Mining

Uganda Issues First Mineral Smelting License For Gold

A gold refiner

Uganda has issued a mineral smelting license for gold – a first in the market and one that could spur more interest in adding value to raw ore.

SD Test Company, which already holds a couple of mining exploration licenses for other metals in Uganda, received a 15-year license in early May, 2024 from the Minister of Energy and Mineral Development, giving it leeway to put up a facility that will heat and smelt raw gold to agreed purity levels.

The license was issued under the new Mining and Minerals Act, 2022.

It is the second mineral smelting license to be issued under the new law, the other being the one awarded to Woodcross Smelting Company to smelt tin. Under the new law, government is entitled to take up a 15% stake in large scale mining licenses.

The gold to be purified by SD Test Company, which is expected to be above 99%, is bound to fetch a higher price on the market compared to it being sold raw. It is not clear where exactly SD Test is going to set up its smelting facility, although, according to its license, it will operate on 0.74 hectares.

Uganda’s government remains vocal in calling for the beneficiation of its minerals, arguing that adding value to raw ores will not only fetch the country a higher price on the international market but it will also create more jobs from the spinoff supply chain industries.

Uganda slapped a 5% tax on the value of each kilo of raw gold to be exported, and a $200 fee on each kilo of refined gold to be sold to the international market. Nearly 70 per cent of the total amount of gold that is exported from Uganda is unprocessed, according to some market players.

SD Test’s smelting license (MSL00380_TNTest), which features on government’s Mining Cadastre, and is valid up to early May 2039, brings a new dimension of competition in a market that is heavily dominated by gold refineries.

Interestingly, the license was issued on the same day it was applied for – May 6, 2024 – which is quite unusual.

A screengrab image from Uganda’s Mining Cadastre shows the smelting license granted to SD Test Company

There are at least five gold refineries in Uganda today, some of which previously operated exclusively under a Manufacture Under Bond warehouse license. The Commissioner of Customs at the Uganda Revenue Authority is responsible for granting this license.

The gold refineries, which operate as service companies, are likely to be bound by the new Mining and Minerals Act 2022 going forward – with a whole section on the mineral refining license added in the new law. However, a ministry official declined to comment on this likelihood, saying she was not authorized to speak on behalf of the ministry.

Gold is now Uganda’s main export earner. Available figures show that Uganda exported gold worth more than $2 billion in 2022 – the highest export value that the country has recorded.  A substantial amount of the gold was from neighbouring countries such as Tanzania, Rwanda, DR Congo, South Sudan, just to mention a few.

Email the writer: jeffmbanga@gmail.com

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