Ugandan Government Terminates Chinese Mining Contract Following Corruption Scandal
On June 20, 2017, Ugandan President Museveni terminated a 25-year concession contract awarded in 2014 to Chinese mining company, Tibet Hima Mining Co. Ltd. (a Ugandan registered subsidiary of Chinese firm, Tibet Automobile China). The contract was withdrawn following allegations against the Chinese company claiming that it bribed several senior officials in the Ugandan government to influence the bidding process for the project.
Despite references from senior Chinese government officials about the “technical incompetency” of the firm, Tibet Hima Mining Co. won the 25-year concession contract for an estimated $167.1 million dollars to own and operate in the Kilembes copper mines in Uganda. Per the agreement, Tibet Hima was poised to extract 5 million tons of copper from the bloc. Sources indicate, however, that during the 2014 bidding process, Tibet Hima disbursed approximately $175 million in kickbacks (a larger sum than the contract amount) to various senior officials in the government within the ministries of Finance and Energy as well as the Attorney General’s Chambers. Although a due diligence review of the company’s capabilities were conducted by a Uganda official, which revealed that it was an automobile manufacturer, the Ugandan Investment Authority proceeded with the deal.
Since the inception of the contract, Tibet Hima has also been accused of failing to meet several stipulated terms. These include falsely claiming associations and partnership with Shanghai Baosteel Group and Chinalco Luoyang Copper and failing to pay the first annual concession fee of $1.5 million. The company also failed to provide an exploration guarantee to the Ugandan government as mandated in the contract.