Uganda’s minerals industry getting back into gear

Kampala, Uganda — At one time, the annual value of Uganda’s mineral product was far greater than that of its East African neighbours, Tanzania and Kenya. This came to a halt during the political unrest and state-sponsored violence of the 1970s and ’80s.

Since then, Uganda has been working to restore its image as “the pearl of Africa,” bestowed on it by Winston Churchill. A glance at the skyline of Kampala, the nation’s capital, is enough to conclude that the process is well on its way.

Inflation is low and Uganda’s economy is now growing faster than that of most African nations. The government earned widespread approval for addressing early the scourge of AIDS, and its policy to divest itself of interests in industrial enterprises is nearly complete.

There have been problems stemming from operating inefficiencies in the narrow-gauge railway link through Kenya to the container port at Mombasa that have slowed economic growth. However, this problem was resolved in a recent agreement with Kenya to appoint a private management company to run the railway link and provide the major infusion of capital needed to upgrade the facilities.

A section of the container port is to be dedicated for Uganda’s exclusive use to circumvent endemic inefficiencies at the port.

As an initial step to getting the mining industry back on its feet, Uganda produced a new mining act in 2003, and followed that up the next year with detailed regulations.

Access to mineral rights is generally along similar lines to those that have attracted industrial interest in Tanzania and elsewhere, and mechanisms are now in place for fast approval of applications.

Various pieces of legislation present an attractive tax and investment package of incentives. One interesting feature is that reconnaissance licences can be issued ahead of the prospecting licences.

Mining has slipped back, however, and is overshadowed by the spectacular development of gold mining in Tanzania during the last decade.

As well, after years of unrest, the Democratic Republic of the Congo (DRC) appears to be stabilizing. The country is experiencing a revival of its mining, especially for gold. For instance, the fabulous Kilo Moto district that has produced over 9 million oz. gold, lies just across Lake Albert from Uganda and is beginning to make news again.

Sandwiched as it is between the DRC and Tanzania, Uganda looks well positioned as a gold prospect. Historically, production of this metal from greenstone belts has been small and eclipsed by the value of production of copper and cobalt from the Kilembe mine and smelter that Falconbridge (FAL.LV-T, FAL-N) operated in western Uganda. Columbite-tantalite, tin and tungsten have also been produced.

Perhaps Uganda’s greatest claim to fame in the geological world is the extensive development close to its eastern border of carbonatites. Crude phosphate was produced in the past from one deposit that is now being reviewed for revival. The deposits are similar geologically to the one mined by Agrium (AGU-T, AGU-N) near Kapuskasing, Ont.

An unusual commodity found in one carbonatite is vermiculite, which occurs here in spectacular, large flakes. The market for this commodity turned on its head when the principal source of supply, in Montana, closed in the early 1990s following the discovery of asbestos contamination. As a result, the market potential for Ugandan vermiculite has become very attractive.

Deep weathering over much of the area underlain by the carbonatites obscures much of the detail of these occurrences, but potential is attractive for rare earths, columbium-tantalite and other commodities related to these rocks in South Africa, Brazil and elsewhere.

Nickel occurs in what seems likely to be commercial amounts at Falconbridge and Barrick Gold’s (ABX-T, ABX-N) Kabanga deposit in northwestern Tanzania, and the deposit’s host rocks strike north into Uganda.

Kabanga contains only low values of platinum group metals (PGMs), but an occurrence of PGMs lies in Uganda’s northeast, close to the border with Kenya, and sources have yet to be found for the occasional diamond discovered during mining of placer gold deposits in central Uganda.

As part of the program to revitalize mining in Uganda, the World Bank is helping to fund an airborne geophysical survey that will provide coverage of parts of the country previously neglected.

Results of this work should throw some light on the details of the remarkable, circular magnetic anomalies already evident from earlier work. These features appear as perfect circles with diameters up to 500 km and suggest an impact structure. If this interpretation is correct, then some deeply weathered areas of the country could well be of interest for nickel prospecting.

Canadian mining companies already active in Uganda include IBI (IBI-V) and Uganda Gold Mining (UGM-V, UGGMF-O).

Copies of a brochure outlining mineral possibilities in Uganda will be available at the International Bookshop of the 2006 Prospectors and Developers Association of Canada convention in Toronto.

— The author is a semi-retired geologist living in Vineland, Ont. He is advising the Ugandan government on its mineral sector reforms.