The European Union has pledged more than €25 million in grants to support Uganda’s mining sector, including efforts to build capacity for processing and adding value to minerals before they are exported. The EU Delegation Head in Uganda, Jan Sadek, said the bloc supports Uganda’s ambition to stop exporting unprocessed minerals and will provide additional resources, technology, skills and access to European markets to help develop the sector.
Sadek said Uganda’s opportunity lies not simply in extracting minerals, but in building industries around their processing and utilisation. “Mineral extraction is not the opportunity Uganda has, but to ensure the extracted minerals go to processing, to laboratories, to workshops and to plants to develop skills and create jobs,” Sadek said.
He was speaking at the 15th Uganda Mineral Wealth Conference in Kampala, organised by the Uganda Chamber of Energy and Mines and the Ministry of Energy and Mineral Development under the theme, “Beneath the Surface: Unlocking Africa’s Next Mining Powerhouse.”
Sadek said the EU wants to work with Uganda to identify mineral value chains that can attract investment. “Europe respects Uganda’s ambition to add value to its mineral resources and comes with a proposition of mutual benefit,” he said.“Together we can identify competitive value chains and develop a pipeline of investable projects.”
Sadek said the EU also wants to see Uganda export more finished mineral products to European markets and pledged to connect Ugandan companies and training institutions to European knowledge, technology, capital and markets. He said the EU is preparing €25 million in grants for the mining sector.
“Across our ongoing and planned engagements, the EU will have mobilized more than €25 million in grants to support Uganda’s mining sector, including €6.25 million provided by the EU and Germany through GIZ for the Sustainable Development of the Mining Sector in Uganda,” Sadek said.
The funding comes as Uganda seeks to move from exporting raw minerals to processing and beneficiation, a policy objective the government has pursued for more than a decade. The government previously introduced a special levy on unprocessed gold, resulting in a two-year standoff with players in the sector.
Private investors have meanwhile called for a phased and selective approach to restrictions on the export of unprocessed minerals, arguing that capacity needs to be developed without disrupting the mining industry. The Ministry of Energy and Mineral Development is also pursuing reforms aimed at strengthening regulation of the mining industry.
The reforms have so far included the formation of the Uganda National Mining Company. State Minister for Energy Sidronius Okaasai Opolot said existing policies and laws do not adequately respond to the changing needs of the mining industry. He said the sector needs a standalone regulator, similar to regulatory arrangements in the electricity and oil and gas industries, as mining expands and attracts more local and international investors.
Opolot said stronger regulation would improve investor confidence and help mobilise capital for processing and value addition. He said the mining sector requires a stable, transparent and predictable regulatory environment supported by a clearly defined administrative structure.
“The policy provides that we must have a policy arm and we want the policy arm to be very clear as a policy arm. We want to put in place a standalone regulator. We have the inspectors. We have the department. But that’s not enough. We want to have a regulator as other sectors in the Ministry,” he said.
The proposed reforms come as Uganda seeks to attract more investment into mineral processing while retaining a greater share of the value generated from its mineral resources.
Aggrey Ashaba, Chairman of the Governing Council of the Uganda Chamber of Energy and Minerals, said the country must move beyond extraction by strengthening processing, beneficiation and national participation in the sector.
Ashaba also called on Uganda’s financial institutions to develop partnerships that can help reduce investment risks in mining and mobilise more capital for mineral value addition. The push for greater value addition is expected to require investment not only in processing facilities, but also in laboratories, skills development, infrastructure, technology and regulatory capacity-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
