Over 30 years since it was shut down, former copper giant, Kilembe Mines Ltd is set to resume production after it was sold to a Chinese firm.
According to a statement, from Jim Mugunga, the Ministry of Finance and Privatisation Unit Spokesman the Divestiture Reform Implementation Committee (DRIC), which is a subcommittee of cabinet responsible for the Privatisation Process, declared the Tibet-Hima Industry Company Limited led consortium the winner, after it emerged as the best evaluated bidder.
Losing out closely was another Chinese firm, Gingko, which had equally submitted a very strong bid, according to a source privy to the negotiations. Gingko had also seemed to enjoy strong political backing, with its officials meeting President Museveni last year way before bids were called in December, 2012.
Some of the key highlights of the best evaluated bid include a commitment to make an initial investment of $135m towards rehabilitation of the mine and the upgrade of Mobuku Power Plant to 12mw.
“They exhibited a commitment to rehabilitate the mine in order to commence the processing of the established 4.5m tonnes of copper and tailings alongside ensuring in-country value addition,” Mugunga noted.
Tibet-Hima also committed to a signature fee to Uganda of $4.3m as well as an annual concession fee of $1.005m. Government will also benefit from statutory payments including income tax and mining royalties.
Getting Kilembe – once the biggest contributor to the country’s GDP – operational again, will not be easy. Lots of the firms’ machinery has fallen apart and the rail network that linked the mines to the smelter in the eastern district of Jinja is dilapidated and non-functional.
The Kasese based mining project was also hit hard in devastating floods recently which left even more infrastructure destroyed.
Since 1982, Kilembe has been in limbo following its closure during a turbulent political period in Uganda that conceded with some of the lowest copper prices on the world market. The conditions currently are different though, with raising demand for copper from the likes of China and India driving prices up.
The Tibet-Hima consortium is composed of Shanghai Baosteel Group which is an iron and steel conglomerate with expertise in smelter technological supplies; Chinalco Luoyang Copper Company; Yunnan Copper Company with vast experiences in exploration expertise provision and Dongfang Electric Corporation whose expertise is in hydro power technical and development equipment supplies.
Other consortium members are Tebian Electric Apparatus who are manufacturers of cables, cords and transformers; Zijin Mining Group (mining and downstream beneficiation) as well as Zongshen Industry Group (mining financial investments).