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Symposium pleads for more funding to minerals subsector

Various participants at a stakeholders’ symposium have called for more funding to the mining and minerals subsector, one of the most promising yet largely ignored in the country.

Currently, the subsector takes the smallest part of the budget of the ministry of Energy and Mineral Development. The electricity segment and petroleum industry take the lion’s share of the ministry. The call came up on January 18, 2023 as part of deliberations of the Extractive Industry and Energy Stakeholders Symposium at Imperial Royale hotel, Kampala.

The symposium was organized by the office of the Auditor General (OAG) to boost its knowledge of recent events in the sector and improve its auditing function for better governance.

David Sebagala, a senior inspector of mines at the ministry of Energy and Mineral Development, presented ‘The minerals subsector in Uganda: challenges, bottlenecks and prospects’ on behalf of the directorate of Geological Survey and Mines. He said the subsector is dominated by artisanal and small-scale miners (ASMs), small mineral dealers, a limited number of geoscientists and paucity of data.

The directorate issues prospecting licences, exploration licences, mining leases, retention licences and location licences. Of recent, these may be applied for and obtained through an online system. However, data on these licences and leases is not updated.

A map of licences issued so far gives a glossy picture of busy activity. However, on physical inspection, one finds that a good number of licences are inactive. Worse still, some licences or leases that are deemed expired may be found to still be in operation.

UNDER FUNDED DEPARTMENT

Under facilitated mines department staff resort to being consultants for companies they are supposed to monitor and regulate, leading to conflict of interest and losses to the country, participants observed. The number of mining inspectors is also too small for the activities in the subsector.

Sebagala observed that there is lack of three-dimensional geodata establishing the actual quantities and quality of mineral resources in the country. Instead, the government relies on mere ‘occurrence’ of a resource to issue licences and leases.

This state of affairs discourages investors because they cannot be sure of the quantities and quality, and might necessitate them to spend money on first establishing the relevant data. It also leads to high incidence of speculators, and cases of deliberate under declaration and exaggeration.

Participants noted that for long, there has been more negative portrayal of ASMs rather than attempts to understand and address some of their structural challenges to improve the subsector’s opportunities. However, last year, the ministry launched a self-regulation manual for artisanal and small-scale gold miners (ASGMs) that is hoped to assess proper mine site management.

The tool underscores management of tailings, mercury usage, protection, waste water disposal, handling and storage. There were also many concerns about royalties; the collection mechanism is not clear and streamlined, and districts hardly report received royalties.

The symposium recommended that the assessor (currently the ministry) should be the same person as the collector (Uganda Revenue Authority).

Participants recommended that there should be a definite vote for royalties at the district level, and filing for royalties to URA should be separate. Also, royalties for some minerals should be raised or instituted where they do not exist. Construction materials mined at a commercial scale should be treated as minerals and charged royalties.

Currently, this loophole leads to financial loss. Participants also recommended the establishment of a mineral stock exchange to deal with the problem of little capitalization and limited participation in the subsector.

NATIONAL MINING COMPANY

The latest law in the subsector, the Mining and Minerals Act 2022, establishes a national mining company. However, Sebagala observed that regulations operationalising it are not yet in place.

Noting that Uganda had such a company in the past, he called for a different approach of management to avoid problems that befell the old one. He proposed a specific law to establish the company and give it more autonomy.

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