According to Joseph Enyimu, Commissioner for Economic Development, Policy, and Research at the Ministry, listing minerals will not only formalize the trade but also attract both local and international investors, boosting economic growth and value addition in the extractives sector.
The Ministry of Finance is in the process of developing a national commodities exchange aimed at securitizing Uganda’s minerals and enabling their trade on the stock market.
According to Joseph Enyimu, Commissioner for Economic Development, Policy, and Research at the Ministry, listing minerals will not only formalize the trade but also attract both local and international investors, boosting economic growth and value addition in the extractives sector.
“We think that where we sit in the Great Lakes region makes us
a prime candidate for this. We hope to pull in some very serious Foreign Direct
Investment through the Capital markets,” he said.
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“Based on the results of that pilot, we will be concretizing a few moves, and we are very glad that Bank of Uganda has adopted, as part of its reserve management framework, the domestic purchase of gold. So, we see the pieces falling into place,” he said.
This development comes at a time when there is a growing interest
in the mining sector, especially amidst the energy transition debate, where the
critical minerals are key.
The planned listing of the minerals on the stock exchange also
comes at a time when the government has just formed the national mining company, which will take care of the national interest in the mining companies as per
the new mining law.
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He said the government has broken the existing minerals into
six categories, beginning with the critical minerals in the energy transition, precious
minerals, industrial minerals, and the Tin (cassiterite), tungsten
(wolframite), and tantalum (coltan) or 3ts.
These minerals are essential
in the electronics industry, and they are highly sought after worldwide. The government
has also earmarked iron ore and geothermal sources. Most of these minerals are
located in the Southwestern Uganda districts.
Mining companies around the world are undertaking capital
raisings and can approach the world’s capital markets in various ways. Through an
initial public offering (IPO), listing either in its home jurisdiction or
cross-border, a mining company can access major global finance hubs and capital
from a deep pool of investors around the world.
An IPO can help a company raise its profile with customers, suppliers, and the media, as well as providing it with an opportunity to improve internal
systems and controls, and increase the general operating efficiency of the
business as it prepares to comply with the relevant regulatory scheme for
public companies.
President Museveni has insisted on a ban on the export of raw
minerals. The Ministry of Finance hopes that the abundant iron ore deposits
will propel the steel industry as part of the value addition drive.
“So we are saying that in the next fifteen years, the demand for
steel is going to shoot up, given the growth trend that we have seen. If you
look at the infrastructure projects we have programmed for the next ten years,
and the local content to feed them, we think that the industry is picking up a signal,”
said Enyim.
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The mineral sector has been identified among the sectors that
are to propel Uganda’s economy from US$ 50 Bn to US$ 500 Bn or the tenfold growth
strategy.
The plan is to increase the percentage contribution of the Minerals
industry to GDP from 1.9% to 2.4% in 2030, or from 80bn to 180bn in 2030.
