Introduction
Although Uganda is endowed with a great diversity of geological formations and structures, the mining sector is still in a stage of infancy. The sector’s contribution to Uganda’s economy accounts for less than 0.9% of GDP and 8.2% of exports as of the 2003/04 FY. Most actors in the sector are at the small scale and artisan levels with a significant absence of large-scale mining activity.

The government is actively seeking private and foreign investment to promote large scale mining growth and to reorganise small-scale and artisan mining activities to enhance productivity and, technical, environmental and social performance. The overall objective of the government is to build capacity in the mining sector through the Mineral Sector Development Technical Assistance Project (MSDTA) by targeted interventions to alleviate poverty in rural areas with significant small-scale and artisan mining activity.

Production
Many minerals and metals can be found in Uganda including: copper, cobalt, gold, tin, tungsten, and oil.  Exploration activities in the Semliki Basin in western Uganda have reaffirmed the existence of oil deposits and further drilling is planned to establish their size. European mining firms are involved in a $100 million cobalt reprocessing project at Kilembe.

The country’s sole vermiculite mining company plans to more than double the mineral’s production from the current 100,000 to over 200,000 metric tonnes annually to meet international demand. Vermiculite is used as an air conditioner, animal feeds supplement, fire protection, friction lining industry, a safer alternative to asbestos, cleaning up oil spills and waste treatment, for making boards, mouldings and furnace insulation and used in paints. Ministry of Natural Resources officials say the mining company intend to fully exploit the mineral and expand to the bigger markets of US and European Union from the present only market in Canada.

Gold is mostly found in small, high-grade alluvial deposits distributed throughout the country. Local gold dealers report some high quality gold deposits within Uganda, as well. During 2004/05, the value of mineral exports is projected to grow to US$87 million, from US$71 million in 2003. Government will also implement the Sustainable Management of Mineral Resources Project before July 2005. The objective of the project is to increase investment in mineral exploration through acquisition of geo-data and supporting activities of small and private miners.

Economic importance and performance of the sector
The mining sector has provided a significant contribution to foreign exchange reserves as well as revenue accruing from royalty. The royalties paid to government increased from Sh2.05 billion in 2002 to 2.36 billion in 2003. The value of mineral exports also increased from US$120 million in 2000 to US$175 million in 2003. Gold mining also rose from 14,200 grams in 2001 to 28,645 grams in 2003. Wolfram mining also rose from 26.69 tonnes in 2001 to 24.74 tonnes in 2003.

The major limestone deposits at Hima and Tororo have provided the major raw material for Uganda’s Portland cement industry. The new plant at Tororo currently produces over 1,100 tonnes of cement per day. There are also a host of mining companies which provide employment to many Ugandans — both skilled and unskilled.

Management of the sector
Mining in Uganda is regulated by the Mining Act of 1964 and the Petroleum Exploration and Production Act of 1985. All mining activities are controlled by the Geological Survey and Mines Department, which regulates the granting of mining permits, licenses, and leases. The Petroleum Exploration and Production Department controls licensing for exploration and production, drilling activities, offshore operations, and pollution prevention and control. Both these agencies fall under the jurisdiction of the Ministry of Natural Resources. During 1999, the Ministry of Energy and Mineral Development was restructured. The Ministry now consists of one Directorate, three Departments, and four specialized units. The Ministry plans to revise the Mining Act, to promote investments in the mineral industry and to license, regulate, and inspect these investments.

Investment policy in the sector
The Uganda investment policy in the mining sector was developed through an extensive consultation process involving a broad spectrum of stakeholders. These included operators, private mining companies, academicians, environmentalists, policy makers and development planners.

The policy is designed to overcome the main barriers in the mineral sector by introducing new fiscal and technical incentives to mitigate adverse social and environmental impacts. It also sets out to provide conditions conducive to attract new investment for exploration and mining development, with the private sector providing the necessary management, technical and financial resources required.

The Mineral Policy objectives are:
• To stimulate the mining sector development by promoting private sector participation.
• To ensure that mineral wealth supports national economic and social development.
• To regularize and improve artisan and small scale mining.
• To minimize and mitigate the adverse social and environmental impacts of mineral exploitation.
• To develop and strengthen local capacity for mineral development.
• To add value to mineral ores and increase mineral trade.

Under the policy frame-work, government plans to carry out geological, geo-chemical and geophysical surveys of the entire country at various scales; process, analyse and interpret the geoscientific data; archive, package and disseminate the data to potential users through print and electronic media. The policy also provides for the investor-friendly and competitive legal and fiscal frameworks with well-designed parameters for the sector.

Facing the challenges
Ugandan miners, especially the small-scale operators face management challenges. There is therefore need to build their management capacities through training in business management to support them in basic business concepts and practices including planning, financial management and marketing.

There is also lack of information and technical skills. Small-scale gold and salt miners often practice extremely inefficient and unsafe methods of prospecting and extraction. A case in point are the salt miners at Lake Katwe who use rudimentary methods of mining which not results in very low levels of production but also exposes them to many health hazards. This is a result of a combination of factors such as lack of knowledge and information on techniques and geology, lack of funds for equipment and the often informal and clandestine nature of their activities.

There is also a major challenge of raising awareness on the need for environmental control and management. Government should therefore consider rendering support, improved skills, and some form of legal or financial incentives to miners to minimise the impact of the activity on the environment.

Conclusion
The emerging scenario is that mining is still in the infancy yet its overall contribution to the economy is diminishing. In view of this, the government has to review its policy on mining investment to encourage foreign direct investment in the sector. There is also need to support policies to promote small scale mining activities in areas like Lake Katwe and Karamoja where local artisans are already involved in mineral production.