BUA Group Alleged To Be Using Militia To Mine In Dangote Site

The management of BUA Group has been using armed militia, soldiers and policemen to mine marble and limestone in mining sites allocated to the Dangote Group, the Ministry of Mines and Steel Development has alleged.

In a statement signed by the ministry's Permanent Secretary, Mohammed Abass, and made available, the ministry said the company had been using a combination of armed militia, soldiers and policemen to obstruct the ministry's team from executing the stop work order issued to the company in October.

The ministry's statement was in response to an open letter to President Muhammadu Buhari by the company alleging that a minister was involved in sabotaging its operations.

Abass said that in the records of the Ministry of Mines and Steel Development and the Nigerian Mining Cadastre Office, the BUA Group did not have a mining lease over the contentious site (No. 2541ML) and was therefore engaged in illegal mining.

He stated, "The ministry stands by the stop work order issued to the BUA Group and signed by the Permanent Secretary dated 17th of October 2017."

"The letter was issued after thorough investigation confirmed that the BUA Group was indeed engaging in illegal mining of marble/limestone at a mine pit located on geographical coordinates N070 21' 47.4' E0060 26' 51.8', while the run-of-mine is stockpiled at an area with geographical coordinates N070 21' 48.4'; E0060 26'37.2'."

"Clarification provided by the Mining Cadastre Office shows that the coordinates of the mine pit and RoM stockpile area fall wholly within the area of mining Lease No 2541ML belonging to Messrs Dangote Industries Limited."

Abass added, "The ministry had earlier in 2015 issued a stop work order on this same disputed site but the BUA Group disregarded the order and went ahead with its illegal mining activities, under heavy cover of armed soldiers, policemen and men of the Nigeria Security and Civil Defence Corps."

"The management of BUA also resisted the enforcement of the latest stop work order issued on October 17, 2017 using a combination of armed militia, soldiers and policemen to obstruct the team from the ministry in effecting the stop work order."

He added that the ministry would not compromise due process in its commitment to promote local and global investments in the Nigerian mining sector.

 

Dangote Partners With Jumia To Sell Cement Online

In a new move designed to reduce price and ease logistics inherent in the purchase of its products, the management of Dangote Cement Plc has signed a pact with the foremost e-commerce platform Jumia Nigeria to offer for sale its cement to customers online.

At the unveiling of the deal in Lagos, Dangote Cement, Key Account Director, Chux Mogbolu said Dangote Cement was happy to partner with online shopping giant, in a bid to make Dangote cement available with ease to customers.

According to the deal, Nigerians and corporate bodies wishing to purchase a minimum of 300 bags of 50kg of Dangote Cement and above can now order on Jumia from the comfort of their rooms at a reasonable price of N2,500 per bag as opposed to how much is sold in the open market and see them delivered to any place of their choice without any extra cost for transportation.

Mogbolu, however disclosed that the purchase would only be within Lagos, Port- Harcourt and Abuja for now.

He said: "Dangote Cement decided to work with Jumia Nigeria based on its credibility and excellent performance over the years in online shopping management", adding that the new initiative would help arrest the scams perpetrated by online fraudsters who deceived the people by asking them to come and purchase Dangote Cement for N1000 per bag.

"For now, the pilot scheme is live in Lagos, Abuja and Port Harcourt, but we can extend to other cities depending on the level of demand and performance of the new deal".

"With the deal, Nigerians in need of seamless supply of cement from Dangote can now place order and pay online and wait for the delivery in record time from any of Dangote's nearest cement plant to Lagos, Port Harcourt or Abuja.

"We are starting with Minimum Order Quantity (MOQ) of 300, 600 and 900. We may increase depending on demand surge as time goes on," Mogbolu explained.

Speaking on the deal too, Chief Executive Officer of Jumia Nigeria, Juliet Anammah said the deal with Dangote Cement is part of efforts to deepen service delivery on Jumia Nigeria online platform.

She said she was of the belief that the deal will be beneficial to all parties involved and deepen further online shopping in Nigeria as obtained all over the world.

The Jumia Nigeria boss reflected on the 2017 Black Friday Festival ran by her organization and said the Festival has attracted more than 14 million visits since the commencement of the campaign on November 13th.

According to her, "the annual sales event, which was initiated in Nigeria in 2013 by Jumia remains the busiest and largest shopping day of the year on both online and offline stores. This year's explosive Black Friday numbers demonstrates the increasing capacity and flexibility of the online retail space in Nigeria."

"We deliver to the 36 states across Nigeria, and are able to reach neighborhoods and shoppers who traditionally have not had access to a wide variety of products and deals. This year we also see the increasing interest in groceries and other FMCG products which reflect the increasing relevance of Black Friday to the average Nigerian."

Some key highlights of the 2017 figures presented by Jumia Nigeria in Lagos on Thursday showed among other things more than 1.9 million visits on Black Friday Big Bang. 14.4 million visits since the start of the sales event; Overall, 85% of all visits were made on a mobile device, compared to 72% in 2016; and 86,000 smartphones and counting have been sold in the past two weeks.

Quantum Global Quits Kenya’s Savannah Cement

QGIAM, the private equity arm of Africa focused investment firm Quantum Global last week announced that on behalf of their investors, the sale of its interest in Savannah Cement, a leading Kenyan cement producer, has been completed following the receipt of regulatory approvals.

Quantum Global's investment was designed to support the cement producer on a number of value creation initiatives, including the development and launch of new products and the optimization of existing facilities.

Jean-Claude Bastos de Morais, Quantum Global's Founder and Group CEO expressed delight to have partnered with Savannah Cement in one of the critical industry sectors in East Africa.

He said they advanced together and aimed to close the existing infrastructure gap in Africa. “The exit from this investment is testament to the success of our approach of deploying capital in transformative sectors of key importance in Africa at the right time."

Martin Bachmann, Group Head of Active Management of Quantum Global, stated that the partnership with Savannah Cement and its management team created significant value and the two were involved in such a critical growth phase for the company. “Through its development of state-of-the-art products and technologies and its focus on the best use of green technology and on revolutionising environmental management in the cement industry, the company is well positioned to compete in an expanding marketplace, and we wish them continued success."

Quantum Global Group held the asset since 2015 through its USD 1.1 billion Infrastructure Fund, which is one of the most significant private equity funds in Africa solely focused on infrastructure developments.

Having started operations in 2012, Savannah Cement operates in a buoyant market driven by rising demand for cement products in a growing region. Savannah Cement is a state of the art, eco-friendly cement grinding plant with a capacity of 1.5 million tons a year, located in Athi-River, ca. 30 km from Nairobi. Successful in capturing several regional infrastructure deals to grow its market share, Savannah Cement quickly became a major regional player.

As part of the Infrastructure Fund, the Group so far has committed a significant portion of the capital for the construction of a deep-sea port in the Angolan province of Cabinda and for the development of an agri-processing plant for juice, water and wine processing and packaging geared towards the SADC region.

 

Turf Year For South African Miners But Stakeholders Are Optimistic

The year 2017 was another challenging year for South Africa's mining industry in light of a decrease in dividends and market capitalisation, various retrenchments across the industry, and marginal increases in taxes paid.

However, spot price increases for bulk commodities supported the industry and resulted in a return to profitability after the first substantial increase in revenues in five years. These are some of the highlights from PwC's ninth edition of SA Mine, a series of publications that highlights trends in the South African mining industry released by PwC last week. 

Michal Kotzé, PwC Africa Energy Utilities & Resources Leader, says: "The 2017 year can be described as a year of policy uncertainty and real questions over the long-term sustainability of the industry." 

"After the price lows of December 2015 and January 2016, the current year saw USD prices recover for most commodities with the exception of platinum. Although some USD price gains were offset by a stronger rand, the improved prices did bring the industry as a whole back into profitability." 

Despite an improvement in the financial performance of the industry, regulatory announcements in June 2017 resulted in market capitalisation dropping to June 2015 levels.

A subsequent recovery at the end of August was aided by improved USD prices and hope by investors that the suspended new Mining Charter would be revised before final implementation. In this edition, we have also included a brief look at the regulatory changes in Nigeria, the DRC and Tanzania.

Market capitalisation 

The 2017 financial year saw a decrease in the market capitalisation of the companies analysed to almost the low levels of 2015. The market capitalisation of the 29 companies analysed in this report decreased to R420 billion, a 25% decline from R560 billion as at 30 June 2016. Market capitalisation recovered somewhat to R506 billion as at 31 August 2017 on the hope that there would be an amicable solution between the industry and the regulator. 

Contribution by commodity 

Coal maintained its strong position as the leading South African mining commodity revenue generator. Despite its percentage of revenue generated remaining unchanged at 27%, it increased total revenue to R119 billion from the prior year's R105 billion.

Platinum group metals' (PGMs) share of total revenue decreased to 22% from 24% as total PGM revenue decreased by R2 billion to R94 billion. Gold's share of mining revenue decreased to 16% from the 18% in 2016. In contrast, iron ore's share increased to 11% from 9% due to a R10 billion increase in revenue. 

Financial performance 

Revenue increased by 13% (R43 billion) from the prior year. "It is notable that this is the first substantial increase in more than five years," says Andries Rossouw, PwC Assurance Partner. 

The gold companies' revenue increased by 17% (R23 billion) due to improvements in USD gold prices and a weaker rand for most of the reporting period. The platinum companies have seen revenue increases by 4% from the prior year on the back of improved platinum prices for parts of the year. 

Operating expenses increased by R13 billion, which is a 5% increase from the prior year. Continued low commodity prices have resulted in another year with significant impairments in the industry, with a total of R22 billion in impairment provisions. More than R100 billion was impaired over the last three years, more than wiping out the last two years of capital expenditure in the industry. 

After last year's net loss the companies in this year's analysis are back into a net profit position due to lower impairments. The EBITDA margin of 26% is 6% higher than the previous year.

"It is encouraging that all commodities improved their EBITDA margins. However, the low platinum EBITDA margin (12%) is still a significant concern and threatens the sustainability of a number of operations," Rossouw adds. 

Labour still accounts for the majority of mining companies' costs, accounting for approximately 44%. Labour costs increased by 4.5% which was marginally below inflation. 

Integrating risk into business strategy 

In the last number of years we have not seen a significant change in the risks identified by mining companies. These include: volatile commodity prices and foreign exchange fluctuations; the regulatory, political and legal environment; socio economic environment around mines; sustainable business plans or budgets; labour relations; operating costs; reliance on third-party infrastructure; employee safety and health; liquidity and capital management; and compliance with environmental standards.

In 2017, the risks have remained relatively consistent with three companies also including cybersecurity and its consequences as a risk. 

Safety in mines 

According to safety statistics, the level of safety has improved substantially in the industry, with fewer fatalities reported over the past 10 years. This is indicative of investments made by mining companies in safety initiatives. 

Value to investors in the mining sector 

The mining industry continues to add value to all its stakeholders. As reported in company value added statements, employees still take the lion's share of value added at 40%, followed by the Government through direct taxes, payroll and royalties with 19%. It is disappointing to note that shareholders got only 2% in the form of distributions. 

Adoption of emerging technologies in the mining industry 

Technological advancements have spurred innovation and new ideas in the mining industry. A number of mining companies have adopted emerging technologies. The use of remotely-piloted as well as autonomous drones to survey opencast mines is a common example of the adoption of emerging technology. Mines are also using autonomous drilling, proximity devices, collision awareness systems for mine vehicles and trucks, cloud and mobility solutions. 

Illegal mining activities 

The value of illegal mining and dealing of metals and diamonds in South Africa is estimated to be more than R7 billion per year. The South African gold sector has been the most adversely impacted by illegal mining within the industry, according to the companies included in our study.

The Chamber of Mines has emphasized the need for mining houses, the DMR and the South African Police Service to work together at every level of illegal mining activity from individuals working underground to the large syndicates that organise activity and sell the end product. 

Mining in Africa 

The DRC 

The growth in the DRC mining sector since 2002 has been facilitated by the commodities boom, attractive tax and customs incentives, greater stability and an improved regulatory environment. By the end of 2016, 482 companies held mining rights, compared to 35 in 2002. The production of copper amounted to 1.035 billion tons at the end of 2016 versus 27 259 tons in 2002. Cobalt production achieved 69 038 tons at the end of 2016, versus 11 865 tons in 2002. 

Nigeria 

Despite various challenges the Government has taken a number of steps to make the mining sector more attractive for investment by putting in place clear regulatory policies and operationalising existing ones. There are still a number of challenges in the sector ranging from insufficient infrastructure as well as regulatory conflicts. The Nigerian mining sector realises it needs to align itself with world trends and norms, especially around the future demand for various minerals. 

Tanzania 

In 2016, the Tanzanian Government introduced fundamental changes to the income tax regime for the extractive sector. June 2017 saw significant changes for the sector, even more fundamental than the 2016 changes. The broad objective of the new legislation is to seek to obtain a higher return to Tanzania from its natural resources.

Dangote Cement Records 12.6% Sales Volume Increase Across Africa

Dangote Cement, Africa’s largest cement producer, has announced its unaudited results for the six months ended 30th June 2017, posting a 12.6 percent increase in sales volume across Africa. 

In the financials released on the floor of the Nigerian Stock Exchange indicated that the increase in sales volume showed a growing capture of Pan-African market as Dangote Cement continues to gain grounds.

Revenues from operations in Nigeria increased by 34.5 percent  to ₦291.4 billion while Pan-Africa revenue increased by 63.7 percent to ₦124.4B from ₦76.0B mainly as a result of increased volumes and foreign exchange gains when converting the sales from country local currency into Naira.

Analysis of the half year result revealed that sales volumes of African operations increased by 12.6 percent to 4.7 million metric tons with Sierra Leone making a   53 kt maiden contribution.

Record of sales from its operations scattered around the African continent revealed that a total of 1.1million ‘metric tons of cement was sold in Ethiopia, almost 0.7 million metric tons sold in Senegal, 0.6 million metric tons sold in Cameroon, and 0.5 million tons in Ghana.

Also, 0.4 million metric tons of cement was sold in Tanzania and 0.3 million tons in Zambia. Sales volumes from Nigerian operations fell from 8.8Mt to 6.9Mt, occasioned by the onset of rains which stalled many construction projects.

Reflecting on the half year results, Dangote Cement’s Chief Executive Officer, Onne van der Weijde expressed satisfaction that the company’s revenues have continued to grow despite low sales from the Nigerian operations noting that the revenues grew on the strength of sales from other African operations.

Said he: “Our revenues have continued to grow despite the lower volumes seen in Nigeria, especially because of the recent heavy rains. Our margins have improved significantly, helped by improved efficiencies and a much better fuel mix in Nigeria.

“We are using much more gas and increasing our use of coal mined in Nigeria, thus reducing our need for foreign currency and supporting Nigerian jobs.

”Our Pan-African operations are growing well and increasing market share. We saw our the first sales from Sierra Leone in the first quarter and our new plant in the Republic of Congo will be in production at the end of July, further increasing our footprint across Africa and strengthening our position as its leading manufacturer of cement.”

The Company reports that it estimated that Nigeria’s total market for cement was 10.2 million tonnes (Mt), 23.2% lower than the estimated 13.3Mt sold in Nigeria in the first half of 2016. Of total market sales in the first half of 2017, just 0.1Mt was imported. 

“As a result of the slower market, our Nigeria operation sold nearly 6.9Mt of cement, down 21.8% on the 8.8Mt sold in the first half of 2016. We estimate our market share to have been about 64.5% during the first six months of 2017.   

Dangote Cement is a high-growth, low-debt, internationally diversified company that has just paid a dividend amounting to nearly 75% of 2016 net profits to shareholders.

“The recent publication of our credit ratings highlights the financial strength we have achieved through our unwavering focus on the profitable expansion of the business, underpinned by our belief that we must remain prudent in our financial management.”, Mr. Weijde stated.

Nigeria Gets $1.5bn Nitrogenous Fertilizer Plant

Nigeria’s acting President, Prof Yemi Osinbajo, Thursday in Port Harcourt inaugurated a giant world-class fertilizer plant, built by Indorama Eleme Fertilizer and Chemicals Limited at the cost of $1.5 billion. 

The acting President used the opportunity to remind all Nigerians that time has come for them to grow whatever they eat and produce whatever they consume.

“What Indorama is accomplishing today is very much in line with President Buhari’s vision for a country that produces what it consumes and grows what it eats. If you had to sum up our vision for the Nigerian economy in a few words, these would suffice. Grow what we eat, produce what we consume,” he said.

Prof Osinbajo commended Indorama for keying into the Presidential Fertilizer initiative which President Buhari launched last year to make fertilizers cheaper nationwide.

“At the end of last year, the President launched a Presidential Fertilizer Initiative, to ensure the availability of cheaper fertilizer to our farmers, to support what we’re doing in agriculture, in the production of rice and wheat and other staples.

“That Fertilizer Initiative, now well underway, has created significant economic opportunities for companies like Indorama Eleme Fertilizer & Chemicals Limited.

“I have been informed that Indorama will this year alone supply about 360,000 Metric Tons of Urea to Fertilizer blenders, which, in turn, will produce NPK fertilizer for the benefit of farmers across the country.

“This is the kind of economic progress we’re after, in which every unlocked opportunity proceeds to unlock several others, across multiple sectors of the economy.”

The acting President said that the Buhari administration will continue to support Indorama Eleme Petrochemicals Limited, which was privatised in 2006 by the Federal Government.

“We will continue to support Indorama Eleme Petrochemicals Limited’s expansion ambitions. Our commitment to the privatisation programme is equally assured, and we will continue to do everything to support investors to maximise the potential of their assets,” he said.

Earlier in his address, the Chairman of Indorama Corporation, Mr Sri Prakash Lohia said that the plant which has capacity to produce 1.5 million metric tons of fertilizer per annum is the largest single-train Urea plant in the world.

The Acting President also presented a Certificate of Discharge to the Chairman of Indorama Group, Mr Lohia and the Managing Director, Mr Manish Mundra for successfully accomplishing the post purchase agreement entered into with the Bureau of Public Enterprises on behalf of the Federal Government of Nigeria.

“Following the 2006 handover, the BPE carried out routine monitoring on the enterprise to ensure that the core investor adhered to and implemented the post-acquisition plan it had laid out for the company.”

“Today is the culmination of that process of monitoring and oversight by the BPE. I am delighted that it is taking place on an inspiring and hopeful note, and that we are all here today celebrating a thriving and promising company. We should not take this state of affairs for granted,” he said.

The Plant has a production capacity of 4000 metric tons (MT) of nitrogenous fertilizers per day or 1.5 MT per annum. The world-scale plant has been built with an investment of USD 1.5 billion, a huge Foreign Direct Investment, funded by the International Finance Corporation (IFC) and a Consortium of 15 European and African banks and Financial Institutions.

Governor Nyesom Wike of Rivers State, in his speech said that for Indorama to invest a whopping $1.5 billion in the state, it shows that the state is safe for investors and their investments. He called on other investors to emulate the footsteps of Indorama.

The fertilizer plant is well supported by Port Terminal at the nearby Onne Port Complex, and a Gas Pipeline of 83.5KM for gas supply.

The plant will bring about a green revolution in the agriculture sector not only in Nigeria but also in other parts of Africa and world at large.

Besides, making the fertilizer products to be available at affordable cost, the plant will boost crop yield to farmers and greatly help in minimizing the food grain deficit in Nigeria.

The plant has also generated lots of job opportunities contributing to the economic prosperity of Nigeria.

The construction of the plant commenced in April 2013 and completed in December 2015. The commissioning activities were concluded in March 2016 and the commercial production started in June 2016.

 

Jeweller Completes First Export of Conflict-Free DRC Gold

Partnership Africa Canada and Fair Trade Jewellery Co. on Monday announced the first export of conflict-free and traceable artisanal gold from the Democratic Republic of Congo to Canada.

The milestone comes a month after Partnership Africa Canada announced the Just Gold project had implemented a system to trace legal and conflict-free artisanal gold in DRC, with a proven chain of custody from mine site to exporter.

Fair Trade Jewellery Co., a Toronto-based pioneer in ethical sourcing, sustainability and retail, imported 238 grams in three gold doré bars to Canada.

Within days, the Toronto team refined, alloyed and designed four responsibly-mined and conflict-free artisanal gold rings. Each ring has been engraved with a lot number, which traces it to a specific mine site in the DRC’s Ituri Province, where the gold originated.

“Sourcing from Congo was a new and exceptionally ambitious process, but one to which our organization is committed to and capable of achieving thanks to partners on the ground, like Partnership Africa Canada,” said Robin Gambhir, Fair Trade Jewellery Co. co-founder.

“After more than a decade of ensuring that our materials are responsibly-sourced, we’re delighted to add Just Gold to the gold options we currently offer our clients. Ensuring we source fully traceable materials directly from communities is a way to foster community development, and as a company—deepen our impact on many stakeholders,” added Gambhir.

Partnership Africa Canada began the Just Gold project as a pilot in 2015 in Ituri Province. The project creates incentives for artisanal gold miners to channel their product to legal exporters—and eventually responsible consumers—by offering fair and transparent pricing and by providing capacity-building, such as technical assistance to miners in return for legal sales. Miners are taught better exploitation techniques and are offered Just Gold project equipment. In return, gold they produce must be tracked and sold through legal channels.

The project has over 600 miners registered across six sites.

As the project moves out of its pilot phase with a proven chain of custody from mine site to the exporter in DRC, Fair Trade Jewellery Co.’s move to import the gold is an important next step. The jeweller also collaborates with its sister company, Toronto-based software startup Consensas, to trace the gold from export to consumer.

“This export from Bunia, DRC to Toronto proved that it is possible to bring Canadian and international consumers traced conflict-free Congolese artisanal gold. What is particularly exciting is that we have shown that every gram of gold can be accompanied by reliable quantitative and qualitative data about its provenance and the actors involved in its extraction, production and trade,” said Joanne Lebert, Partnership Africa Canada’s Executive Director.

“Saying that it is impossible to carry out due diligence on gold supply chains is no longer a valid argument for industry. We have proven otherwise,” said Lebert.

Challenges faced during this export included high export taxes, transportation restrictions, and burdensome paperwork, will be used by Partnership Africa Canada to call on the Congolese government to create more favourable conditions for legal trade and responsible investment.

Funding for the Just Gold project is provided to Partnership Africa Canada by Global Affairs Canada, with additional funding by USAID through the Capacity Building for Responsible Minerals Trade (CBRMT) project and International Organization for Migration.

PwC Report Points To Impressive Mining 2017

According to PwC’s Mine 2017 report, the world’s Top 40 miners recovered from a race to the bottom, with bolstered balance sheets and a return to profitability in 2016, giving them much-needed space to pause and draw breath.

As it looks to the future, the 14th edition of PwC’s industry series analysing financial performance and global trends, also outlines the new opportunities and hazards on the horizon – and the impact of intransigent or innovative activity.

Mine 2017 was released by PwC Africa today at the Junior Indaba conference held in Johannesburg.

Michal Kotzé, Energy, Utilities and Mining Industry Leader for PwC Africa, commented: “The narrative of the Top 40 in 2016 tends to read like a mine site safety mantra: Stop. Think … Act. The industry has moved out of danger but 2016 was not a year of significant action, and we now wait to see who will be bold and step out beyond the fluctuating market confidence.”

The report analysed 40 of the largest listed mining companies by market capitalisation. The financial information for 2016 covers the reporting periods 1 April 2015 to 31 December 2016, with each company’s results included for the 12-month financial reporting period that falls into this time frame.

The number of emerging companies included in the Top 40 has decreased by two and now totals 17. There were seven new entrants from the previous year, five of which had made appearances on previous rankings in either 2014 or 2015. First Quantum and Teck Resources re-emerged on the 2016 list after strengthening their financial positions.

The report recognises a return to profitability in 2016, with an aggregate Top-40 net profit of $20 billion; after an aggregate loss of $28 billion in 2015. The improved fortunes of the industry were then directed to strengthening balance sheets.

Overall the market capitalisation of the Top 40 increased in 2016 by 45 percent to $714 billion, approaching the 2014 level. This was mainly due to rising commodity prices.

Revenue from the Top 40 remained relatively flat – up just one percent from the previous year’s sum of $491 billion – despite a rebound in commodity prices, particularly coal and iron ore in the second half of the year.

Capex fell dramatically again, by a further 41 per cent, to a new record low of just $50 billion. After hitting a near-record in 2015, impairment charges tumbled last year to a less-alarming $19 billion.

Debt repayments totaled $93 billion, up from $73 billion a year earlier, with most of the debt issued to refinance, rather than fund acquisitions or mine development.

Kotzé added: “We see an improved gearing ratio of 41 per cent, down from the 2015 record of 49 per cent. But this is still well above the 10 year average of 29 per cent. Interestingly, we also found that around half the capex figure was invested in sustaining activities, so the growth capital portion was strikingly small compared with previous years.”

Rapidly rising commodity prices sparked renewed market optimism and improved credit ratings across the Top 40 firms. Valuations also climbed, especially for the traditional miners, with the trend continuing through the first quarter of 2017 even as commodity prices remained flat. But, valuations aside, there is little to suggest that the group made any substantial advances throughout the year.

For the fourth consecutive year, the industry reduced spending on exploration. $7.2 billion was invested in 2016, barely one-third of the record $21.5 billion allocated in 2012, with the funds cautiously targeted at less risky, later stage assets, typically located in politically stable countries.

Lake Albert Gas To Facilitate Iron Ore Processing In Kigezi

 

The great Kigezi region in western Uganda will get a big iron ore smelting plant, president Yoweri Museveni told a political rally in Nfasha village, Kacherere Parish, West Rubanda constituency, Kabale district. 

Museveni who is seeking re-election as president of Uganda said the region is rich in mineral resources that can be exploited to transform and enrich the country. “Rubanda is rich in iron ore resources. The NRM Government wants to build a big iron ore smelting plant. 

The gas from Lake Albert will be delivered to Butogota and the neighbouring areas to facilitate the processing of iron ore,” he said, adding that the target was to produce and process one million tons of iron per day. 

The president revealed that the resources available were sufficient to cover a period of 45 to 50 years. The country, according to Museveni, would benefit a lot because the processed iron today fetches US $ 550 per ton. 

However, his competitor and former close ally, former Prime Minister Amama Mbabazi during a presidential campaign rally in Kabale district faulted his former boss for failing to make deliberate efforts to process the iron ore. 

Aerial geological surveys conducted by the Geological Surveys and Mines Directorate GSMD in Kigezi sub-region show that there are 200 million metric tons of iron ore deposits are in the region. This means Uganda can potentially get US$ 110 trillion. 

"Currently, we have over 200 million tonnes reserves of hematite iron ore in southwestern Uganda and 60 million tonnes of magnetite iron ore in the south eastern part of the country and still have huge potential for exploration,"  Francis Natukunda, a senior geologist at Uganda's Department of Geological Survey and Mines, is quoted by New Vision saying.

According to Natukunda, if the iron ore is extracted, it would not be exported, but rather used domestically to fuel demand for steel in the construction industry. Uganda banned iron ore exports in 2012. 

“Uganda’s geographical position gives it access to over 500 million people, including COMESA and SADC and the recent population surge in the countries forming these regional blocks will trigger demand for construction materials from our industries,” state minister for investment, Gabriel Ajedra Aridru told a sector conference in Kampala last year. 

Iron Ore is a key raw material in making steel. Local steel makers like Roofings have shown interest in making significant investment into exploration, mining and processing of iron ore to add values and eventual exportation.

Museveni said his Government would extend electricity from the Muko junction off the Kabale – Kisoro road to benefit a number of places in the area including Muko, Nfasha, Rubanda Mission, Ikumba Health Centre,nBugyera, Ruhuriza and Kiyabe.

 

 

New Mining Set For December Parliament Debate

A new mining law to be debated by parliament starting December promises to improve the environment for investment and generally enhance Uganda’s mining sector.

“We hope to have a new law for debate in Parliament by December,” Peter Lokeris, the State Minister for mineral development told the annual general meeting of the Uganda Chamber of Minerals and Petroleum (UCMP), an outfit that brings together players in the petroleum and mining sectors last week.

Hon. Lokeris said the new law is part of an ongoing review of Uganda’s fiscal and regulatory framework intended to “reshape the future” of the country’s mining sector.

Government has been reviewing the Mining Act, 2003 and Mining Regulations, 2004 to align them with the revised Mineral Policy

The reviewed framework aims to address several issues that have haunted the sector including; conflicts over competing land uses, the rise of unregulated artisanal and small scale mining activities and the inadequate enforcement of health and safety provisions.

The new framework also aims to increase productivity and the creation of new mines by establishing financing mechanisms for artisanal, small scale and large scale mining. It is hoped that the new policy will further improve mineral revenue collection and management and usher in a transparent competitive bidding system.

UCMP’s Chairman, Elly Karuhanga, welcomed the review as part of the continuous efforts by government to create a favourable environment for investment in extractives.

“The review of the laws and regulations for the mining sector, removal of taxes on exploration for oil, gas and mining investments and the continued energy and infrastructure development efforts are all the much needed interventions to address the bottlenecks in our sector,” Karuhanga told the meeting.

Karuhanga also hailed government for heeding calls by UCMP to reconsider the ban on mineral exports, which he said had affected the sector. President Yoweri Museveni lifted the ban in August this year.

SOURCE: Oil In Uganda

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