Is Uganda really sitting on gold reserves worth $13 trillion?

Uganda is a land-locked country that lies in the centre of Africa. Uganda is a fast growing nation whose GDP stands at $34-36 billion. As a country it is heavily dependent on its exports. Exports are mainly in gold ($3.47 b), coffee($539 m), cocoa beans ($101 m), etc.

Back in 2012, Uganda experienced a gold rush and since then has seen a lot of growth in its gold exports. It is their biggest exporter industry and has invited foreign direct investments. FDI has been done into gold mines, refineries and Artisanal and Small-scale Gold Mining (AGSM) Sector.

Recently, the trade world has spun into shock due to claims from the Government of Uganda. Solomon Miyuta, a spokesperson for the Ministry of Energy and Mineral Development, broke the news that Uganda is sitting with $13 trillion worth of gold in its mines.

$13 trillion worth Gold Mines in Uganda?

From a long time, Uganda has opened itself for the world. It welcomes explorations and investments from all over the world. Uganda also provides exploration, location and leasing lisences to companies and small scaled investors.

Gold Distribution of Uganda

After a lot of the explorations (aerial, geophysical) and analyses, it was concluded that Uganda has 31 million metric tonnes of gold ore. From this gold ore, approximately 321,000 tonnes of refined gold could be extracted. The value of this 321,000 tonnes of refined gold is expecteted to be at $13 trillion.

These deposits of gold are expected to be mostly around the area of Karamoja, which is near Kenya in the north east. Other deposits are expected to be near central, eastern and western areas of Uganda.

High Speculation on the $13 trillion number

Chances of new desposits of gold reserves might be true in Uganda. But the value of these deposits i.e. $13 trillion looks highly inflated.

  • Gold Supply – The very reason why gold is valuable is because of its scarce supply. In total, the above ground gold, currently present in the world is 200,000 metric tonnes. This number is far less than what Uganda alone is predicting – 320,0000 metric tonnes.
  • Incorrect Estimate – It is estimated that a good gold mine will yield 8-10 grams of refined gold per metric tonne of gold ore. On the other hand, an average quality gold mine will yield 4-6 grams of refined gold per metric tonne of gold ore.
  • Wrong expectation – Even if the gold mines of Uganda yield 7 grams of refined gold per metric tonne, the total refined gold fetched would be 217 metric tonnes. This number is far less than the expected 321,000 metric tonnes of refined gold.
  • Exponential GDP growth – Currently the GDP of Uganda is valued at $44-46 billion but this new discovery would make the economy as valuable as $13 trillion. This jump is utopian, unprecedented and does not make sense.
Gold Mining in Uganda

What if the number is true?

It is highly speculated that the government have mistaken ‘metric tonnes’ with ‘ounces’. But what if the number is true? What if Uganda is sitting with huge deposits of gold reserves?

  • Rags to Riches – Uganda might just become the richest country in Africa. In fact, one of the richest country in the world. It alone would be having more refined gold than rest of the world.
  • Drop in Gold Value – It is certain that the current value of gold would decrease in the longer run. ‘Bitcoin’, which is limited at 21 million supply unit, could end up more valuable than gold.
  • Chinese Control – Uganda has five gold refineries namely including African Gold Refinery, trading as Thaba Investments, Simba Gold Refinery, Bullion Refinery, Metal Testing and Smelting and Aurnish Trading. 

    But it also has Nuran Ventures – SMC and Wagagai to conduct both mining and processing of gold. Wagagi is a Chinese company that has invested $200 million in Uganda. Even though the government will get a profit cut from exports but refineries and processing would be controlled by Chinese companies. It will be very interesting to see how Uganda lives up to the hype. There is uncertainty about the number but there is surely something in the mines of the African country.

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