Published on 11/10/2024
Uganda has terminated its contract with Tibet-Hima, the concessionaire for Kilembe Mines due to the Chinese investor’s demand to export 30,000 metric tons of gold, copper and cobalt for testing in China.
Minister of State for Investment, Evelyn Anite, announced this decision while addressing Parliament’s Committee on Natural Resources. She was summoned to explain the delays in reviving the Kilembe Mines in Kasese District.
Anite emphasized the need for responsible investment and progress in the mining sector to benefit Uganda’s economy. The government is now seeking new investors to take over the project.
“This contractor demanded that the Government allow him to take 30,000 metric tons of copper, cobalt, and gold just for sampling. It was unreasonable for the contractor to think we would allow such a significant amount of our natural resources to leave the country,” Anite explained.
She outlined three key reasons for the cancellation of the contract: the excessive quantity of products the investor sought for testing, claims that the mine was flooded, and a subsequent discovery of the investor’s incompetence to manage such an extensive operation.
“The President stated that these resources belong to Ugandans. When Tibet-Hima learned that, they indicated they would not continue the contract, as noted in the winding-up commission’s report. We could not allow them to take 30,000 metric tons of our resources for sampling in China. It was unacceptable to the President, to me, and to the Government as a whole,” said Anite.
Minister Anite expressed that she does not regret her decision to terminate the contract with Tibet-Hima and is prepared to face any consequences.
“We made a mistake in the Government by contracting the wrong company. I am pleased to have taken responsibility and terminated the contract. I would gladly accept being fired for this decision because I did my job. I cannot accept a company lacking capacity to manage Government resources, particularly those comprising copper, gold, and cobalt. I stand proud of my actions and do not fear the repercussions,” Anite stated.
Norah Bigirwa (Buliisa DWR) urged the Committee leadership to summon those responsible for awarding the contract to hold them accountable, questioning how such a significant contract could be granted without the investor possessing the necessary documentation.
“I am disappointed not with Minister Anite but with the technical team at the Ministry of Finance. We need to understand who conducted the due diligence. If there had been no contract with Tibet-Hima, how could they have come into force?” Bigirwa asked.
She added, “How can we continue to contract someone who lacks essential documents for such a substantial agreement? Where were the ministers, the technical teams, and the legal professionals during this process? Those responsible need to be held accountable.”
In response, Minister Anite called for the summoning of former and current officials at the Ministry of Finance who oversaw negotiations with Tibet-Hima to explain why the contract was awarded to a company lacking capacity.
“The Ugandans who were responsible for that office and who contracted Tibet-Hima need to be invited to this Committee to explain how they arrived at that decision. I wasn’t there, but they must clarify the parameters they followed. My responsibility is to explain why I terminated the contract,” she said.
The Minister also noted that Tibet-Hima sought to alter the contract due to flooding in Kasese, a request that Uganda rejected. “While Tibet-Hima mentioned floods, they were not a daily occurrence. Thus, we could not agree with them on this matter,” Anite explained.
She added that due diligence on Tibet-Hima revealed that the company lacked the necessary capacity, prompting her to initiate a winding-up commission that led to the contract’s termination.
“The inability of the concessionaire to fulfill the contract led to job losses, forfeiture of concessionaire fees, and the missed opportunity to revive Kilembe Mines. I joined office in 2016, while my predecessor contracted Tibet-Hima in 2013. The President addressed this in his budget speech, indicating his intention to take action against corrupt ministers. I am uncertain if that was the consequence for them,” Anite stated.
Anite’s assertion that Uganda lost 1 million jobs with the termination of the concession raised eyebrows, prompting Herbert Ariko, Chairperson of the Committee on Environment and Natural Resources, to question her calculations.
“You claim we lost an opportunity for 1 million jobs due to this project. I would like to understand the basis for that figure because it is difficult to comprehend scientifically,” Ariko said.
Anite stood by her figure, arguing that as an investor in hospitality, textiles, and manufacturing, her three businesses can generate 500 jobs. She emphasized that Kilembe Mines, due to its rich mineral deposits, could support a far greater number of jobs.
“I can assure you that Kilembe Mines in colonial times provided 300,000 jobs, even before fully tapping its potential. With modern technology, we envisioned that the new concessionaire would conduct exploration, establish a refinery, and segment the processing of copper, cobalt, and gold. I maintain that the loss of 1 million jobs is significant for our country,” Anite concluded.
Genesis of Parliamentary Probe
The Parliamentary inquiry was initiated following a petition by Solomon Silwany (Bukooli Central) in April 2024, which requested an investigation into the circumstances surrounding the termination of Tibet-Hima Mining Company’s contract to manage, rehabilitate, and operate Kilembe Mines for 25 years.
According to Silwany, the Government failed to meet its obligations under the agreement, resulting in Tibet-Hima Mining Company incurring losses of $980 million (UGX 3.581 trillion) between 2014 and 2017.
Silwany told Parliament, “The petitioner paid UGX 4.2 billion to the government, directly employed 822 Ugandans, purchased equipment worth $22 million (UGX 80.411 billion), and committed $183.5 million (UGX 676.187 billion) to future investments in resuming copper ore production from Kilembe Mines.”
Tibet-Hima Ltd cited several grievances against the Ugandan Government, including the failure to hand over the Kilembe Mines site within nine months of the contract signing and the Government’s decision to reduce the concession period from 25 to 15 years, ultimately leading to contract termination despite Tibet-Hima’s preparations for mining activities, including upgrading operational facilities and de-watering underground mines.
In his address to Parliament, Silwany requested an investigation into Tibet-Hima’s allegations and urged the Government to halt ongoing advertisements and subsequent procurement processes related to Kilembe Mines.
