The Africa Centre for Energy and Mineral Policy (ACEMP) is a non-profit organisation that was founded in 2012.
In the last five to ten years we have partnered with the African Centre for Media Excellence (ACME) to train both print and radio journalists about the extractive industries, oil, gas and mineral sector in order to improve their reporting on the nascent petroleum and minerals resources in Uganda. Indeed, some have excelled and gone on to apply these skills at the nation’s leading print media, including this very paper.
However, lately, Uganda has been cast in the limelight for some unfortunate resource misreporting about the status of our mineral wealth. One was the recent state of nation’s reporting about 31 million tonnes of gold discoveries in the country and this has since been followed by another misreporting of rare earth elements discoveries to the tune of 532 million tonnes in Bugiri, Bugweri and Mayuge districts in eastern Uganda worth $350 billion.
In all the two media reports, we are neither informed as to whether these discoveries are resources or reserves, a critical element in resource evaluation, classification, and reporting.
Current global rare earth elements annual production by the leading top 10 producers of rare earth elements in the world do not even add up to what is being mis/reported in Uganda. For example, in 2021, China was at the top with 168,000 metric tonnes, the US, 43,000 metric tonnes, Mynammar 26,000 metric tonnes, Australia, 22,000 metric tonnes, Thailand, 8,000 metric tonnes, Madagascar, 3,200 metric tonnes, India, 2,900 metric tonnes, Russia, 2,700 metric tonnes, Brazil, 500 metric tonnes and Vietnam, 400 metric tonnes.
This information is important because these are mere annual productions registered in 2021 for the top 10 producers of rare earth elements in the world. Tabloid style resource reporting as exhibited by some respected national print media with a wider international readership is not only embarrassing to the nation but also sends wrong signals to the policy makers in government.
For example, it was reported that the prime minister had stopped the investors of the Makuutu Rare Earth project, insisting that development of these resources should follow government’s policy on value addition, while local politicians are already visualising ‘Dubai monumental skyscrapers’ for their electorate, which calls for management of both state and community expectations.
The other wrong signal from such reporting is the assumption that these discoveries are proven commercial reserves whereas not. Classification of mineral resources is not only critical to investors, attraction of FDI in the mineral sector, but also important for policy makers in informing their policy decisions and direction.
It is, therefore, important to always be specific when reporting these discoveries to avoid misleading the public and most importantly the policy makers. The starting point is always to differentiate between resources and reserves as illustrated below.
A “Proven Mineral Reserve” is the economically mineable material derived from a measured mineral resource. A “Probable Mineral Reserve” is the economically mineable material derived from a measured and/or Indicated Mineral Resource. A “Mineral Reserve” is the economically mineable material derived from a measured and/or indicated mineral resource.
A “measured mineral Resource” is that part of a mineral resource for which tonnage densities, shape, physical characteristics, grade and mineral content can be estimated with a high degree level of confidence.
An “indicated mineral resource” is that part of a mineral resource for which tonnage, densities, shape physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence.
An “inferred mineral resource” is that part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. A “Mineral Resource” is a concentration or occurrence of material of economic interest in or the Earth’s crust in such form and quantity that there are reasonable and realistic prospects for eventual economic extraction.
So, here is what we know from Rwenzori Rare Metals Limited, one of the companies behind this discovery. Available data shows that these resources may not necessarily meet all the credentials for value addition in country as our policy makers may wish. Data from Rwenzori Rare Metals indicate resources of 532 million tonnes (comprising of inferred, indicated, and measured resources) @ 640 ppm Total Rare Earth Oxide (TREO), which means that there is potentially a maximum of 340,000 metric tonnes of commercially mineable rare earth oxide.
The potential value of the entire known mineable resource base is around $16 bn at current market value, which is way below the reported $370 billion and nowhere near the value of Uganda’s oil and gas resources, but nevertheless a significant value for our economy.
The company also plans to develop an operational open pit mine by 2024 with a gradual ramp up to mining of approximately 4,000 metric tonnes per annum over the ensuing three-year period, before considering further development and expansion of the project if necessary. This would place Uganda amongst the top 10 global producers of rare earth elements in the world and guarantee the developer adequate raw materials for the estimated modelled 50 years or more lifetime of the mine.
However, to demand for value addition as propagated by government without a full appreciation of the characteristics of our minerals, global market dynamics, and other variables such as access to technology, capital expenditure and operational expenditure implications and other geopolitical issues continues to discourage and frustrate investors in our mineral sector and risks in this case rendering this rather important project for the country and communities in the Busoga region, uneconomical and a race to the bottom.
It is important, therefore, for all stakeholders, the mining companies involved, local communities, cultural and political leaders in the Busoga region as well as government technocrats to pick interest in this important discovery in order to manage both national and community interests.
The author is a mineral and energy economist and executive director, Africa Centre for Energy and Mineral Policy (ACEMP)