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Mining royalty fees defaulters named, face travel bans

An artisanal mining operation in Mubende District. Although a bigger part of Uganda's mining industry is artisanal

An artisanal mining operation in Mubende District. It has emerged that many holders of exploration licenses are instead mining and selling the minerals.

The Ministry of Energy and Mineral Development has published a list of mineral license holders who have not paid fees for mineral exploration, development and production.

The list indicates that fees for 174 exploration, location, retention and mining licenses have not been paid amounting to eight hundred and fifty million shillings (USD257,000). The list contains both individuals and companies, with many of the companies holding multiple licenses.

Some of the companies named included Hima Cement, which owes a paltry forty thousand shillings, Kilembe mines with seven million eight hundred thousand shillings, Capital Ventures International which owes one hundred forty six million shillings for eight exploration licenses, WestCorp Mining Limited that holds eight exploration licenses and has not remitted seventy two million shillings, and East African Mining Limited that owes eighteen million shillings for twelve exploration licenses.

Joseph Okedi, Acting Principal Inspector of Mines at the Geological Survey and Mines Department told Oil in Uganda that the mining companies had been given three weeks to settle their accounts or lose their licenses.

“This is the final call, those who will not clear their dues shall be deregistered and we create space for other investors,” he warned.

However some of the companies contacted by Oil in Uganda denied defaulting on the fees, accusing the Energy Ministry of publishing lies.

Fred Kyakonyo, the Chief Executive at Kilembe Mines Limited said his company does not owe government any money, and insists that they were included by mistake. Capital Ventures International denied receiving any warning from the Ministry and declined to comment further.

But Okedi maintains that every company and individual on the list owes government money, adding that government will use all available means to recover the funds.

“The defaulters shall be traced because they registered with the Registrar of Companies. The notorious defaulters who owe us so much money must be traced. We can trace their Directors too, and if they refuse to pay, the law shall take its toll on them,” he said.

In addition to cancelling all the licenses if the holders that do not comply, the Ministry has threatened to reject all applications for new licenses “if one or more of the Directors is a Director of a non-compliant entity.” Defaulters will also be blocked from travelling outside Uganda.

“Most of these defaulters are speculative explorers and we need them to give way and create space for serious exploration companies,” noted Okedi.

According to the Energy and Minerals Annual Sector Performance Report for 2012/2013, most holders of exploration licenses are instead running fully-fledged mining operations. Of the 839 licenses that were valid by June last year, about 500 of them were exploration licenses.

Attorney General warning

The decision by the Ministry of Energy and Mineral Development to expose the defaulters followed a warning by the Auditor General, John Muwanga.

In his report released this June, Mr. Muwanga noted that 174 companies whose licences had expired, defaulted on arrears of royalties amounting to eight hundred and fifty million, two hundred and forty thousand shillings.  Muwanga also revealed that some other 17 licence holders had not provided the required records and audited financial statements to the Ministry of Energy.

“There was no follow up by management on defaulters, for purposes of compliance,” he reported. He recommended that the Energy Ministry closes follows up the license holders to avoid losses to government.

Report by Flavia Nalubega

editor@oilinuganda.org