Leaders want gold firms to pay royalties

Legislators on the Natural Resources Committee of Parliament and other stakeholders tour a gold mine at Kitumbi-Kayonza in Kassanda District on April 11, 2024. PHOTO/DAN WANDERA
What you need to know:
- Leaders say the companies’ lorries that ferry minerals from the mines damage roads.
Leaders in Kassanda want gold mining companies to pay royalties to fund community development activities in the district. The leaders said the companies have over the years not shown concern in addressing challenges in the host communities, which other firms do as part of corporate social responsibility. The companies, according to a section of the leaders, hide under the exploration licensing terms to avoid paying royalities.
“We have been kept in the dark about the gold exploration activities in our district despite our polite reminder to some of the exploration companies. It is not true that the companies are just on exploration. They are mining one of the most expensive minerals on the international market. We politely wanted the companies to give back to the community but our calls have fallen on deaf ears,” Mr Fred Kasirye Zimula, the Kassanda District chairperson, told this publication on January 14.
He said trucks of the companies transporting minerals from the mines have damaged some of the roads in the district. “The heavy trucks damage the roads yet the district budget cannot sustain the maintenance of the roads damaged by the heavy trucks outside the district planned routine maintenance programme. Our approach and appeal was to have the exploration at the gold mines contribute some money that would enable us maintain the roads used by the heavy trucks,” Mr Zimula said.
He added that between five to seven kilogrammes of gold worth Shs1.7 billion is taken out of Kassanda every day, with mineral investors not paying royalties to the district. This publication could not independently verify these claims.
“This is deliberate and meant to deny the district local revenue. We ask government to force the investors involved in gold mining in our district to pay royalties so that we can use such money to extend the desired services to our people,” Mr Zimula added.
Kassanda District has more than 32,000 artisanal miners operating at the different mines in the areas of Kasita, Kagaba hills, Bukuya and Kayonza.
These areas, according to local leaders, have the poorest road network and lack several other social services such as health facilities and schools. Mr Eron Mukisa, the defence secretary for Bukoba Village in Kitumbi Sub-county, said the village has more than 6,000 residents, but lacks clean water sources and a health facility. “We are calling upon the district to intervene by ensuring the people of Bukoba have good roads and safe water. We have been told that many of the water streams in our area could be contaminated with mercury from the gold mines. Contaminated water is not safe for human consumption,” he said on Tuesday. But officials of Kitumba-Kayonza Mining Association, an umbrella organisation undertaking exploration and gold mining in Kassanda with a membership of over 800 artisanal miners, dismissed claims that they do not mind about the infrastructure and welfare of the locals. “We have been meeting some of the district leaders to see how best our people can be helped. We have not yet started paying royalties to the district because we are still struggling to have the mining guidelines and tax regime set by the government streamlined,” Mr Edward Mukiibi, a leader in the association said. Mr Joseph Kanakulya, an official of a company that is conducting exploration at Kagaba Hills in Kassanda, said they would meet the local authorities to discuss issues related to work permits and royalties. “This should not be about disobeying the government guidelines. We are supposed to study the set guidelines and make informed decisions on what the royalties should be. We mind about the welfare of the workers and communities where we operate,” he said without elaborating on when his company will start paying the royalties.
Ministry of Energy speaks out
Ms Patricia Litho, the deputy communications officer at the Ministry of Energy and Mineral Development, yesterday told Daily Monitor that all exploration and mining companies, including gold dealers must comply with the 2023 guidelines for the mineral purchase and trade in Uganda. “The exploration and mining companies should not undermine the local governments where they mine the gold. The guidelines allow for payment of royalties and licence fees as guided by the government,” she said briefly. Ms Litho added: “The companies are supposed to give back to the respective communities as part of the corporate social responsibility.
Gold revenues
The Auditor General report to Parliament, released in December 2022 faulted the Uganda Revenue Authority (URA) for failing to collect tax worth Shs340 billion from gold exporters despite the players in the gold industry reaping trillions from the trade. “About Shs340 billion in taxes from gold valued at Shs6.92 trillion for the year under review had not been collected,” the report read in part. In 2017, President Museveni abolished the tax for gold royalties to encourage its flow into the communities where mining companies operate. But in July 2021, the government introduced a new tax on processed and unprocessed gold, which gold miners opposed. While royalties were removed, a tax on gold export remained; a 5 percent tax on local and 1 percent on imported gold.