Elgon Steel factory to start production in April 2027

Mbale, Uganda | URN | Uganda is preparing to establish a major steel manufacturing plant at the Sino-Uganda Mbale Industrial Park, with commercial production expected to begin in April 2027, in a move aimed at increasing local processing of iron ore and reducing dependence on imported steel products.

The proposed Elgon Steel Factory will use iron ore sourced from Kabale District and other parts of Uganda to manufacture finished products, including steel bars, targeting growing demand in domestic, regional and continental markets. Minister of State for Privatisation and Investment Aminah Mukalazi disclosed the development during her visit to China, where she was guest of honour at the official launch of the China-Africa International Trade Industrial Park.

During the engagement, the proprietor of the Sino-Uganda Mbale Industrial Park, Jiang, briefed the minister on the factory project, saying preparations for its establishment were in their final stages. Mukalazi reaffirmed the government’s commitment to supporting the investment, particularly by facilitating access to essential production inputs such as coal, which is not locally available.

She also highlighted government measures intended to improve industrial competitiveness, including a target electricity tariff of US$0.05 per kilowatt-hour, predictable tax and non-tax incentives, and facilitation of access to markets. The project comes against the backdrop of Uganda’s efforts to exploit its substantial iron ore deposits and develop a domestic iron and steel industry capable of supplying the construction and manufacturing sectors.

According to government geological assessments, Uganda has significant iron ore deposits in southwestern districts, particularly Kabale, Kisoro and Kanungu, as well as in Tororo. The Muko area of Kabale alone has been estimated to contain more than 150 million tonnes of iron ore, with an iron content of between 60 and 65 per cent. The government has been pursuing mineral beneficiation policies aimed at discouraging the export of raw minerals and encouraging investors to establish local processing industries.

In October 2026, a separate iron ore mining project in Kabale District reached the groundbreaking stage, with Prime Minister Robinah Nabbanja attending the ceremony. The project, involving Sinoma (Suzhou) and Devki Steel Mills, is intended to provide domestic raw materials for Uganda’s steel industry and reduce dependence on imported iron ore.

The Elgon Steel investment will also add to the industrial activities already taking place at the Sino-Uganda Mbale Industrial Park, which has become one of Uganda’s major manufacturing centres. By August 2026, the industrial park hosted approximately 90 companies, 72 of which were operational, employing about 14,000 people, according to reports by New Vision. However, manufacturers at the park have previously raised concerns about unreliable electricity supply, frequent outages and voltage fluctuations that disrupt production and damage machinery.

During a visit to the industrial park in August, investors reported 15 unplanned power interruptions in July alone. One manufacturer reportedly suffered losses of US$108,000 in a single day because of disruptions to its machinery. The concerns underline the importance of reliable electricity supply to the proposed steel factory, whose production processes are energy-intensive.

The Elgon Steel Factory is expected to contribute to Uganda’s broader industrialisation agenda by transforming locally available mineral resources into finished products, creating opportunities for employment and strengthening the country’s manufacturing base. Its planned commencement of commercial production in April 2027 will, however, depend on the completion of preparations, access to essential production inputs, and the availability of reliable industrial infrastructure.

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