Uganda has commissioned a $200 million iron ore smelting plant, which will help the region reduce its reliance on scrap metal, billets, and coils for raw materials.
Tembo Steels Uganda Ltd is building a facility in Iganga, eastern Uganda, with a capacity to produce 1.2 million tonnes of metal per year.
Sanjay Awasthi, chairman of Tembo Steel, told The EastAfrican, “This is East Africa’s largest integrated steel mill with forward to backward integration of steel.”
The launch coincided with Uganda’s plans to follow Kenya’s lead in prohibiting the sale or trade of scrap metal in order to curb the vandalism of infrastructures like high-voltage power pylons, CCTV camera systems, and road furniture.
The region is facing a scarcity of cast iron scrap. Tanzania and Rwanda used to be sources of cast iron, but it is no longer available in those countries.
However, Abraham Muwanguzi, senior planner for technology and industry at the National Planning Authority-Uganda (NPA) said the current EAC Common External Tariff needs to be reviewed as it favours importers of wire rods.
The wire rods are 70 per cent semi-finished goods, but are zero-rated, while coal, the raw material used in the iron ore smelting, attracts withholding and value-added tax.
NPA is pushing for an improved transport network, low-cost loans, reduced power tariffs, and favourable tax incentives for the industry to be competitive.
Increased capacity
Uganda hopes to increase its capacity in iron ore smelting when Pramukh Steel Ltd, Madhvani Steel and Kabale Steel commission their plants, according to their publicised plans. This would allow Uganda to supply smelted iron ore and products to its domestic market as well as Kenya, Rwanda, Burundi, South Sudan, and the DRC.
Uganda spends over $360 million annually on the importation of steel, with at least 70 per cent on the importation of coils and billets products. Some 30 per cent is spent on finished iron and steel products, the firm said.
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 per cent 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 a total installed capacity of about 1,000,000 tonnes per annum. 50.17 percent (501,700 tonnes was being utilised.
