Uganda is now formally engaging Tanzania to import natural gas that will be used as a reducing agent in the iron and steel industry.
“We are discussing with Tanzania if we can make use of their gas,” Ms Irene Muloni, the Energy minister, told Parliament’s Natural Resources Committee.
“Maybe as we build the pipeline for crude [oil], we could also build a pipeline for gas to come from Tanzania [to] go to the west [of Uganda] to help us set up the iron and steel industry,” she said.
The gas, she said, will be used as a reducing agent.
Uganda, according to Ms Muloni, has more than 300 million tonnes of iron ore in, among other places, Kisoro and Kabale districts in western Uganda.
However, because the iron and steel sector is not as developed as say, Japan’s, Uganda spends much money importing related products from, among other countries, China.
According to the August 2015 issue of the Oil in Uganda magazine, the Uganda was as of 2011 spending about $280m (Shs1 trillion) annually to import iron and steel products.
To check the outflow of hard currency, the government in 2011 banned the export of unprocessed minerals.
In 2012, Daily Monitor reported that President Museveni, while commissioning the expanded Jinja-based Steel Rolling Mills, said there would be no more export of iron ore.
Mr Museveni said then that the ban would contribute to the development of Uganda’s steel industry – since investors would be left with no option but to build steel factories in Uganda – and create jobs for the many unemployed Ugandans.
However, hardly three years down the road, he lifted the ban because, according to the Oil in Uganda magazine, had been misled.
The Energy Ministry had at some point noted that Uganda had ‘foregone’ close to Shs200b it would have earned from foreign exchange inflows.
The phosphates factory in Tororo in eastern Uganda is expected to at some point manufacture steel, a key raw material for making motor vehicle bodies.
Tanzania has 1.1 billion cubic metres of natural gas, according to the CIA World Fact Book, which was last updated in January 2018.