Mining

Sipa Winding Up Uganda Operations

Sipa’s Akelikongo nickel-copper project in Kitgum, Northern Uganda

Sipa Resources Limited, the Australian company that once raised the hopes of Uganda’s extractives industry when it attracted global mining giant, Rio Tinto, as its partner in the country a few years ago, has announced that it is winding up its activities in Uganda.

The company’s announcement brings to an end a more than 10-year relationship with Uganda after its failed attempt to find commercial deposits of nickel at the Akelikongo project in Kitgum district.

“Sipa was unable to find a suitable partner or buyer for the project, and the Uganda leases were consequently allowed to lapse. The company is in the final stages of winding up all involvement with the Uganda project,” the company announced recently in its annual report for the year ended June 2024.

The company, which in the past assembled a formidable team of geologists such as Joshua Tuhumwire, a former commissioner at Uganda’s ministry of Energy, and Austrialian Lynda Burnett, added that it has “minimum obligations of expenditure” in Uganda.

In all fairness, Sipa’s decision to exit Uganda is not surprising. The company, which once said that the Akelikongo project gives it a “massive leverage to the nickel price,” has not undertaken any work at the project for more than two years, and its hopes of attracting a new partner have been dashed twice, at the very least.

In August 2018, Rio Tinto, one of the biggest mining companies in the world, announced that it had embarked on a process of buying into Sipa’s Akelikongo project.

The mining giant promised that it would spend up to $57 million before taking up a controlling stake in the project, a reasonable amount at the time in Uganda’s young mining industry.

However, by April 2020, just after Uganda had announced a raft of stringent lockdown measures to limit movements during the Covid-19 pandemic, Rio Tinto had lost interest in the project.

Rio Tinto wrote off a pocket-change amount of $4.2 million that it had spent in farming into the Akelikongo project, citing poor results.

Almost two years later, in February 2022, Sipa Resources Limited found a new suitor – UK’s Blencowe Resources Limited. Sipa agreed to sell its project to Blencowe, which is developing the neighbouring Orom-Cross graphite project.

However, six months later, in August 2022, Blencowe also dropped its bid for the nickel project, saying that exploration results at its Orom-Cross graphite project had turned out to be impressive, so much so that the company did not want to be distracted by other ventures.

Sipa has desperately tried to find a partner for its project over the last 18 months but the feedback, it is now clear, has been lukewarm. With the licenses expiring, Sipa decided to cut its losses and dump the project.

The licenses have now reverted back to government. With nickel listed as a critical mineral in the manufacturing of the technologies needed for the shift from the use of fossil fuels to cleaner sources of energy, it is likely there will be interest in the Akelikongo project.

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