realize its full potential as a mineral-rich destination.
“More often, many people talk about Uganda having many minerals, and then you ask yourself, if they have the minerals, how come you are not a mineral rich destination? You say Uganda is endowed with the occurrences of practically every mineral, you name it. However, for you to talk about a mineral making a difference, you have to invest heavily in exploration, quantify what that mineral resource is. Once you have ascertained what that mineral resource is, then you can technically talk in terms of putting up a mine,” says Kaijuka.
He adds: “And as you know, the country is saying it’s not enough to mine, you must also consider adding value so that the end product is made here. I can guarantee you, if we did thorough exploration on our copper and cobalt or if we focused on about 10 minerals, and added value, we you would be getting more money from minerals than oil and gas.”
The export of unprocessed minerals, the prevalence of artisanal miners as well as illegal miners, and smugglers indeed cannot bring the sector back to its former glory.
The country, Kaijuka says, must do whatever it takes to attract serious investors that get into exploration.
Various countries that have established strong mining sectors have had to use national mining companies work with the private sector in partnership to quantify certain mineral resources and make sure that within a certain time frame, they have addressed certain minerals to focus on.
Kaijuka says Uganda’s mining industry must be made a priority.
“Uganda talks of fourth National Development Plan (NDP IV). I have talked to planners and they have captured the importance of mining, but I am afraid there is a very big difference between planning and implementing a plan. I want you to emphasize the fact that Uganda is always talking about the mineral sector being a priority. I am afraid what happens in implementation is different. That is my biggest quarrel.”
“Do you know the United States imports almost all their rare earth elements from China, and that doesn’t make them very comfortable, because the technology to refinery and process, whilst countries slept, was captured by China. So, when Ugandans are talking about mining, they see artisanal miners in Karamoja, Mubende, Buhweju, Busia, and say we know mining. That is not mining. It is true here it is employing over half a million people, our people, but that’s really not mining the way we would want it.”
Mining is a very critical sector in the transition to green economy, and the industry is very significant for Uganda since the country aspires to establish itself as one of the leaders in the global electric vehicle sector and achieve its vision of widespread e-mobility adoption.
Last year, President Yoweri Museveni banned the exportation of lithium to secure the mineral resource for Kiira Motors, the manufacturers of Kayoola electric vehicles.
“We have designed and we are making our own electric vehicles, electric buses, mini buses which we call Kiira, and we are struggling to make lithium batteries here because we have the lithium. Our lithium will not be exported, we shall make the batteries here. So, if you get me investors (I have some, but if you you get me more), then we will use the lithium batteries in our own vehicles, and export others for other people. So, that is another area you can help me get some investors,” said Museveni while dressing investors at the Uganda – South Africa Trade and Investment Summit in Kampala in September 2023.
Lithium is a key component in the batteries that power electric vehicles. Lithium-ion batteries are the most common type of battery used in electric vehicles, and they offer a number of advantages over other types of batteries, such as a higher energy density and longer lifespan.
With the increasing demand for electric vehicles, the need for lithium is also on the rise. Recognized as a crucial mineral, lithium’s global supply is under scrutiny due to concerns about its capacity to keep pace with escalating demand.
As the demand for electric vehicles grows, so does the demand for lithium. Lithium is now considered to be a critical mineral, and there are concerns about the global supply of lithium being able to meet the growing demand.
In 2021, global lithium production totaled 540,000 metric tons. However, the World Economic Forum anticipates that by 2030, worldwide demand will surge to surpass 3 million metric tons. With the rapid adoption of electric vehicles, this disparity is forecasted to expand further in the years ahead.
Kaijuka urged both the government and private sector to focus on thorough exploration of lithium and other minerals to not only boost the manufacturing of electric vehicles, but also increase the sector’s contribution to GDP and foreign exchange earnings.
“Can we invite people to really be attracted to come and do thorough exploration, which really depends on the private sector. They (private sector) are saying, come and join us invest in the exploration area of mining. I am convinced beyond doubt that in the next five to ten years, if we invested in a focused manner, the contribution of mining sector to GDP, the contribution in terms of foreign exchange earnings and so on will be second to none. Today, if you ask our chief executive to tell you the contribution of mining to revenue generation, it’s a joke,” he said.
In 2015, President Museveni imposed a ban on the export of unprocessed iron ore and other minerals to promote growth of local industries, and in turn create employment for Uganda’s population.
The ban did not boost the mining sector to regain its 1950s contribution to the economy. This was partly attributed to a weak legislative framework.
To boost the sector, Parliament on February 17, 2022 passed the Mining and Minerals Bill, 2021.
The Mining and Minerals Act, 2022 provides for, among others, value addition with a view of promoting local growth by reaping benefits across the whole value chain among other mineral exploration benefits.
Relatedly, in December last year, the Minister of Energy and Mineral Development, Ruth Nankabirwa signed a new regulation setting higher purity standards for tin exports.
This initiative backed President Museveni’s directive to stop exporting unprocessed minerals, including tin.
Critical minerals such as lithium that Uganda is endowed with are sought after globally, because of their significance in the latest technologies and innovations towards electric vehicles, manufacturing of electronics, defence equipment among others.
“You should see the outcry of countries that are lining up for most of these minerals. And that’s why we are talking about critical minerals, and this country is indeed endowed, but endowed without capacity to know what they have. That is my quarrel with you, Ugandans. They (Ugandans) do not invest like Wagagai to explore, they like trading in gold, and you know what they do. I don’t stop them from doing that. But for God’s sake, tell those who have money that investing in this sector can be very rewarding,” Kaijuka said.
