Parliament's Committee on Finance, Planning and Economic Development has recommended cancelling Shs2.6 billion in outstanding mineral rent owed by Kilembe Mines Limited, the country's largest historic copper and cobalt mining establishment. The arrears, owed to the Ministry of Energy and Mineral Development, stood at Shs2.297 billion as of June 30, 2024, before reaching Shs2.6 billion by December 10, 2025. In its report to Parliament, the committee found the proposed write-off by the Ministry of Finance to be justified, noting that repeated recovery attempts by the energy ministry had been unsuccessful.
The committee identified inadequate government funding as a major reason the company could not meet its obligations. Government owns 99.06 per cent of Kilembe Mines Limited. During the 2022/2023 financial year, the company received an approved budget of Shs6.293 billion, but only Shs1.824 billion was released, representing approximately 28.9 per cent of the allocation. Money released went largely to salaries, wages and directors' expenses, leaving critical priorities unfunded, including Shs3 billion for restoration and flood mitigation, Shs1 billion for mining rent and licence fees, and Shs3 billion for a court award to minority shareholders. The committee stated that without this funding, the company was unable to mine or generate revenue to meet its obligations.
The Ministry of Energy and Mineral Development made several attempts to recover the arrears by sending payment reminders and notices of intention to sue, but recovered no funds. The Auditor General had previously recommended the write-off, citing the company's inability to pay. The debt cancellation is linked to the restructuring of mining operations following the transfer of Kilembe Mines' assets to a new consortium in 2025, comprising Uganda National Mining Company Limited with 15 per cent, Sarrai Group with 80 per cent, and Nile Fiberboard with five per cent. An inter-ministerial committee agreed on January 31, 2025, to write off the arrears to allow the new operator to take over the mining licence without inheriting the former operator's financial obligations.
Kilembe Mines, located in Kasese District in the foothills of the Rwenzori Mountains, was Uganda's largest mining operation at its peak. Copper and cobalt earnings accounted for between 20 and 30 per cent of the country's Gross Domestic Product during the 1960s and early 1970s, according to the parliamentary report. Production halted in 1982 following declining international copper prices. Government attempted to revive the operation in 2013 by granting a concession to Tibet Hima Limited, but the company failed to meet its obligations, and the concession was terminated in 2017.
The committee has called for stronger oversight of the company's non-tax revenue obligations going forward. It recommended that the Minister of Finance submit an annual non-tax revenue performance report for Kilembe Mines Limited to Parliament by September 30 every year to strengthen parliamentary oversight as the historic mining operation transitions under new management. The recommendation awaits parliamentary and ministerial approval before the proposed debt cancellation takes effect. Section 33(1) of the Public Finance Management Act requires the Minister of Finance to obtain parliamentary approval before writing off a government claim involving public money.
For Uganda's public finances and mining sector, the write-off means government is forgoing revenue collection from the historic mine while transferring its operations to private operators, with future oversight through annual parliamentary reporting on revenue performance.