Chinese firms battle in Uganda over mineral project

A Chinese fertilizer manufacturing firm, Guangzhou Dong Song Energy Group is being sued Sh2.3 trillion ($620 million) for alleged unlawful exploration of Uganda’s phosphate Comprehensive Industrial Project Osukuru located in the Eastern Region of Uganda.

The phosphate Comprehensive Industrial Project was commissioned by Ugandan President Yoweri Museveni in October 2018 as part of the expansive Uganda-China free zone of International Industrial Cooperation situated in the area.

Chinese claimant and shareholder in Uganda Hui Neng Mining Limited, Fang Min, is suing Guangzhou Dong Song Energy Group for economic loss and lost opportunities her company suffered as a result of the unlawful actions by Guangzhou Dong Song.

Min, who is also the proprietor of Fang Fang Hotel, alleges that the Ugandan government granted her company an exploration licence for the Osukuru phosphate reserves. Meanwhile, in December 2013, LV Weidong, Mao Jie and Yang Junjia of Uganda Hui Neng Mining Limited allegedly connived to pass a board resolution to transfer the company’s exploration licence to Guangzhou Dong Song Energy Group without following the due process of convening board meetings; thereby keeping Min in the dark.

For that, Min is claiming more than Sh67 billion ($18 million) as interest after investing more than $5 million in licensing requirements by Uganda’s Department of Geological Surveys and Mines. The case is before Uganda’s Commercial Division of the High Court.

The site under dispute was to be used to produce 50,000 tons of purely organic fertilizers for the local market so that Uganda would no longer need to import fertilizers, glass, steel and iron, thereby saving the country millions as well as providing over 1,700 jobs.

According to Museveni, “In 2013, Uganda was spending $50 million on importing fertilizers from China but this will stop. We were spending $23 million on glass per year. All these imports will stop and instead, we will be exporting to the region.” With increased demand, production at the
Sukulu mineral project was expected to grow to 100,000 tons.

The case has been adjourned to April 23, 2019.