Shs400b to boost Kilembe Mines growth

Wednesday November 27 2013

Shs400b to boost Kilembe Mines growth

Chinese investors with Kizza & Kiwanuka Advocates and Legal Consultants partner Herbert Wakaabu after announcing their partnership to invest in Kilembe Mines in Kampala yesterday. Photo by Stephen Wandera. 

By Yasiin Mugerwa

After lying dormant for about three decades, Kilembe Mines Ltd, a once vibrant manufacturer and smelter of copper in western Uganda, is out of the woods, owing to growing Chinese investment in Africa.

Tibet Hima Co. Limited, a Chinese consortium that won Kilembe Mines deal, yesterday announced a $175 million (more than Shs400 billion) investment in the mines and unveiled two more Chinese partners: Shanghai Baosteel Group and Chinalco Luoyang Copper.

Chinalco Luoyang has an asset base of Chinese Yuan 3.4 billion (about $554 million) with a complete production system of copper smelting, copper and copper ally processing, aluminum and magnesium materials processing and nonferrous equipment manufacture among others.

Under the deal, Baosteel shall be involved in the feasibility studies for the downstream beneficiation process that shall involve smelting, refining and product factory development.

The investors pledged to ensure environmental protection and invest in corporate social responsibility ventures like schools and hospitals.

At a press conference in Kampala, the deputy chief executive of Tibet Hima Mining Co. Ltd, Mr Lu Guo, undertook to revive Kilembe Mines Ltd. He said currently, the investor is carrying out feasibility studies and fixing infrastructure ahead of the exploration phase.

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“We want to assure Ugandans that we are committed to the project and we are going to revive Kilembe Mines,” Mr Guo said.

“It’s going to be step by step. We need to improve infrastructure and increase capacity of the hydropower needed to run the Mines,” he added.

Mr Guo said the company paid the government a signature fee of more than $4 million (about Shs10 billion) and going forward shall pay an annual concession fee of $1.5 million (about Shs3.7 billion) for the 25 years — the duration of the concession.

The government shall also benefit from statutory payments and taxes.

The Daily Monitor understands that the project has been designed to cover four components; the Hard Rock Mine Project, the Tailing Ponds Project, the Mubuku 1 Hydropower Project and the Beneficiation Project which shall involve the value addition aspect where copper and cobalt shall be refined and processed into various products.

“The project is a phased project and its success is dependent on extensive exploration programme and reconnaissance activities for the different components which are already underway,” Mr Guo said.

He said the initial phase will take two years and that more than 3,500 direct jobs will be created adding that to boost local content selected Ugandans will be trained in Geology.

Expected local content targets are between 15-20 per cent as the minimum expenditure on Ugandan service providers at the various stages.

The investors said the number shall progress as capacity of Uganda enterprises is built to be able to handle supplies in the mining sector.

ymugerwa@ug.nationmedia.com

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