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Kampala - Uganda has signed a deal with a Chinese company to develop a phosphate mine and fertiliser plant as part of a broader agreement that will see the firm spend at least $620m, the country's minerals minister said on Tuesday.
Uganda currently imports all its fertiliser ingredients, making them costly and beyond the reach of most smallholder farmers, who make up most of the agricultural sector.
Peter Lokeris, state minister for minerals and energy, said the Chinese investment would sharply cut the cost of fertiliser in Uganda, widen usage at farms and potentially increase yields of crops including coffee, tea and tobacco.
The Chinese firm, Guangzhou Dongsong Energy Group, will develop the project - which will also include a steel plant - in Tororo district in eastern Uganda, near the country's border with Kenya.
"The main project is a phosphate mine and fertiliser plant," Lokeris told Reuters. "However, since iron ore is an associated mineral of phosphates, a steel mill is a strategic investment."
The fertiliser plant will have the capacity to produce at least 300,000 tonnes of phosphate fertiliser a year, he said, while the steel mill is expected to produce 300 000 tonnes of steel a year.
The minister did not say when the project would be completed.
Inflows of Chinese investment in Uganda have been steadily rising in recent years as China seeks to deepen economic ties with sub-Saharan Africa.
Last year the east African country said it would hand out all major infrastructure contracts to China, to be financed with credit that could be paid off with future oil revenues.
Uganda has stepped up efforts to develop its long-neglected mining sector in the past seven years after geological surveys revealed significant deposits of a range of minerals including iron ore, gold, phosphates, uranium, rare earths, titanium and diamond.
