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Value addition: Presidential directive rattles miners

A miner displays a piece of iron ore in Kabale. (Photo: B. Sidsel)

A miner displays a piece of unprocessed iron ore in Kabale District. (Photo: B. Sidsel)

A 2011 directive from President Yoweri Museveni forbidding Ugandan miners from exporting unprocessed minerals remains largely unenforced to date, with some of the miners describing it as impractical.

In a meeting with representatives of the miners at State House in November 2011, President Museveni directed the Energy and Mineral Development Ministry to halt miners from selling minerals in raw form because they were robbing the country of income and employment.

“When it comes to minerals such as Phosphates, Wolfram, Cobalt, Copper, Coltan, Nickel among others, it is criminal to export them as unprocessed ore,” read the presidential statement that was circulated at the meeting. “We lose money and jobs by so doing.”

The President equated exporting unprocessed ores to selling “mere soil” that would not fetch any significant returns. “Wolfram, when processed, produces tungsten which can be used in the manufacture of alloys (strong steel) that are used in the manufacture of aircraft engines, drilling equipment, etc,” he said.

More recently at the just concluded retreat of the ruling NRM party in Kyankwazi last month,  President Museveni reiterated his proposal to place a ban on the exportation of unprocessed minerals in the country.

“Make it a culture not to allow minerals to go out of this country unprocessed. We must educate our people to defend our economy. I do not want to be part of these historical mistakes”, he told the MPs.

Big dreams

However, many players in the sector have criticised the President’s value addition plans, arguing that they are big dreams which may not apply to Uganda’s context at the moment given the huge investment required to set up the necessary facilities.

“It is not a question of processing, it is a question of quality processing, they (Ugandan products) might be inferior in quality and no one will buy them,” points out Isingoma Amooti, the Head of Krone Uganda Limited, arguably the biggest Wolfram and Tungsten extractor in Uganda.

“The whole thing is academic, it is not practical for a small country like Uganda,” he adds. “Sanity and common sense must prevail.”

The Chairman of the Small Scale and Artisanal Miners Association, Johnny Sasiirwe also explained that some of the miners are hesitant to get involved in value addition because of the limited market for the finished goods. “For instance I have a shop that sells gold rings in town, but I can sell about two rings in a year,” he said.

But State Minister for Minerals, Peter Lokeris, insists that the Presidential directive is being implemented and warns against miners violating it. He said some Wolfram dealers have already fallen victim to the ban.

“You are supposed to smelt it (Wolfram) into a fine product, minimum at least into a sponge,” he told Oil in Uganda.

Meeting with the Prime Minister

Last week, through the Uganda Chamber of Mines and Petroleum, representatives of small scale and artisanal miners met with Prime Minister Ruhakana Rugunda and Energy Minister Irene Muloni in Kampala.

They requested for a grace period to enable them complete ongoing obligations with their clients before the directive is enforced. They revealed that most of them were also servicing loans with commercial institutions which they would fail to pay if they ceased operations.

They advised government to set up a national mineral processing plant that would be capitalised enough to buy the unprocessed minerals from them.

“We proposed that we sell to government which can process the minerals,” Emmanuel Kibirige, an artisanal gold miner from Mubende District told Oil in Uganda. “That way, it will be a win-win situation for both of us.”

For now, the miners are optimistic that government will let them continue their operations for a while, but it will not be long before the President gets his way, the huge investment needed to realise meaningful value addition notwithstanding.

Report by Flavia Nalubega

editor@oilinuganda.org