Uganda's mining sector is transforming as the government implements key reforms to formalise the industry and tap into its rich deposits of gold, cobalt, rare earth elements, and iron ore. With ambitions to increase the sector's contribution to over 7% of GDP, the country is positioning itself for long-term economic growth and to play a crucial role in supplying minerals essential for the global energy transition.

The country has vast mineral resources, but its mining industry has experienced a turbulent history. After a boom in the 1950s and 1960s, when the sector contributed up to 30% of the nation's export earnings, political instability, underinvestment, and poor infrastructure led to a sharp decline. However, the potential for a renaissance remains strong, with a renewed focus on regulatory reform and rising global demand for minerals such as cobalt, rare earth elements, and gold.

It boasts over 27 commercially viable minerals, including gold, copper, cobalt, tin, tungsten, iron ore, phosphates, and rare earth elements. These resources are spread across various regions, with substantial deposits in Karamoja, Busia, Mubende, and Sukulu. Despite abundant resources, much of Uganda's mineral wealth remains underexplored due to limited infrastructure and investment.

Gold is one of Uganda's most valuable resources, with key deposits in Busia, Mubende, Karamoja, and Buhweju. In July 2022, the government said that exploration surveys had revealed vast estimated gold deposits of around 31mn metric tonnes (mt). Of this significant discovery, around 320,158 mt are refined gold. However, experts say that the validity of the gold reserves still needs to be proven with geophysical and geochemical surveys.

The government has already granted a licence to produce part of the gold deposit to the Wagagai Gold Mining Company, a Chinese firm. Wagagai planned to invest $50m in a refinery, which has since risen to $60m.

The Uganda Free Zone Authority (UFZA) has granted the Wagagai mine and refinery a 'free port zone', exempting them from import and export taxes. Its operations are expected to create 3,000 direct jobs.

Uganda's gold sector is dominated by artisanal and small-scale mining (ASM), which contributes over 90% of the country's gold production. While artisanal mining plays a major role, the sector's lack of formalisation limits its ability to contribute more to the economy.

In 2023, Uganda's gold exports surged more than ten-fold, rising from $201mn to $2.3bn, despite US sanctions on a major gold processor. New processors, including Wagagai Mining, and the suspension of tariffs on gold exports helped to drive this increase.

Copper and cobalt — historically mined at the Kilembe Mines in western Uganda — offer substantial opportunities. The mines are estimated to hold 4mn mt of ore, with 1.98% copper and 0.17% cobalt content. However, logistical and bureaucratic challenges have kept the Kilembe Mines closed since the 1980s despite past production.

The government is keen to restart copper and cobalt extraction at the mines. In December 2023, it received four bids to revive the mine, including from Gingko Energy, Liaoning Hongda (trading as Wagagai Mining), Sinomine Power China, and Sarrai Group. As of October 2024, the preferred bidder has yet to be announced.

Furthermore, Uganda's iron ore reserves are concentrated in the Muko and Sukulu regions. The country holds more than 260mn mt of proven iron ore reserves, which is critical for developing a domestic iron and steel industry. Despite this potential, large-scale exploitation has been slow, and efforts to build the sector remain limited.

In addition, substantial deposits of tin, tungsten, and tantalum (3Ts) in southwestern Uganda are highly sought after for their role in the global electronics industry. In April 2024, Uganda commissioned its first tin smelting facility in Ruti, Mbarara, capable of producing tin with a purity of 99.95%.

This facility marks an important step towards adding value domestically and reducing reliance on raw mineral exports.

Meanwhile, phosphate deposits in the Sukulu region are crucial for fertiliser production, supporting Uganda's agricultural sector and contributing to regional food security.

Moreover, Uganda could emerge as a key player in the global rare earth elements (REE) market, led by the development of the Makuutu Rare Earths Project. Located 12 km east of Kampala, Makuutu is one of the few substantial ionic adsorption clay (IAC) REE deposits outside China. IAC deposits are highly valued for their low extraction costs and balanced mix of light and heavy REEs, including neodymium, praseodymium, dysprosium, and terbium.

Spanning a 37km area, the Makuutu project uses heap leaching, a cost-effective method that extracts REEs from ore by washing it with an acidified salt solution, yielding a mixed rare earth carbonate. With a projected 27-year mine life and the potential to produce scandium as a co-product, Makuutu offers long-term economic value. The project is well-connected to infrastructure, including roads, rail, and 810MW hydroelectric power located 65km away, ensuring low operational costs.

Beyond Makuutu, further potential for REE deposits exists, particularly in the Rwenzori region and parts of eastern Uganda, though these still need to be explored. These areas could significantly boost the country's role in the global REE market if developed.

Uganda has 46.8mn inhabitants and an economy valued at $56.3bn, according to the IMF. It is projected to grow by 5.6% in 2024 and 6.5% next year. The country has seen significant contributions to its growth from sectors like agriculture, industry, and services. Inflation is estimated at 3.8% in 2024. However, public debt remains high, at an estimated 49% of GDP.

Kampala, Uganda's capital and largest city, has a population of around 1.7mn. It is the nation's economic and administrative hub, hosting key government institutions and businesses.

Yoweri Museveni has been the president since 1986, making him one of Africa's longest-serving leaders. His administration has implemented various constitutional changes that have enabled him to maintain power for nearly four decades.

Uganda's mining sector contributed 2.2% to GDP in the fiscal year 2022/2023, a marked increase from 0.3% in the fiscal year 2009/2010. Despite this growth, the sector still struggles to regain its former importance, and the country's economy remains heavily reliant on agriculture.

Most mining activities are carried out by artisanal and small-scale miners (ASM), who account for more than 90% of the country's mining production and employ around 300,000 people directly, according to Pact and ARM, non-profit organisations.

Furthermore, in 2022, the Mining and Mineral Act was introduced to formalise ASM operations, increase revenue, and create a more structured sector. The Act provides mechanisms for registering miners through a biometric system, regulating licensing, and enforcing safety standards. However, the success of the law depends heavily on effective oversight and enforcement — areas where Uganda has faced challenges in the past.

The legislation is hailed as a key reform to improve the mining sector. It streamlined the licensing process and established Uganda's National Mining Company (UNMC). The firm manages the state's 15% free carry stake in large-scale mining projects, ensuring the country benefits directly from its mineral resources. Under the Act, the UNMC also has the right to buy up to 20% of extra shares in mining ventures at the commercial rate.

However, gold experts say that the legislation introduces the threat of nationalisation of the deposits. This is not uncommon in other countries but raises the prospect of Uganda's mineral riches becoming tied to the whims of the national government.

Furthermore, the effectiveness of the new law will depend on consistent enforcement. In the past, Uganda has struggled with weak regulatory implementation, and many miners remain sceptical that this reform will lead to tangible improvements. While the new framework provides a more transparent structure for mining operations — without sufficient resources for monitoring and compliance —illegal mining and environmental degradation look set to continue.

The government had set an ambitious target for the mining sector to contribute more than 7% of GDP by 2040, mirroring levels seen in the 1950s and 1960s. The Uganda Chamber of Mines and Petroleum expects the sector to play an even more prominent role, suggesting it could contribute 10% of GDP by 2040 by harnessing untapped resources and attracting strategic investments.

However, the government's target depends on overcoming significant barriers. Chief among these is the infrastructure gap in key mining regions. Despite its promising mineral potential, the Karamoja region, in the country's northeast, suffers from poor roads, unreliable electricity, and limited access to water—all of which raise operational costs and reduce investor confidence.

In addition, the country's landlocked position poses challenges for exporting minerals. It mainly relies on trucking to transport goods to Kenya's Port of Mombasa. Poor road conditions, border delays, and high transport costs complicate this route. While the Standard Gauge Railway offers some relief, its scale remains limited, leaving trucking as the main, inefficient option.

Regulatory enforcement is another challenge. Despite the new Mining and Mineral Act, illegal mining remains an issue. ASM activities are often carried out informally without adhering to environmental or safety standards. While the biometric registration system for artisanal miners is a step forward, its effectiveness will depend on widespread implementation and strict oversight.

This biometric system collects detailed information about each miner, such as age, fingerprints, and location. It issues them unique identification cards linked to a central database managed by the Department of Geological Survey and Mines. The system also helps trace illegal mining activities and improve sector oversight.

Under Ugandan law, authorities can convict, imprison, and fine people caught illegally mining.
Furthermore, developing any new mining deposit in Uganda carries risks and challenges. Mining activities by Chinese and other firms in Karamoja — where much of the gold has been identified — have created tensions with local communities. Mining in the region has been subject to a Human Rights Watch investigation, which was critical of miners for causing environmental damage and not compensating those whose land was impacted by the work.

The government has tried to address these tensions in the new Act by ensuring host communities participate in decision-making. This includes providing information on licences and environmental and social impact assessments at national and local levels. It also prioritises training and employment for host communities.

Foreign mining companies interested in operating in Uganda are likely to weigh the country's political and corruption risks. According to the 2023 Corruption Perceptions Index (CPI) by Transparency International, Uganda ranks 141st out of 180 countries, with a score of 26. This score, unchanged from the previous year, reflects ongoing concerns about corruption in the public sector, which can affect investor confidence and the overall appeal of the business environment.

In 2022, the US imposed sanctions on Belgian businessman Alain Goetz and a network of companies connected to him, including African Gold Refinery, one of Uganda's biggest gold refiners. He was alleged to be involved in illicit gold trading from the Democratic Republic of Congo, accusations Goetz has denied.

Uganda joined the Extractive Industries Transparency Initiative (EITI) in 2020. The Uganda EITI's work plan includes developing a policy for publishing contracts and licenses related to the extractive sector, documenting planned reforms on beneficial ownership transparency, conducting a scoping study on state participation in the industry, and improving the communication and dissemination of data.

Environmental sustainability is another concern, as unchecked mining activities risk damaging ecosystems. Mercury use in the artisanal gold mining sector is an issue, particularly in the Karamoja and Mubende regions. Miners often rely on mercury for gold extraction due to its affordability and availability despite the severe health and environmental hazards it presents. 

However, improper disposal leads to contamination of local ecosystems, including water sources. Efforts to formalise the artisanal mining sector aim to reduce the use of harmful chemicals like mercury by establishing improved safety standards and encouraging more sustainable mining practices.

Uganda needs to enforce environmental impact assessments (EIAs) and other regulatory measures more vigorously to ensure mining operations balance economic growth with ecological conservation.

While Uganda holds strategic mineral resources, it faces intense competition from other African countries, such as Botswana and Namibia, that offer more attractive investment environments. These countries benefit from better infrastructure, streamlined regulatory frameworks, and established mining sectors, making it harder for Uganda to attract the necessary foreign investment to develop its mineral resources.

Despite these challenges, recent airborne geophysical surveys indicate potential in Karamoja, in particular. Further exploration could uncover commercially viable deposits of gold and iron ore.

Uganda's mining sector holds immense potential, underpinned by vast untapped mineral resources, rising global demand, and strategic projects such as the Makuutu Rare Earths Project. However, realising this potential depends on overcoming key barriers, including infrastructure deficits, regulatory challenges, and illegal mining activities. If these issues are addressed, Uganda could play a more significant role in the global mineral supply chain, contributing considerably to economic diversification and growth.