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Chinese firm lands major mining deal

Updated: 2015-01-16 08:36
By Li Wenfang (China Daily Africa)

Project in Uganda also involves steel production, plants making fertiliser and acid, a power plant and more

A mining development deal in Uganda, one of the largest foreign-invested projects in the East African country that incorporates mining, fertilizer manufacturing, steel production and a melting plant, will generate annual net profit of $81 million, says the Guangzhou Dongsong Energy Group Co.

The company signed the mining agreement with the Ugandan government in December after it received the permit in October to mine a 26.47-square-kilometer site in eastern Uganda's Tororo district, says Mao Jie, the company's vice-president.

 Chinese firm lands major mining deal

Staff members of Guangzhou Dongsong Energy Group Co hold a meeting with villagers in Uganda's Tororo district. Photos provided to China Daily

Founded in 2000, privately held Guangzhou Dongsong is engaged in hydropower, mining, energy and commercial property sectors, with total assets standing at 7 billion yuan ($1.13 billion) last year.

The Tororo district project is 180 kilometers from the Ugandan capital, Kampala, and located close to the nation's border with Kenya to the east.

The first phase of the project, supported by an investment of $374 million, is expected to produce an annual capacity of processing 1 million metric tons of ores and 170,000 tons of steel production. It will also establish a 100,000-ton phosphate fertilizer plant, a 120,000-ton sulfuric acid plant and a hydrometallurgy melting plant. The excess waste heat from the sulfuric acid plant will fuel a new power plant.

The power plant will supply more than 30 percent of the electricity needed for the project.

There is a growing demand for fertilizers in Africa and the phosphate fertilizer produced at the Ugandan site will most likely be shipped to Kenya, Ethiopia, Burundi, Rwanda and Tanzania.

Much of that fertilizer will also help enrich Uganda's farms. The country's soils are able to feed only 6 million of the nation's population of 35 million, says Beatrice Byarugaba, commissioner for crop production and marketing at the Ministry of Agriculture, Animal Industry and Fisheries of Uganda.

In its aim to increase the use of fertilizers in production, Uganda is vying to create a competitive, profitable and sustainable fertilizer industry that can contribute to food and income security.

According to the World Bank, Uganda's GDP is expected to grow at a rate of 6.6 percent this year.

Cash crops in Uganda include coffee, cotton, tobacco and tea, and food crops include plantain, millet, maize, cassava and sorghum.

The project's second phase will need about $250 million. Guangzhou Dongsong will contribute 35 percent of the total investment, with the rest coming from China Development Bank. The China-Africa Development Fund has a 20-percent share in the project.

The Tororo district project, scheduled to go into operation next year, was one of the top four benchmark projects last year for the Ministry of Energy and Mineral Development of Uganda.

The multifaceted project in Uganda is set to be accelerated by China's strategy of "One Belt and One Road," says Mao.

Chinese President Xi Jinping proposed in 2013 the initiative of building a New Silk Road Economic Belt and the 21st Century Maritime Silk Road.

The country will accelerate the development of the economic zones and strengthen the cooperation with the countries involved, Xi Jinping said at a meeting in November.

Historically, the "Silk Roads" on land and at sea served as a major channels for trade and cultural exchanges with Central Asia, Southeast Asia, South Asia, West Asia, East Africa and Europe, Xi said.

The Guangzhou Dongsong project in Uganda will have a workforce of 1,200. Mao says a Chinese staff of experts and employees will gradually decrease from the 400 to 120.

Wu Yuyu contributed to this story.


 Chinese firm lands major mining deal

Employees of Guangzhou Dongsong Energy Group Co at a drilling site in eastern Uganda's Tororo district.

(China Daily Africa Weekly 01/16/2015 page22)

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