Shanghai Baosteel, Chalco Unit Win Uganda Copper-Mines Contract

Chinese companies including Shanghai Baosteel Group Corp., which controls the country’s biggest listed steelmaker, won a contract to develop copper mines in Uganda after pledging $175 million to upgrade the operations.

The investment commitment in Kilembe Mines Ltd. was the “highlight” in choosing the group that includes Aluminum Corp. of China (2600)’s Chinalco Luoyang Copper unit over others, Finance Ministry spokesman Jim Mugunga said today in an e-mailed statement from Kampala, the capital. Tibet Hima Industry Co. is leading the group that also includes Yunnan Copper Industry Co. (000878) and Dongfang Electric Corp., he said.

Output at Kilembe, set up in 1950 and owned by the East African nation, peaked at 1 million metric tons a year in 1970, with the smelter producing 18,000 tons of copper in 1964, according to a presentation on the Uganda Mining Ministry’s website. The operation has been under care and maintenance since 1982 and is near the border of Democratic Republic of Congo, the world’s eighth-largest copper producer.

“The winning consortium committed to a signature fee to government of $4.3 million as well as an annual concession fee of $1.01 million,” Mugunga said.

Companies such as Tullow Oil Plc (TLW), China National Offshore Oil Corp. and France’s Total SA, are developing Uganda’s oilfields, which contain an estimated 3.5 billion barrels of crude. Significant production may start in 2017, according to Total. China’s foreign direct investment in Africa has surged in recent years, with the nation putting in a bit more than $3 billion to work on projects on the continent, according to the state-run Xinhua news service.

The Tibet Hima-led group may manage Kilembe for 25 to 30 years, depending on the outcome of talks with the government, Mugunga said by phone.

The group will also upgrade Kilembe’s Mobutu hydropower project to 12 megawatts from five megawatts, he said.

Nine companies originally bid for Kilembe, Mugunga said.

To contact the reporter on this story: Fred Ojambo in Kampala at fojambo@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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