After publicly advocating value addition by announcing a ban on export of Uganda’s iron ore in 2013, President Yoweri Museveni seems to have caved in to pressure from one mineral dealer and backtracked on the position.
Details of what influenced President Museveni’s change of heart are not known, but an 18-month investigation by extractive industry watchdog Global Witness reveals that the dealer, Moses Kamuntu, met the president and gained permission to continue exporting the ore.
“Iron ore export is limited to my company. Don’t ask me how I can do that. That is personal,” the Global Witness report titled Undermined, quotes Mr Kamuntu as saying.
The report also reveals that it is almost impossible to do business in Uganda’s mining sector without paying bribes or drawing support from high-level political connections.
Mr Kamuntu had two location licences for small-scale miners, but not international exports.
He also held two other exploration licences.
Directorate of Geological Survey and Mines
According to Undermined, there is documentary evidence showing that Mr Kamuntu’s operations were well known to the Directorate of Geological Survey and Mines, which was effectively rendered powerless when President Museveni gave the dealer written permission to proceed.
“Why don’t you ask the president?” Mines Commissioner Edwards Katto told The EastAfrican when contacted. “I cannot comment on a presidential directive.”
Since 2014, President Museveni has repeated the directive on international mineral wealth at conferences held in Uganda banning iron ore exports.
The president’s directive revoked several iron ore export permits.
The president’s position was that the ore should be locally processed to feed the steel industry which relies on imported iron rolls.
He also proposed that Uganda import coal from Mozambique to smelt the ore because the country does not have enough energy locally to do so.
Coal from Mozambique
But government officials say importing coal from Mozambique to smelt iron ore does not make economic sense because of the distance involved, and that hidden costs will raise the prices of steel products.
President Museveni insists on value addition on Uganda’s mineral resources and therefore, iron ore is earmarked for domestic consumption.
“The more important issue is value addition and how minerals should develop the country. We know there has been mining in Africa for a long time, but we also know that these countries are very poor. The question is where has the money been going?” President Museveni told a mineral wealth conference in Kampala.
Previously, investors only had to pay royalties and export raw iron ore to countries like Kenya.
This meant the local steel industry lacked enough supply of iron rolls and relied on scrap metal as a raw material.
Uganda’s mining sector
According to Global Witness, Mr Kamuntu exports 10,000 tonnes of iron ore monthly.
“The fact that Kamuntu claims to have ‘bought’ time through the president’s word and used it to oil the wheels of illicit business raises serious questions about the way Uganda’s mining sector is managed and the deleterious effects on tax collection,” says the report.
Uganda has 200 million tonnes of proven iron ore while 500 million tonnes are indicated on the surface but are not yet proven.
The volumes could increase if actual figures are established.
Unlike India, Sweden or Brazil which have deep-rooted deposits, Uganda’s iron ore occurs in layers and is likely to be depleted quickly, depending on the volumes at which mining and processing happens.