Uganda opens $200m iron ore smelting plant
The Ugandan government has completed a $200 million iron ore smelting plant that is expected to reduce the region’s dependence on scrap metal, billets, and coils.
In Iganga, eastern Uganda, Tembo Steels Uganda Ltd. has built a metal processing plant with a capacity of 1.2 million tonnes of metal per year.
Our integrated steel plant is the largest in East Africa with forward and backward integration, Tembo Steel chairman Sanjay Awasthi told The EastAfrican.
Uganda intends to follow Kenya in banning the sale or trade of scrap metal. This is in order to curb vandalism of infrastructure, such as high voltage power pylons, CCTV cameras, and street furniture.
The region is experiencing a shortage of cast iron scrap. In the past, cast iron was produced in Tanzania and Rwanda, but these countries no longer produce it.
According to Abraham Muwanguzi, a senior planner with the National Planning Authority-Uganda (NPA), the EAC Common External Tariff needs to be revised, as it favors wire rod importers.
Wire rods constitute 70 percent of semi-finished goods, but they are zero-rated, whereas coal, which forms the raw material for iron ore smelting, is subject to withholding taxes and value-added taxes.
To be competitive, the NPA advocates for a better transportation system, low-cost loans, reduced electricity rates, and favorable tax incentives.
In line with Pramukh Steel Ltd, Madhvani Steel and Kabale Steel’s publicized plans, Uganda hopes to increase its capacity in iron ore smelting. This would allow Uganda to supply smelted iron ore and products to its domestic market, as well as to Kenya, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo.
A total of over $360 million is spent each year by Uganda on the importation of steel, with at least 70 percent being spent on coils and billets. An estimated 30 percent of the company’s expenditures are devoted to finished steel and iron products.
Uganda has confirmed iron ore deposits of over 500 million tonnes. These include Hermatite iron ore found in Muko in Kabale and Kisoro districts of southwestern Uganda, and magnetite iron ore in Sukulu and Bukusu in Tororo District in eastern Uganda.
Uganda’s steel production (for both domestic and export markets) currently stands at an estimated 585,000 tonnes per annum, that is, 35 percent of installed capacity. Of these, 210,000 tonnes is liquid steel production, which is mainly produced through scrap smelting in the induction furnaces.
According to NPA, in 2018 Uganda’s iron and steel plants had total installed capacity of about 1,000,000 tonnes per annum. 50.17 percent (501,700 tonnes) of the total was used.