What you need to know:
Credit. Standard Bank to offer funding to firms at development, production stages.
KAMPALA. Investors will have to show strong financial and expertise muscle to get an exploration licence in Uganda if the review process of the mine policy and regulatory framework is completed.
This will replace the old model where licences are given on a first-come-first-serve principle as provided for in the Mining Act (2003).
Mr Edwards Kato, the commissioner department of geological survey and mines ministry of Energy, told journalists last week in Kampala that this will ensure a competitive tendering process for potential investors in Uganda’s mineral sector and ensure that a licence is given to a competent player.
“Some investors don’t have financial and technical capacity but get licences because of that principle. And because they don’t have capacity, they always sell the licenses to another investor which is not good,” he said.
He added: “It has to be competitive so that we look at all interested parties proposals, examine their financial capacity and expertise and choose the best. We will also monitor to ensure that investors don’t under declare their worth.”
He added that some clauses in the policy and regulatory framework that are obsolete will also be changed to ensure that they are in line with international best mining practices.
Among the other clauses to be reviewed include scraping Value Added Tax (VAT) on the importation of equipment used in exploration of mineral resources and harmonising the Mining Act with the Land Act to facilitate mining activities.
“Investors importing equipment for exploration shouldn’t be subjected to tax because there is nothing to tax; they should only be taxed when they start production,” he said, adding that taxing them is a disservice to the mining sector.
The vice chairman Uganda Chamber of Mines and Petroleum, Mr Richard Kaijuka, said there is need to streamline policy and regulatory framework, adding that investors need a conducive environment in terms of enabling legislations, regulatory framework and having access to land to facilitate mining activities.
“There has to be a framework where all Ugandans understand that if we are to exploit our mineral resources, we have no choice but to have access to land. Ugandans have got to welcome investors as opposed to looking at them as being adversaries,” he said.
Funding for companies
Mr Anthony Ndegwa, an investment banker at the Standard Bank of South Africa’s Mining Finance division said the institution is ready to offer credit to a company that is at the development and production stage but not exploration. Junior mining firms operating in Uganda invest at least $5 million during the exploration stage with the figure shooting higher with proven mineral reserves.