The Government of Uganda announced on June 8 the results of a recent exploration in which a deposit of 31 million tons of gold would have been discovered, mainly in Kamamoja, a territory in the northeast of Uganda, from which up to 320,000 tons could be extracted. , according to the Reuters news agency. If the forecasts come true, it would become the most amount of gold metal being extracted than would ever have been obtained until now. According to data from the World Gold Council, a total of 201,296 tons of gold have already been extracted globally so far. Before this announcement, estimates of the remaining gold to be mined were 53,000 tons of identified reserves, a figure that has been totally pulverized by the 320,000 new ones found.
China’s great conquest
The spokesman for the Ministry of Development of Raw Materials and Energy of Uganda, Solomon Muyita, told Reuters that this deposit has been possible after two years of exploration. Wagagai, a Chinese mining company, has been the first to establish its extraction bases there and has carried out an investment of 200 million dollars to build a refinery. Uganda’s Parliament announced its intentions to invest in mining in the country and earlier this year approved the creation of a national mining company, all mining projects carried out in the country will be required to sign a production agreement in which the company will take 15% of the operation. According to The Independent, the Chinese company will go through the toll and pay a total of 20 million a year in fees to the Ugandan government once it starts exporting.
This new gold rush has knocked on the doors of refineries in countries like China, which already had a significant presence in Africa and large projects to continue exploiting resources on the continent, an essential activity to maintain its domestic economy. The red stain has been spreading over African lands for 12 years, silently conquering this oasis of raw materials. The majority of African countries lack the necessary structure to exploit their resources and it is for this reason that they receive billionaire investments from Beijing with open arms, despite the misgivings it causes in the West.
Since 2010, 25 economic and trade cooperation zones have been created in 16 African countries and a total investment of 735,000 million dollars, according to a Chinese government report on Trade and Economic Links with Africa. Countries like Nigeria, Ghana and Zambia take the prize for the largest investments of more than 10,000 million dollars.
Gas and oil have been postulated as the favorite resource of the Chinese. This sector occupies 19% of investments in Africa. Gold was not even 1%, a figure that will increase in the case of Ugandan land. Only in 2021, China invested 2,070 million dollars in Africa. This year the offers on the table have reached 20,000 million in investments to various African countries.
Gold collapses on the stock market
The insufficient echo of the news has already had a volatile effect on the commodity market. The consensus average of firms collected by Bloomberg estimates losses for this precious metal of 1.1% by the end of 2022. In the case of Citi and Commerzbank (the only two firms with post-announcement reports) they have lowered their target price .
In the first case, the price set by Citi on May 31 was $1,960 for the third quarter. Subsequently, in the June 22 report, the price target is $1,845, down 5%. By the end of the year, the established target price also falls 2%, reaching $1,800. In the case of the firm Commerzbank, the forecasts they had for the third quarter of 2022 fall by 2% compared to the report of March 25.
China is one of the countries with the largest presence of refineries in the African continent
The rise to power of characters like the dictator Idi Amin led the country into a bitter and silent six-year civil war. A bomb for a country that had a great economic projection. After the storm comes the calm, and Uganda is currently a democratic and relatively stable country after the arrival of President Yoweri Museveni, in power since 1986. However, it remains a very poor and unequal country.
Until now, Uganda did not have gold deposits of a considerable size to attract mining companies and everything indicated that its unexplained exports of 17 tons of gold in 2019 -95% more than its capacity- came from smuggling, mainly from the Democratic Republic of Congo. According to the Belgian organization International Peace Information Service, this service brings Uganda about 320 million dollars a year, of which 120 million is diverted to rebel groups in the north of the country.