MPs Advocate for Renegotiation of Kilembe Mines Deal Between Govt, Tibet Hima

Parliament has endorsed a report by the Committee on Environment and Natural Resources recommending renewed negotiations between the Ugandan government and Tibet Hima Mining Company Limited (THMCOL) concerning the disputed termination of their concession to manage Kilembe Mines.

The report was presented by the Committee on Environment and Natural Resources, chaired by Herbert Ariko, on Wednesday, 27 November 2024. It highlighted procedural failures and mismanagement by government institutions, which the committee asserts unjustly led to the termination of the agreement.

The concession agreement, signed in 2013, gave THMCOL the rights to revive and operate Kilembe Mines for 25 years. However, the government terminated the contract in 2017, alleging the company failed to meet key obligations, including providing an exploration guarantee, paying annual concession fees, and ensuring participation by all consortium members.

THMCOL disputed these claims, arguing that government delays and inefficiencies significantly hindered its ability to fulfil the agreement's terms.

According to the committee's findings, THMCOL invested over $56 million in revamping the mines, including building infrastructure, paying employee wages, settling Kilembe Mines Limited’s debts, and covering operational costs. Additionally, the company claimed to have paid the government a total of $6.69 million during the concession period. Despite this, the termination reportedly led to financial losses totalling approximately $980 million, which included projected revenue from the mines.

The committee criticised the government's handling of the concession, calling the termination “hasty and unjustified.” Ariko noted that alternative remedies, such as mediation or financial penalties, should have been pursued.

“The government failed to exercise due diligence in managing this concession. The premature decision has prejudiced the petitioner despite their significant investments and willingness to comply with the agreement,” Ariko said.

The report also revealed that the government failed to fulfil its obligations under the agreement, including the timely handover of the mining site and the issuance of necessary licences. It also unilaterally reduced the concession period from 25 years to 15 years, a move the committee described as unfair and destabilising to the company’s operations.

“This abrupt change undermined the concessionaire’s ability to plan and secure long-term investments,” the report stated.

One of the more contentious issues was the government’s refusal to allow THMCOL to export mineral samples for testing. The company argued that testing was essential for designing a smelter plant, but the government failed to provide clear guidance on acceptable quantities, effectively stalling the company’s efforts to develop necessary infrastructure.

The committee recommended halting the ongoing procurement process for a new concessionaire until all outstanding issues with THMCOL are resolved. It also called for compensation for the company’s investments and losses.

“Equity demands that the petitioner be adequately compensated for their investments or allowed to continue operations under a renegotiated agreement,” the committee said.

Deputy Attorney General Jackson Kafuuzi suggested reviewing the petitioners' claims to determine appropriate compensations. “We have come to know that the concession was null and void, but they had acted upon it, invested, and paid money. Do we simply say you paid for something that does not exist?” he said.