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New law would allow Uganda to take stakes in private mining

Kitco News

Uganda's cabinet has approved a draft mining law that would allow the government to own shares in private mining operations and impose steep penalties for violations in the sector, including prison terms of up to seven years.

The draft law mirrors others in the region, including in Tanzania, where authorities have sought to extract more value from natural resource wealth they see as having unfairly benefited international mining firms at the expense of locals.

The bill will be presented to parliament for debate and eventual passage into law, Sarah Opendi, junior energy and minerals minister said on Wednesday in a statement.

She did not give a timeframe, but now cabinet approval has been given, the law could be sent to parliament as early as next week.

When enacted, it will replace a law that has been in place since 2003.

It will provide for "state equity participation in large, medium and small scale mining up to a maximum of 15%," Opendi said in the statement.

Penalties set out in the draft law include fines of 1 billion shillings ($278,164.12) and custodial sentences of up to seven years for those found guilty of illegal mining and other violations.

Investors would be required to enter production sharing agreements (PSAs) with the government. Previously, companies could apply and be granted mining licences on their own, Opendi said.

President Yoweri Museveni's government has been seeking investment in the sector to increase exploitation of resources, such as copper, iron ore, gold, cobalt and phosphates.

Earnings from gold exports jumped to $1.8 billion last year, from $1.2 billion in the previous year.

($1 = 3,595.0000 Ugandan shillings)

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