260+ million tonnes of iron ore discovered in Uganda

Uganda may become a more important player in the African iron ore market, after a geological survey revealed much bigger deposits of the steel-making ingredient than found during colonial mappings.

"Currently, we have over 200 million tonnes reserves of hematite iron ore in southwestern Uganda and 60 million tonnes of magnetite iron ore in the south eastern part of the country and still have huge potential for exploration," according to Francis Natukunda, a senior geologist at Uganda's Department of Geological Survey and Mines.

Natukunda was quoted by New Vision, a daily newspaper in the landlocked East African country, while speaking at a two-day South African trade and investment seminar in Kampala.

He said the survey also revealed "potentially huge diamond deposits around areas of Lake Kyoga" due to the discovery of bodies similar to kimberlite.

According to Natukunda, if the iron ore is extracted, it would not be exported, but rather used domestically to fuel demand for steel in the construction industry. Uganda banned iron ore exports in 2012.

"Uganda's geographical position gives it access to over 500 million people, including COMESA and SADC and the recent population surge in the countries forming these regional blocks will trigger demand for construction materials from our industries," according to the state minister for investment, Gabriel Ajedra Aridru, speaking at the same conference.

Iron ore is not currently mined in large quantities in Uganda. The US Geological Survey lists cobalt, copper, tin and tungsten as mined metals, and cement and vermiculite as the most important industrial minerals extracted. Uganda produced 1.6 million tonnes of cement in 2012, the most recent year available from the USGS, and just 2,949 tonnes of iron ore.

If Uganda does enter the iron ore market with much higher production, it will be doing so at a low market cycle for the industrial commodity. On Nov. 25, iron ore prices fell below $70 a tonne for the first time since 2009 as the world's top producers continue to boost supply and Chinese demand for steel weakens.

They picked up last Thursday, however, edging just north of $70, on the back of a seasonal pick-up of demand and tight supply of high-quality lump ore.