Struggle to rid country of ‘conflict minerals’ label

Monday October 22 2018

Mine

The cost incurred by mining companies is usually trickled down to the low earning artisanal miners who depend on the sector for their livelihood. PHOTO | CYRIL NDEGEYA 

By IVAN R. MUGISHA
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Even as Rwanda endeavours to grow its mineral exports, western buyers are still far from convinced that some of the country’s minerals are not smuggled from its conflict-prone neighbour Democratic Republic of Congo.

Speaking at the General Assembly of the Tantalum-Niobium hosted in Kigali last week, Rwandan officials voiced their frustrations with the mineral traceability scheme, arguing that it is a biased tool that chokes the country’s mining sector.

“We are advocating for a system that implements a cost that is value based, especially for the upstream mining communities. Prices on the mineral commodity market are volatile and when they reduce, the cost of traceability does not come down with it,” said Francis Gatare, chief executive officer of Rwanda Mining Board.

“The cost of traceability hurts mining communities the most since they are the ones absorbing the full cost of traceability. Rather than make it costly, they should reward people in the production of

Pilot scheme

In the meantime, Rwanda is also participating in a pilot scheme for tracing minerals using blockchain technology developed by London-based Circulor, which when fully introduced promises to cut all costs for miners and the information collected will be more valuable to the buyers further down the value chain, who then find it reasonable to pay for the information.

Currently, Circulor is testing the solution with a local mining firm PRG Resources, a company investing in a Tantalum refinery in Rwanda.

“We are watching the testing/piloting process closely and are keen to introduce it to others at the right time,” Mr Gatare said.

The American legislation termed as the Dodd Frank Act requires public companies to disclose the use of tin, tungsten, tantalum and gold emanating from the DRC and nine adjoining countries.

The minerals are referred to as “conflict minerals” because they have been found to provide rebels especially in the eastern part of DR Congo with finances to buy ammunition.

However, the International Conference on the Great Lakes Region (ICGLR), is also lobbying the international community about the region’s concerns though it has yet to yield any results.

Rwanda Today has learnt that UK-based Tin Supply Chain Initiative (iTSCi), which audits and issues the relevant certification as it has a system that monitors minerals from the point of extraction at mine sites to smelters and to where minerals are processed for use is yet to respond positively to the region’s concerns.

Transparency

While iTSCI argues that it incurs high costs and needs the money to keep the programme going, members argue that iTSCI needs to be transparent about their costs and revenues or spread the cost more fairly across the entire value chain and reduce the financial burden, estimated at 95 per cent currently borne by Upstream Mining Companies.

Ten years after implementing the mineral traceability scheme, which shows the origin of its minerals, Rwanda continues to campaign for its removal, largely because it is expensive, with government studies showing that over $5 million is spent on tracing its minerals annually.

Miners in the country also point out that Rwanda is politically and economically peaceful and stable, hence making the traceability scheme ineffectual since it targets to eliminate illicit flow of minerals that fuel violent conflict by financially supporting rebel groups.

“As miners, we pay traceability fees to the government to support independent people who trace and tag minerals, and we also pay traceability fees at the international market; that is a sort of double taxation that is costly,” said Jean Malic Kalima, owner of Wolfram Mining Ltd and president of Rwanda Mining Association.

To verify the origin of one tonne of minerals, miners pay $130 to the government and $170 at the international commodities market. The cost incurred by mining companies is usually trickled down to the low earning artisanal miners who depend on the sector for their livelihood.

“This is an unfair tax that should be removed. There is no war in Rwanda, they know where our minerals come from and we have always asked those who want to come see where our minerals originate from to come for themselves,” Mr Kalima added.

Deaf ears

However, Rwanda’s argument largely falls on deaf ears, as international mineral traders are defiant that the traceability legislation cannot be repealed or replaced, as that would overrule the achievements made in controlling the flow of so-called “conflict minerals.”

Regardless of how costly the traceability scheme may be, the international community is inclined to consider it necessary.

“Mineral traceability and certification means that there are people on the ground to check the minerals independently. This is the best programme available for certification,” said John Crawley, the president of Tantalum Niobium International Study Centre, adding,

“Our industry has seen the benefit of doing independent verified certification. Good traceability is expensive because you need independent people on the ground closer to the source. It is expensive and difficult to comply with but we need to comply with it.”

Rwanda’s chances of having the traceability system removed were boosted last year when American President Donald Trump threatened to suspend the “conflict minerals” Act.

The threats however did not come to fruition and the Dodd Frank Act is still effective.