Published on 25 Aug 2025

Chinese investor spearheads first major gold mining project in Uganda

Uganda aims to triple mining’s contribution to the economy by 2040

Uganda has inaugurated its first large-scale gold mine and refinery – a US$250m project owned by China’s Wagagai Mining, a subsidiary of Liaoning Hongda Group – as it seeks to raise mining’s role in the economy.

The Wagagai Gold Mining Project, in the Busia district in eastern Uganda, has already absorbed US$150m of investment. The company plans to spend a further US$50m by 2027 to extend ore extraction to 600 metres, and another US$50m by 2035 to reach depths of 1,000 metres. The refinery is expected to produce 1.2 tonnes of gold annually, generating about US$100m in foreign exchange.

Uganda’s emergence as a significant gold producer in East Africa marks a new chapter in the region’s mining sector. The country’s rich gold deposits, particularly in areas like Buhweju, Mubende and Karamoja, has sparked something of a ‘gold rush’. Key mining regions across Uganda showcase the country’s geological wealth. The Mubende District, known for its extensive gold deposits, has become a focal point for commercial mining operations. The Karamoja Region, with its vast unexplored territories, represents significant potential for future development. Meanwhile, the Buhweju District continues to yield promising results for both artisanal and commercial miners.

At the inauguration ceremony, President Yoweri Museveni condemned the export of unprocessed minerals, pledging that no raw ores would leave the country under his rule. He also proposed the creation of a mineral wealth fund to channel revenues from gold and oil into infrastructure.

The project comes amid Uganda’s efforts to revive a sector that once played a central role in its economy. In the 1950s and 1960s, mining contributed as much as 30% of export earnings. But decades of political instability, underinvestment and weak infrastructure led to a sharp decline. As of the 2023 fiscal year, mining contributed only 2.2% of GDP, though the government wants this to reach at least 7% by 2040. To meet this goal, it has introduced a series of reforms designed to build a more structured mining sector.

A law enacted in 2022 permits the government to take a 15% free-carry stake in mining ventures. The approach mirrors policies in some other African countries, but in Uganda the state is not obliged to take up the stake, a provision critics say could encourage corruption. To manage its equity interests, the government last year established a state-owned mining company.

Among the miners active in Uganda are Woodcross Resources, which mines and refines tin in the south-west; Chinese-backed Sunbird Resources, licensed to extract limestone for cement near the Kenyan border; and Australia’s Ionic Rare Earths, which has approval to mine and process rare earth deposits.

However, Uganda’s ambition for the mining sector faces steep obstacles, foremost among them a lack of infrastructure. In Karamoja, the mineral-rich northeast, poor roads, unreliable power and scarce water supplies inflate costs for miners and deter investment. The country’s landlocked geography compounds the problem. Exports depend heavily on trucking to Kenya’s port of Mombasa – a route plagued by weak roads, high charges and long border delays. A US$3bn standard gauge railway under construction between Kampala and Malaba, on the Kenyan border, is intended to cut costs by linking into Kenya’s network and on to the Indian Ocean. But the project covers only part of the country, meaning trucking will continue to dominate.

Uganda is also set to join the ranks of oil producers in 2026, almost 20 years after it discovered commercially viable reserves in the Lake Albert basin near the border with the Democratic Republic of Congo. France’s TotalEnergies and China’s CNOOC, working with the state-owned Uganda National Oil Company, reached a final investment decision in 2022. The fields are expected to yield 1.4bn barrels over at least 20 years.

References

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