In the previously war-ravaged and tightly knit community of Locomo in northern Uganda, the local clan has a saying: “The land belongs to the dead, it is under the care of the living, and it is being held in trust for future generations.”

There is an innate connection between the tiny rural population of some 300 people and the land they work and see around them.

Largely, it is used for subsistence farming and animal husbandry; for decades the wider region was witness to war and atrocities as government forces battled with the infamous Lord’s Resistance Army. In recent times, the residents have also had to face the violence of cattle rustlers from neighbouring districts.

But in a fortuitous twist of fate, the Locomo community now stands to benefit from a “huge” world class discovery of high quality graphite, a mineral that is key to lithium-ion batteries found in smartphones and electric vehicles.

The development of the Orom-Cross project by London-listed company Blencowe Resources Plc is awaiting the final go-ahead from investors. Its CEO Mike Ralston was in Uganda inspecting progress earlier this month and the company, which has just issued a new tranche of shares on London’s Alternative Investment Market stock exchange, boasts that returns will be extremely profitable. If the project proceeds to production, it could generate hundreds of millions of dollars in revenue.

However, although the locals of Locomo are custodians of the land for their ancestors and their future generations, they are not sure they will receive a fair slice of the pie.

They are by far the least powerful of the actors that have now come into play with such a prize up for grabs.

At the State House in Kampala, the project is being watched carefully as President Museveni eyes a potentially large export earner for the country and a handy negotiating card that can be leveraged in negotiations with foreign powers, in particular the competing geo-strategic interests of China and the US.

Those two countries have entered the fray and are desperate to get their hands on graphite to control and spur the clean energy transition away from fossil fuels.

Intriguingly, both countries are involved in the project. In recent weeks and especially since the re-election of Donald Trump, the superpowers have also ramped up the rhetoric on trade wars.

China has threatened to target America’s mineral-critical supply chains, with graphite one of the products high on their list. China controls a major part of the minerals needed for the energy transition.

It is in this context that Blencowe seems to have sided with the West. Its recent pronouncements on X/Twitter suggest that their product is vital for Europe and the US to diversify from reliance on China’s reserves. Invest in us, is the tone of their rallying cries.

The people of Locomo may not know it, but it could soon be at the sharp end of a global whirlwind. For the present, however, the promise of money seems to have created its own divisions in the area.

Although Blencowe agreed to pay significant sums to the local community to boost skills, education, health and general infrastructure, there have been loud murmurings of discontent. Where is the money we were promised, some asked.

In mid-2024, with the help of Finance Uncovered, two Ugandan journalists began to investigate. By carefully examining the company’s annual accounts and other financial statements, the reporters set about tracking some of the promised funds.

And what they then found was not, as some had suspected – without foundation – egregious wrongdoing by the company, but instead wrangling among the so-called representatives of the community itself over who was to get what and when.

The rows, which included a threat by a local council to immediately halt the operations of the company in the district, centre on a private “surface rights agreement” that mining companies often sign with owners of the land in return for digging into the ground.

Blencowe has promised prosperity and several corporate and social responsibility initiatives, but the ordinary people of Locomo worry they may be the ones to lose out.

Rising from the ashes

After decades of war and strife in the last decade, Uganda’s northern regions have begun to recover from the trauma caused by Joseph Kony and the Lord's Resistance Army (LRA).

Approximately 100 km east of the town of Kitgum lies the village of Orom and it was in this isolated part of the world in 2013 that large quantities of graphite were found. The timing couldn’t have been better. As a mineral seen as essential to supporting the transition away from fossil fuels to cleaner energy sources, graphite is particularly valuable in the manufacturing of lithium-ion batteries which are used in devices like smartphones and electric vehicles.

Studies done thus far estimate the Orom-Cross deposit contains as much as 2-3 billion tonnes of graphite flakes, most of which are near the surface and can be mined relatively easily and cheaply. The size of the area being explored is about 20 sq km, affecting 10 villages and about 300 people in Akurumor parish, with most project affected people being with the Locomo village where the bulk of the graphite is found.

According to annual reports and corporate presentations, Blencowe estimates that an investment of $130 million over the next few years will yield the company returns of $482 million over the next decade and a half. Blencowe is in the final stages of a detailed Definitive Feasibility Study that it will use as the basis on which to approach investors for further money.

In the interim, the company attracted interest from both superpowers. The Development Finance Corporation, an arm of the U.S. government, recently provided a $5 million grant towards the studies that will determine whether a final investment decision is made, likely in the New Year. The company also recently tested bulk samples from the mine with Chinese customers, whose government is building the largest renewable energy projects in the world.

For the citizens of Locomo and the surrounding district of Kitgum, these developments have raised hopes that the associated economic benefits will be a step-change in modernising the region and materially improving the lives of its citizens.

Before Finance Uncovered and the two Ugandan journalists started investigating, many of the locals had no idea what kinds of sums had been promised. The reporters then examined Blencowe’s annual accounts for 2023. Under Note 15 for long term creditors, the figure was revealed: some £1.4m in total to be paid in several installments over several years.

This was the surface rights agreement with the Locomo Communal Land Association. It had originally been signed in front of the community and then lodged at the Directorate of Geological Survey and Mines at the Ministry of Energy and Mineral Development in Kampala in May 2018 before Blencowe’s arrival on the scene. The rights at that time were held by Consolidated African Resources (Uganda) Ltd (CARU), a Ugandan company.

The agreement granted CARU a 49-year lease over the prospecting area in return for compensation. Payments became due at the point where the company would require access to different sections of the prospecting area, so the timing of the payments was entirely at the discretion of the company.

The association in turn was responsible for making disbursements to individual community members and administering a student scholarship scheme the company agreed to fund.

While a land valuer was used in the process of drafting the agreement, when asked by reporters no-one could explain how the actual rates were determined. This investigation was therefore unable to assess whether the agreed rates were fair. The issue is also compounded by the fact that the land in this part of the country is predominantly used for subsistence farming.

Blencowe, whose executive chair is Cameron Pearce, an Australian and a founder of the company, acquired CARU and the surface rights agreement in 2020.

After Blencowe's acquisition of CARU, the company and the land association agreed to revise the agreement in September 2022. The amounts to be paid were not altered but the second version shortened the period between payment instalments. Blencowe will now make a further eight equal instalments at defined dates with final payment due in 2035.

The revised agreement requires provision of local education and sensitization of the local communities in Akurumo parish on the opportunities and advantages of mining graphite, including provision of employment priorities to the local capable members of Akurumo parish.

In response to our questions, Blencowe CEO Mike Ralston said considering the size of the mineral area and the fact that the payment structure was based on access, the next payments would not have been due for a long while and this was something both parties considered “unreasonable”. Blencowe was therefore happy to respond to the association’s request.

According to a letter addressed to the land association by lawyers representing Blencowe in 2022, the community will be paid approximately £142,000 (at current exchange rates) at each of the eight instalments left on the agreement, or approximately £1.13 million in total between now and 2035.

Blencowe said two payments had already been made to the community: one before it acquired CARU and the second when the revised agreement was signed in 2022. It firmly maintains it is up to date with the payments, with the next one due when a decision is made to proceed to production.

But when reporters visited the area earlier this year, they found a degree of uncertainty, confusion and anxiety about the payments and the agreement, for example that inflation in Uganda would erode the value of any settlement as time progressed.

Some residents said they had not received money due to them and that there had been delays. They were under the impression this was the fault of the company.

But Ayella Felix, the vice-chair of the land association, admitted there were issues with its own processing of compensation to individual residents.

‘Mismanagement’ of funds

As well as the processing delays, the reporters were told there had been allegations of mismanagement against the land owners association. It seems that the discontent among the community was such that the Resident District Commissioner, an office holder appointed by the President, became involved and instructed processes to be followed, particularly around the handling of funds.

A source familiar with the issues said that the association spent 240 million Ugandan shillings (£51,303) acquiring two tractors for communal use and which were to be rented out on commercial terms. It was agreed that any money generated from doing so would be banked on a monthly basis. However, in 2020, only UGX 1.6 million (£342) was banked and nothing the following year.

It appears that the association’s chair had had UGX 2.3 million (£491) in his custody for the whole year. The Commissioner said such monies should be held by the Treasurer.

The land association and the association chair did not respond to questions we submitted.

Blencowe says it has no say in how the funds are distributed by the land association and indicated it had no intention of trying to influence the decision.

In response to questions over mismanagement of funds at the land owners association, Blencowe stated it would work with any relevant authorities to ensure compensation continues should it be made aware of any improprieties or legal proceedings against the association or any of its members.

District council land grab

The difficulties with the association are not the only problems plaguing community relations in the area.

In December 2023, the Kitgum District Council, under which the village of Locomo sits, moved to suspend operations of Blencowe after councillor Charles Oryem tabled a motion that alleged “numerous irregularities”.

Oryem, in a document read out at a district council meeting, noted that no information or formal documents had been made publicly available to the district council, despite ongoing activities within the explored area.

He listed a host of other gripes including that the agreement reached with the land owners association favoured only one parish. Separately, Oryem believed there has been a lack of transparency around how students would be selected for scholarship scheme and that the area could miss out on wider economic benefits.

Arwai Christopher Obol, the chair of the council, told us his request to access the surface rights agreement had been unsuccessful. He said: “We are now investigating because why is the community not satisfied? It's a question that we need to look into critically, yes. But the chances of having the community being exploited is very very eminent.”

When journalists examined the council’s move, it was not clear on what authority the district could suspend or call for the suspension of operations of a mining company because under Uganda’s Mining and Minerals Act of 2022, the Department of Geological Survey and Mines takes the lead in regulating mining companies.

Blencowe has also not yet formally started mining operations: it is still in the exploration phase, and as such had only paid $100 to the central government for royalties on the bulk samples it had taken from the area.

The company said that it was certainly not aware of any royalties that should have been paid to the district council, and certainly not prior to mining operations commencing. It also pointed out that it only sought an agreement for compensation on the land in one parish, as the entire Orom-Cross prospecting area is located within the parish of Locomo.

Blencowe described the incident as an “interference” created by certain local parties for their own agenda. It said this was quickly shut down by senior Ugandan government authorities once they learned of these activities.

The reaction of the government also underscores the strategic importance of the project to the country. President Museveni imposed a ban on raw exports of minerals in 2015. As part of its development of the Orom-Cross deposit, Blencowe plans to build a processing plant that will purify the graphite to a 99.95% concentrate, thereby uplifting its value and increasing the potential for the operation to generate valuable foreign exchange for Uganda.

The issue of community relations is an important factor in early stage mining operations and companies are adept at highlighting their efforts in their corporate and social responsibility reports.

In its 2023 strategic report, the company reports: “[The company] has agreed to help provide local education and sensitization of the local communities in Akurumo parish on the opportunities and advantages of mining graphite. CARU will give employment priorities to the local capable members of Akurumo parish.

“Since the acquisition of CARU the Group has donated to local causes, such as a scholarship programme and to fight against COVID-19. The Group will continue to donate to the local communities around the region of Uganda in which the Project Licences are located.”

None of the rows within the community are mentioned – although there is no reason why they should be unless they are deemed to have a financial effect on the company.

There is no suggestion of any wrongdoing by Blencowe and it insists it has a good public relations operation in effect in the Locomo area. After visiting the area earlier this month, Mr Ralston told Finance Uncovered: “The Community is supportive and our relationship is strong.”

But as the importance of the mine and its fortunes comes nearer to fruition, it remains to be seen whether it is able to ensure the local residents are treated fairly.

Vincent Kedi, Commissioner of Licensing and Administration at the Directorate of Geological Survey and Mines, said it was important that Blencowe ensures community relations are good and that there is no information gap.

"When you are going to develop a mining project in a community, you must have a social license to operate. The community must understand what you are doing. They should be appreciative," he said. Radio Free Asia