Government to sell Kilembe mines - Daily Monitor

Government to sell Kilembe mines

Sunday November 4 2012

By Monitor Reporter

The miserable years of redundancy at the previously busy Kilembe Mines could soon be over if the current appeal by government for a buyer attracts interest.

The Privatisation Unit in the Ministry of Finance, Planning and Economic Development has issued a statement of request for confirmation of interest for concession of the assets of Kilembe Mines Limited, the company that operates the Kasese Copper Mine and a smelting plant in Jinja.
The statement is an invitation to prospective buyers to confirm their interest in the deal.

The statement adds that the successful bidder would enter into a concession agreement with the government, take over the rehabilitation of assets, revive the mining activities and carry out further exploration activities.

Kilembe Mines Limited was established and incorporated in Uganda as a mining company in 1950 and registered the highest copper production in the 1970s when maximum output soared to 17,000 tons yearly.

However, the success lasted until 1982, leaving the mine on a care-and-maintenance basis. The company, whose majority shares of 99 per cent is owned by government and one per cent by Toro Kingdom, currently survives by generating and selling electricity to the national grid.

Mr Fred Kyakonye, the general manager of Kilembe Mines, has confirmed the move by government to sell the property to an investor. He explained that the transaction would ease attempts to access resources and revive the company.

Mr Kyakonye also explained that the years of redundancy has attracted encroachers who are stealing the property of the company, adding that presently, they spend much of their time frequenting court to battle over ownership claims of the assets such as land from the encroachers.
Mr Kyakonye, however, said the mine has potential that only requires technical and financial resources to restore.

The present attempt to sell off the assets of Kilembe Mines is one of the many endeavours government has made over the past years to revive the copper producing firm, one of the largest investments in the mining sector.

In 2010, government sought investors to manage Kilembe Mines, whose assets include a copper mine, power generation plant, lime factory and a timber treatment plant. At the time, government proposed a joint venture, with a progressive buy out of all its shares by the potential investor. It, however, said share holding percentage would be determined by the level of investment.

In the current plan, government has said it is seeking to implement the divestiture of the Kilembe Mines Limited through a Public-Private Partnership, meaning it would jointly own the property with the private firm. However, this arrangement could also change.

A statement from the Privatisation Unit says while government’s preference is for a Public-Private Partnership arrangement, interested bidders could propose other suitable arrangements.

The transaction comes at a time when there is a reported attractive market price of copper and cobalt with increasing demand especially in China, India and Japan. In addition, the management of Kilembe Mines says there is a confirmed 4 million tons of copper ore at the mine as well as an un-exploited 2,800 acres under the mining lease.

Some of the products also produced at the Kilembe Mines include wagon wheels, brake blokes, pulleys, water pumps, man- hole covers, seed oil mills, bricks making machines, mini- hydro electric plants, and various ferrous and non ferrous castings for manufacture of spare parts for machinery.

The sale of the company could also provide sufficient employment.