Uganda signs maiden production sharing deal to revive copper mine

Uganda has signed its first mining production sharing agreement (PSA) to redevelop a mothballed copper and cobalt mine in the country's west, near its border with the Democratic Republic of Congo (DRC), it said on Monday.

The Kilembe mine, which sits on the foothills of the ice-capped Rwenzori mountains, is estimated by government geologists to contain about 4-million metric tons of ore that is 1.98% copper and 0.17% cobalt, both of which are needed for the energy transition away from fossil fuels.

Under the PSA, Ugandan firms Sarrai Group Limited and Nile Fibreboard Limited will jointly develop the mine, energy and mineral development minister Ruth Nankabirwa Ssentamu wrote on X. She did not say how much they would invest.

Sarrai Group is one of East Africa's largest industrial firms specialising in wood products, and Nile Fibreboards is one of the agro-manufacturing conglomerate's subsidiaries.

Nile Fibreboard, headquartered in Uganda's capital Kampala, also deals in wood products and it was not immediately clear if either company had mining expertise.

"This morning, we marked a significant milestone in Uganda's mineral sector by signing the first-ever mineral production sharing agreement for the redevelopment of Kilembe Mines," Nankabirwa said in the post.

More than a dozen firms had expressed interest, she said, from which the two winners were picked.

"This flagship project will produce copper cathodes and cobalt metal, critical for the transition to clean energy technologies, and drive Uganda's industrialisation."

Production at the mine began in 1956 and peaked at 18,000 tons of copper cathode annually in the early 1970s. Activity was halted later that decade by Canadian firm Falconbridge due to low copper prices and political instability.

The mine comprises a greenfield exploration area, a brownfield copper mine, a processing plant and cobalt-rich tailings, according to the ministry of energy.

Reuters was not immediately able to reach Sarrai as no contacts were listed on the website. Reuters did not immediately receive a response to e-mailed questions to Nile Fibreboard.