Global Policy Forum

The UN recommendation that sanctions should be imposed against Ugandan minerals has rattled those involved in the Country's mining sector. The UN measure was taken as a result of Uganda's participation in the looting of natural resources, including gold and diamonds, in Congo-Kinshasa. Opponents of the UN measure, however, point out that it might unfairly penalise those involved in Uganda's tiny, thriving, and potentially highly lucrative mining sector.

WHO IS WHO IN UGANDA MINING

Bryan Artwood, chairman of the Uganda Chamber of Mines, claims that minerals can be found in many districts in Uganda. He maintains that about 500,000 artisan miners will suffer as a result of the UN sanctions. Artwood is also owner of the Heritage Oil and Gas Company , which along with Petrel of Ireland, is involved in oil exploration in western Uganda.

However, as matters now stand, UN sanctions may be largely symbolic. Mining in the country remains undeveloped, and accounts for just 1% of GDP. Although the country almost certainly contains viable, and possibly considerable, deposits of gold, oil, cobalt and nickel, no comprehensive survey of the mineral wealth has been undertaken and the economic significance of the deposits remains unknown. The Ugandan government, however, is keen to diversify an economy dominated by the agricultural sector. Its efforts have been rewarded with the Uganda Investment Authority having already registered 20 investors who apparently propose to inject $ 210m into mining related activities.

Anything to do with gold mining and sales is handled by the office of President Yoweri Museveni . He recently told parliament that the country last year exported 10 tonnes of gold, a substantial increase over the average for recent years. However, the bulk of gold transactions are handled by companies that are either 100% foreign-owned or are joint ventures with army officers. These liaisons have created a complicated web of interests, but they remain dominated by the private sector.

Catalyst Corporation of Canada, which acquired 100% interest in Kaabong, is reputed to control substantial gold reserves in north-east Uganda. It has Major-General Salim Saleh , Museveni's controversial brother, as a shareholder. Along with Oslo International it took over the adjacent Lopedo prospect when Branch Energy renounced its concession. Nabisoga Mining Ltd ., has four permits for Kyakiddu property in central Uganda and has entered into a joint venture with the Canadian-based Gold Empire Ltd . They operate in Bushenyi in western Uganda with 22 concessions covering an indeterminate area.

New Ensigns Resources , affiliated to the Irish-based Glencar Mining plc has four permits in south-east Uganda, and International Roraima Corporation has 20 of which 17 were funded by South AfricaOs Iscor.

Many of these companies hold licences in the south-west and south-east of the country. But most are not actively mining and some have already abandoned exploration or mining.

PRIVATE SECTOR PRESSURES

Because of the involvement of so many western companies, the Ugandan government, with some justification, feels that it will ultimately not be penalised by the UN. Both Britain and the US are apparently reluctant to institute sanctions against Uganda. Marts Berdal , a director at the London-based International Institute for Strategic Studies believes that the UN is in a no-win situation with the sector. "Industrialised governments have come under pressure to protect the private sector from UN interference," he says. Yet the fact that most of the foreign companies are located in south-east and south-west Uganda, in areas near Congo-Kinshasa, has created problems. Allegations of minerals from Congo-K being ‘filtered' through such operations are inevitable. Geographically, Uganda provides a strategic platform for companies with regional ambitions. South African company Foskor early this year gained a controlling interest in Uganda's existing phosphate mines, which it now owns with Rhodie Chemie of France. Manufacture of fertilisers from the phosphate is intended for the regional market. Regional economic organisation, Comesa, has already approved the development. It is to be financed by the South African government's investment arm, the Industrial Development Corporation.

Some Australian companies engaged in gold mining in Tanzania are also eyeing Uganda. Normandy Limited took a controlling interest in Kasese a $ 140m cobalt project whose plant was commissioned by Museveni last October. So far it has exported 290lbs of Cobalt. Hardman , another Australian company, has apparently begun prospecting for oil.

A DARLING OF THE WEST

Museveni is on friendly terms with various western investors who still regard him as influential in the region. His military conquest and subsequent economic liberalisation have created a climate conducive for business. Last year, Uganda's parliament modified the Mining Act by giving companies rights to convert exploration licences into leases by increasing the duration of exploration to three years. The 1997 Income Tax Act allows the full remittance of mining income and grants exemption from import duty for mining equipment.

Minerals have enabled Museveni to control his army. Senior officers also dabble in business. This applies particularly to those operating in Congo-K. The UN report, for example, accuses Col Y. Mugyenyi , who headed one of the infantry brigades in eastern Congo, of holding 15kg of gold. He was recently spotted in London on a shopping spree where he bought three customised Rovers. There have also been reports of links between Saleh and Barrick Gold Corporation which reportedly sub-contracted Saleh's Calebs International to exploit deposits in eastern Congo-K.

GOLD-DEALING GENERALS

The main worry is that gold trading by army personnel will encourage anarchy in the region. The message was driven home in a 1999 joint report of the Ugandan armed forces and the Rwandan army on what led to fighting between the two armies in Kisangani. It partly blamed the acquisition of a gold mine at Banalia by a senior Ugandan army officer. There is also fear that some foreign companies or their agents may be tempted to participate in the smuggling of minerals from eastern Congo-K and southern Sudan into Uganda.

Museveni flatly denies this. He is livid that the UN has implied that his ‘mission' in Congo-K has been described as ‘looting'. Dr Ruhakana Rugunda , a minister in the presidency, says that trade liberalisation has allowed gold and diamonds to be exported to Uganda from Congo-K. These are then legitimately re-exported. However, most of the gold exported from Uganda is mined within the country. But the government has been stung into action by the criticisms and accusations. On 13 May, the minister for international co-operation, Alfred Mubanda , signed an instrument establishing a judicial commission of inquiry into allegations that Ugandan officers were involved in the plunder in Congo-K. It is headed by Justice David Porter, an expatriate judge. Such transparency is urgently needed as Uganda is fast developing an image as a haven for crooks.