Uganda recently unearthed a monumental gold discovery of 31 million metric tons of gold valued at $12 trillion. Uganda’s Ministry of Energy and Mineral Development announced that the country conducted several surveys confirming the results, stating that the minerals are now simply waiting to be mined. Solomon Muyita of the Ministry of Energy and Mineral Development believes these findings will attract gold miners and investors to the nation’s crypto sector, ultimately providing substantial economic support to Uganda.
“Ground breaking ceremony of Busia’s gold mine project, largest gold deposit so far quantified in Uganda estimated @ 12.5 tonnes of mineable gold, investor Wagagai’s initial investment is USD50 million, 3,000 direct jobs,” the Uganda Investment Authority announced on Twitter.
The Ugandan government has already formally licensed the Wagagai gold mining company to begin constructing a gold refinery valued at $200 million. The Chinese firm began construction phases back in 2016 and will now begin producing gold products in the Busia district. According to Muyita, gold mining can begin immediately.
The potential for local gold refining unlocks numerous benefits for Uganda’s economy. To start, the findings will expand the mining sector, economically supporting hundreds or potentially thousands of families in the community. With that, the mining sector should enhance social service delivery to Ugandans living near extraction facilities.
Unfortunately, the Busai district currently employs over 2,000 artisinal miners, most of whom are being forced to use harmful rudimentary practices (as you would find in illegal facilities). Many of these actions are causing injuries and illnesses, ultimately clashing with the current legislation. It’s not entirely clear whether this new gold discovery will allow the continuation of such harmful practices, though we do know that it will provide some form of additional jobs.
Ugandan President Yoweri Museveni is already taking powerful steps to promote domestic refinery practices within the nation to prevent miners from exporting resources away from Uganda. The president has gone so far as to state that any raw gold exports will be considered a criminal practice.
“It is criminal for anybody to argue for the continued exports of raw materials in Africa when there is 90% more value in that product that you are giving to the outsiders,” Museveni stated.
Museveni’s plan to localize the full supply chain shows a powerful attempt at promoting transparency and controlling the end-to-end product. Gold often gets lost within the supply chain’s opaque and illicit trade processes, leading to an unsustainable and untraceable end result.
According to Wagagai’s general manager, Tan Chun Chi, the gold mining company’s investment has already reached $60 million. The project’s construction has been delayed a few times as the company has been awaiting the release of a couple of licenses. Wagagai finally obtained its gold production licenses back in March, allowing it to begin gold production a few months ago.
Now, Tan Chun Chi plans to double the mine’s speed since production is finally underway. Wagagai has a 21-year lease to continue mining the area and currently plans to take full advantage of the recent gold discovery.
Wagagai has also invested $200 million in constructing a gold refinery. With this investment, Wagagai will be able to tackle both the mining and refinery ends of the production process.
Unfortunately, the company has noted that mining in Uganda has proven to be quite difficult. Because of this, the nation has only successfully mined around 2,500 to 3,000 tons of gold per year.
“If this is indeed the volume that we have, it is time to clean our house and do business in developing ourselves and our country by going to the middle-income status and beyond.” Winnie Ngabirwe, a Mineral Development Expert, explained.
Uganda currently ranks as one of Africa’s largest gold exporters. After the launching of Entebbe’s Africa Gold Refinery, Uganda’s gold export rates truly skyrocketed, with its export totals to Europe and Asia touching $3 billion between 2019 and 2020. Uganda also exported $28.7 million worth of gold to Hong Kong, $1.9 billion to the United Arab Emirates, and $1.4 billion to South Korea during the same period.
By 2025, Uganda hopes to increase its foreign earnings as the gold production rates begin bringing in cash flow, and the country can begin extracting oil.
It’s only fair to note that a few skeptics believe that Uganda’s enormous gold discovery could be a governmental ploy to pay off its external debt. Of course, such statements are currently only conspiracies, and Uganda will likely be exporting a lot more gold in future quarters, supporting the greater market.