Uganda’s Cabinet has approved plans for the redevelopment of Kilembe Mines in Kasese District, which they repossessed 2-years ago after the cancellation a 25-years concession it had granted to Chinese Firm Tibet Hima Mining Company.
Industry Resources

Uganda Gov’t takes back Kilembe Mines, approves new redevelopment plan

Uganda’s Cabinet has approved plans for the redevelopment of Kilembe Mines in Kasese District, which they repossessed 2-years ago after the cancellation a 25-years concession it had granted to Chinese Firm Tibet Hima Mining Company.

According to the Executive Director of the Uganda Media Centre, Ofwono Opondo, the move is aimed at rehabilitating the assets and resuscitating the mining operations so as to contribute to the general economic development in Uganda.

“Cabinet has directed for immediate exploration of the ascertained mineral reserves and resources to attract  Private  Sector Capital, Management, and technical expertise, with a commitment to install efficient and modern technology to maximize the future of Kilembe Mines Limited operating results,” said Opondo while addressing a news conference at the Uganda Media Centre.

He added that the government ’s move seeks to undertake a further mineral exploration to add to the known reserve base, thereby enhancing the viability of mining operations.

“The decision encourages partnership between the Government of Uganda and the private sector in revamping mining activities at Kilembe. It will create employment opportunities for Ugandans as well as enhancing community development and local empowerment,” he stressed.

Cabinet’s decision comes hardly a year after Tibet Hima Mining Company, the embattled Chinese company whose 25-year to operate the cobalt and copper Kilembe mines was cancelled two years ago.

The Chinese firm has since sued the government seeking compensation of at least US$33m in damages.

Case in Court:

In the case filed before the Commercial Division of the High Court, Tibet Hima is accusing the government of breaching the terms of the concession.

It is alleged that the government failed to renew the company’s mining lease, approve draft insurance policies, and also failed to “deliver permits and licenses required to commence” it’s activities.

The Finance Ministry cancelled Tibet Hima’s concession in October 2017 on the recommendation of the Winding Up Commission, which was established by the State Minister for Investment and Privatization, Evelyn Anite.

The commission recommended that the government takes over the copper/cobalt mines and related assets or lease them to another investor.

Prior to the termination of the concession, Tibet Hima had been routinely faulted for defaulting on key operational terms of the concession agreement, failure to pay the annual concession fee of US$1.76m (Shs6bn), and failure to invest the minimum capital expenditures totalling US$175m (Shs618bn).

The government had hoped that the concessionaire would revive the mines and also explore and develop other minerals in there. Copper production at Kilembe peaked in the 1970s at around 18,000 tonnes of copper cathode a year. It declined with Idi Amin’s nationalization policy.

The mines ceased operations in 1978, a result of political instability and a steep fall in global prices of copper ore.

From 1978 to 1982, they were placed under the care and maintenance of Kilembe Mines Limited (KML), a state-owned company.

In 1992, Kasese Cobalt Company Ltd was also established to recover cobalt metals from an unstable stockpile of a cobalt-rich sulphide concentrate and see if one of the units could be converted to smelt copper and other metals.

BY DAVID SSEGUYA