Uganda’s state-owned mining company poses corruption risk for investors, experts warn

Uganda’s president, Yoweri Museveni, recently launched the Uganda National Mining Company (UNMC), with the state-owned enterprise being able to take up to a 15% equity stake in all medium and large-scale strategic mining operations across the country. This applies to medium and large-scale licences granted after the coming into force of the Mining and Minerals Act 2022.

Although the 2022 Act was already in force, the UNMC remained dormant until early 2025. Edward James and Vishana Mangalparsad of Pinsent Masons said that Museveni’s recent push to operationalise the UNMC suggests that the government may seek to begin implementing relevant aspects of the new regime, including the free carry state participation in new mining licences granted.

Uganda has substantial reserves of critical minerals including lithium, cobalt, and rare earth elements. In response to increasing global demand for these minerals, the Ugandan government appears to be taking steps to prioritise mining activities for economic development while maintaining a significant share in natural resource exploitation, they said.

James, an anti-bribery and corruption expert, said: “The move towards greater localisation aligns with other mineral rich countries in Africa.”

“Similar approaches were adopted in Zambia and Botswana and recently in Burkina Faso,” he said.

“Although greater local benefit is certainly a good thing, the new law creates obvious corruption risks and companies should continue to sensibly manage compliance risks. The risk comes from the 2022 law that now appears to be in the process of being actively implemented. That law enables the minister to give the state an up to 15% interest in a medium or large mining licence when he grants a new licence. This interest will be taken at no cost and the UNMC is the vehicle through which the interest will be held. The risk point is apparent – there is a lot of money at stake for companies and officials may seek to exploit that.”.

“A key issue is the taking up of the interests is optional, not mandatory. The minister may decide to give up to 15% to UNMC – he may also decide not to do that. There will undoubtedly be various stakeholders involved and some may seek to unduly influence the process in exchange for bribes. Companies looking to obtain new licenses will need to be on the look out for this. We anticipate that how the risk may materialise is that arbitrary agents may actively approach mines claiming that they can influence the outcome and, if they don’t pay, the full 15% will be given to UNMC,” he said.

The UNMC was launched to ensure Uganda gains direct returns from the mining industry while continuing to welcome foreign investment, with the government planning to inject UGX500 billion (approx. US$130 million) into the company over five years to enhance state oversight, increase revenue and facilitate technology transfer. The company will however be able to take up 15% interests in new licences at no cost. The 2022 law enables the state – acting through UNMC – to auction the interests, subject to any pre-emption rights that the mining company may hold.

Mangalparsad, an energy and natural resources expert, said: "Implementing strong anti-corruption safeguards into UNMC's operations, such as independent audits, public disclosure of contracts, and transparent procurement, will be crucial to ensuring that the purpose of the entity is not departed from. Whilst the law provides that its 15% interests in mining rights can auctioned in open and transparent processes, history has shown that processes can be manipulated to benefit particular parties. The Ugandan government will need to keep a very close eye on how things unfold."

Uganda is the latest country to exert control over its domestic mining operations, as resource nationalism or no-cost participation becomes more common across the African continent. These measures are being imposed over and above the traditional revenue streams of taxes and royalties.