Uganda opens $200m iron ore smelting plant
Saturday February 26 2022
Uganda’s new smelting plant could reduce the region’s reliance on scrap metal. PHOTO | FILE
Uganda has commissioned a $200-million iron ore smelting plant that could significantly reduce the region’s heavy dependence on scrap metal, billets and coils for raw material.
The plant in Iganga, eastern Uganda, with a capacity to process 1.2 million tonnes of metal annually, is a project of Tembo Steels Uganda Ltd.
“This is East Africa’s largest integrated steel plant that has forward to backward integration of steel,” Sanjay Awasthi, chairman Tembo Steel, told The EastAfrican.
The launch came amid plans by Uganda to follow Kenya in banning the sale or trade in scrap metal to tame wanton vandalism of infrastructure such as high voltage power pylons, infrastructure supporting CCTV cameras, and road furniture.
The region is facing scarcity of cast iron scrap. Tanzania and Rwanda used to be sources of cast iron, but it is no longer available in those countries.
However, Abraham Muwanguzi, senior planner for technology and industry at the National Planning Authority-Uganda (NPA) said the current EAC Common External Tariff needs to be reviewed as it favours importers of wire rods.
The wire rods are 70 per cent semi-finished goods, but are zero-rated, while coal, the raw material used in the iron ore smelting, attracts withholding and value added tax.
NPA is pushing for an improved transport network, low-cost loans, reduced power tariffs, and favourable tax incentives for the industry to be competitive.
Increased capacity
Uganda hopes to increase its capacity in iron ore smelting when Pramukh Steel Ltd, Madhvani Steel and Kabale Steel commission their plants, according to their publicised plans. This would allow Uganda to supply smelted iron ore and products to its domestic market as well as Kenya, Rwanda, Burundi, South Sudan, and the DRC.
Uganda spends over $360 million annually on the importation of steel, with at least 70 per cent on importation of coils and billets products. Some 30 per cent is spent on finished iron and steel products, the firm said.
Uganda has confirmed iron ore deposits of over 500 million tonnes. These include Hermatite iron ore found in Muko in Kabale and Kisoro districts of southwestern Uganda, and magnetite iron ore in Sukulu and Bukusu in Tororo District in eastern Uganda.
Uganda’s steel production (for both domestic and export markets) currently stands at an estimated 585,000 tonnes per annum, that is, 35 percent of installed capacity. Of these, 210,000 tonnes is liquid steel production, which is mainly produced through scrap smelting in the induction furnaces.
According to NPA, in 2018 Uganda’s iron and steel plants had total installed capacity of about 1,000,000 tonnes per annum. 50.17 percent (501,700 tonnes was being utilised.