Cost Benefit Analysis of the Mining Sector in Karamoja, Uganda Houdet J., Muloopa H., Ochieng C., Kutegeka S. and Nakangu B. IUCN Eastern and Southern Africa Programme Cost Benefit Analysis of the Mining Sector in Karamoja, Uganda Houdet J., Muloopa H., Ochieng C., Kutegeka S. and Nakangu B. Copyright: © 2014 International Union for Conservation of Nature and Natural Resources The designation of geographical entities in this book, and the presentation of the material, do not imply the expression of any opinion whatsoever on the part of IUCN, Irish Aid, ISS or SYNERGIZ concerning the legal status of any country, territory, or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. The views expressed in this publication do not necessarily reflect those of IUCN, Irish Aid, ISS or SYNERGIZ. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage retrieval system without permission in writing from the publishers. Product or corporate names may be the trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Citation: Houdet J., Muloopa H., Ochieng C., Kutegeka S. and Nakangu B. (2014). Cost Benefit Analysis of the Mining Sector in Karamoja, Uganda. Kampala, Uganda: IUCN Uganda Country Office. ix +82p ISBN: 978-2-8317-1657-2 Cover Photo: Gold artisanal and small scale miner along a river bed. Plastic basins are commonly used for gold separation. (Photo credit: Sophie Kutegeka) Design & layout: Gordon Arara (IUCN Publications Unit, Nairobi) Available From: IUCN (International Union for Conservation of Nature) Uganda Country Office Plot 39 Babiiha Avenue, P. O. Box 10950, KAMPALA, Uganda Tel +256 41 344508/233738 Fax +256 41 342298 www.iucn.org/esaro Table of Contents List of tables ...................................................................................................................................................v List of figures ................................................................................................................................................. vi List of boxes .................................................................................................................................................. vi Acronyms ..................................................................................................................................................... vii Acknowledgements ......................................................................................................................................viii Executive Summary ....................................................................................................................................... ix 1.INTRODUCTION.........................................................................................................................................1 1.1 Rationale and background to the project .................................................................................................1 1.2 Project objectives .....................................................................................................................................1 1.3 Methodology ............................................................................................................................................2 1.3.1 Work Phase 1: Desktop review of relevant literature and legal frameworks ..........................................2 1.3.2 Identification of CBA case studies and scenario design .......................................................................2 1.3.3 Stakeholder identification & questionnaire design ................................................................................3 1.3.4 Project inception workshop in Kampala ................................................................................................3 1.3.5 Data collection in Karamoja – Second Multi-Stakeholder Consultative Meeting and site visits ............3 1.3.6 CBA modelling and report drafting .......................................................................................................3 2. A LITERATURE REVIEW OF THE SOCIO-ECONOMIC AND ENVRIONMENTAL IMPACTS OF ASM AND LSM ...................................................................................................................4 2.1 Positive and negative impacts of Artisanal and Small-scale Mining (ASM) .............................................4 2.1.1 The growing role played by ASM in mining worldwide .........................................................................4 2.1.2 Key socio-economic drivers of ASM .....................................................................................................5 2.1.3 Informal ASM is driving negative environmental and social impacts .....................................................5 2.1.4 The key environmental impacts of ASM ................................................................................................6 2.2 Positive and negative impacts of Large Scale Mining (LSM) ...................................................................8 2.2.1 Understanding the economic benefits of LSM ......................................................................................8 2.2.2 The social and environmental impacts of LSM ......................................................................................9 2.3 Introduction to cost-benefit analysis and its application in the mining sector .......................................14 2.3.1 Cost-benefit analysis (CBA) for mining projects – introduction to methods .......................................15 2.3.2 Assessing the net social impact of mining ..........................................................................................17 3. THE KARAMOJA REGION – STATUS QUO ...........................................................................................21 3.1 Improved security but persisting human development challenges ........................................................21 3.2 Colonial legacies of land tenure and new challenges ............................................................................23 3.3 Mining situation in Uganda and Karamoja .............................................................................................25 3.3.1 Brief history of mining in Uganda ........................................................................................................25 3.3.2 Definitions and conceptualization of LSM and ASM in Karamoja .......................................................26 3.3.3 The mining policy and legal regime in Uganda ....................................................................................26 3.3.4 The mineral taxation regime in Uganda ...............................................................................................29 3.3.5 Environmental and social regulations applicable to mining in Uganda ...............................................32 iii 4. COST-BENEFIT ANALYSIS OF KARAMOJA MINING CASE STUDIES ...............................................36 4.1 CBA of LSM case studies ......................................................................................................................36 4.1.1 Dao Marble Ltd – CBA of the Ratta Mine Marble Mining project ........................................................38 4.1.2 Tororo Cement Ltd – CBA of Kosoroi Limestone Quarry in Katikelike ................................................50 4.1.3 Jan Mangal Ltd – CBA of the Nakabat Gold Mine ...............................................................................58 4.1.4 African Minerals Ltd – CBA of Limestone ASM in Moroto ..................................................................66 4.1.5 Summary of key findings for LSM case studies ..................................................................................67 4.2 CASE STUDIES OF ARTISANAL AND SMALL-SCALE MINING (ASM) .................................................69 4.2.1 Gold artisanal mining at Rupa sub-county ..........................................................................................70 4.2.2 Gold artisanal mining at Acherer village ..............................................................................................70 4.2.3 Key findings from ASM case studies ...................................................................................................72 5. CONCLUDING REMARKS AND RECOMMENDATIONS FOR IMPROVING THE SUSTAINABILITY OF ASM AND LSM IN KARAMOJA ..........................................................................74 5.1 Building up ecosystem accounting and integrated land-use planning capacity while ensuring free access to information .......................................................................................................75 5.2 Promoting and ensuring sustainable LSM practices..............................................................................78 5.3 Providing tangible support to ASM communities for sustainable diversified livelihoods .......................79 Annex 1 – Impact rating and ranking criteria ...........................................................................................80 REFERENCES .............................................................................................................................................81