Overview:
The arrears arose from unpaid annual mineral rents accumulated while Kilembe Mines held mining licences, State Minister for Minerals Sidronius Okaasai told the Committee on Finance, Planning and Economic Development on Wednesday.
KAMPALA — The Ministry of Energy and Mineral Development has asked Parliament to approve a Shs2.6 billion waiver on mineral rent arrears owed by Kilembe Mines Limited as the government-owned company winds up operations to pave the way for a new mining venture.
The arrears arose from unpaid annual mineral rents accumulated while Kilembe Mines held mining licences, State Minister for Minerals Sidronius Okaasai told the Committee on Finance, Planning and Economic Development on Wednesday.
The ministry says writing off the arrears will facilitate the transfer of the mining licence to the new contractor as government completes the winding-up process for Kilembe Mines Limited.
Under Section 189 of the Mining and Minerals Act, annual mineral rents are payable to government before the grant of a mineral right and annually thereafter on the anniversary of the grant until the mineral right is terminated.
The Auditor General flagged the unpaid mineral rents in the audit for the year ended December 2024 and advised the ministry’s accounting officer to explore the possibility of writing off the amount.
Agnes Alaba, the ministry’s Commissioner for Geological Survey and Minerals, told MPs that although the exploration licences expired in 2022, Kilembe Mines remained liable for the accumulated mineral rent arrears.
“The exploration licences expired in 2022; however, the arrears of the related annual mineral rent remain an obligation of Kilembe Mines Limited,” Ms Alaba said.
“We request the committee to allow us to write off this arrear as we process the transfer of licence to the new contractor.”
MPs raise concerns
The waiver request, however, drew questions from MPs, with some seeking assurances that lessons from previous mining operations at Kilembe would be addressed before the new company takes over.
Sheema Municipality MP Dickson Kateshumbwa asked the ministry to explain how it intends to prevent environmental risks that have previously disrupted mining activities in the area.
He cited floods and other environmental hazards that affected the operations of Tibet-Hima and Kilembe Mines Limited, warning that similar challenges could undermine the new mining venture if they are not addressed.
Mr Kateshumbwa urged the ministry to present a clear mitigation plan before the new operator begins full-scale operations.
Madi-Okollo District Woman MP Joanne Okia, meanwhile, raised concerns about the impact of the winding-up of Kilembe Mines Limited on workers.
She questioned what would happen to Ugandans currently employed by the government-owned company as the entity is dissolved and operations are transferred to the new mining company.
Kassanda County North MP Patrick Nsamba Oshabe was more cautious about the proposed waiver, questioning why the ministry was seeking to write off the arrears before the winding-up process had been completed.
“Why are you rushing to seek a waiver when the winding-up process is still ongoing, after all you said Kilembe Mines Limited is not party to the new mineral production sharing agreement?” he asked.
New operator
Kilembe Mining Limited, which is 99 per cent owned by government, took over the mining licence previously held by Tibet-Hima Limited.
Tibet-Hima failed to redevelop the Kilembe copper mines, leading government to cancel its concession in 2017.
Kilembe Mining Limited subsequently took over the licence but also failed to meet key obligations related to the redevelopment and production of copper at the historic mine.
The government has since sought a new investor to revive copper mining at Kilembe.
In 2025, government signed a new mineral production sharing agreement with a consortium comprising Sarrai Group Ltd, Nile Fibreboard Ltd and Uganda National Mining Company Ltd for the exploration, development, production and processing of minerals at Kilembe Mines.
The new mining venture is expected to revive copper production at the mine, with the first output projected by 2029.
The proposed waiver therefore comes at a critical stage in the transition from the government-owned Kilembe Mines Limited to the new operator.
The ministry’s request now awaits consideration by the Finance, Planning and Economic Development Committee as MPs weigh the proposed write-off against the need to clear the way for the new mining agreement.