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Rwanda asks for more time to tag minerals

Sunday March 06 2011
gypsum

Minerals have become one of Rwanda’s major export earners taking over from coffee. Photo/FILE

Uncertainty has gripped Rwanda’s lucrative mining sector ahead of the expiry of next month’s deadline for tagging all mineral exports.

The Rwanda Geology and Mines Authority (OGMR), has written to the Electronics Industry Citizenship Coalition (EICC) extractives Work Group and the Global e-Sustainability Initiative (GeSI) extractive work group requesting for a one year delay for tagging all its mineral exports, a bid that is yet to be approved.

On July 20, 2010, the US President passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, requiring companies to disclose whether they use minerals from DRC or neighbouring countries within nine months.

A key provision in the law requires companies listed on the New York Stock Exchange and whose products contain cassiterite (tin ore), coltan, wolframite and gold to disclose to the Securities Exchange Commission whether they are sourcing the minerals from DRC or adjoining countries.

If they are, companies need to prove conclusively that the minerals are not coming from rebel-controlled areas in the DRC within nine months.

Rwanda’s key minerals cassiterite, wolframite, coltan and gold all fall under the above category.

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Rwanda officials said last week the country was unlikely to beat the April 1, 2011 deadline.

Deadly dead

Analysts said this would not only affect the balance of payments but also the loss of tax revenue.

Rwanda’s mining sector output grew by 34 per cent in 2010 due to increased export volumes of minerals generating $96.4 million, effectively making the mining sector the top revenue earner.

Comparatively, coffee fetched $56.1 million while tea brought home $55.7 million.

Other the key minerals from Rwanda include tin, tungsten and tantalum.

The letter, seen by The EastAfrican states that while tagging is already being done in the country, the process will not be complete especially in small artisanal mining areas before the deadline.

“The Rwandan mineral industry has more than 30,000 small miners working on remote sites. We will be unable to include all such mines within the new system until sometime next year,” wrote Dr. Michael Biryabarema, Director General of OGMR .

Since December 2010, Rwanda is implementing the ITRI Tin Supply Chain Initiative (iTSCi), an internationally recognized tagging and sealing system to facilitate the process.

In a parallel interview, Dr Biryabarema said effecting the deadline is likely to choke the country’s budding mining industry, a major export contributor to the country’s gross domestic product and a source of employment.

Cassiterite earned the country $42.2 million in foreign exchange, Coltan $18.5 million and wolfram $7.1 million.

Dr Biryabarema said that while the ‘conflict minerals’ legislation is not intended to impose a trade embargo, this may be the outcome if no feasible solution is found.

He argued that more time is required for companies to put the mineral tracing processes in place, realistically till the end of 2012.

“If (the law) it is about good practice that is what we are there for. The only concern is about the timing and more importantly our competitors on the international market who may hide behind this legislation and lobby,” he said.

“Their production costs are much higher than ours so in that way we are competing. If production from central Africa is closed, then they can control the world pricing; they should not lobby too much to cause an embargo so that they can open their own mines,” he explained.

If the law takes effect this year, companies sourcing minerals must submit an annual report to the Securities Exchange Commission detailing measures taken to exercise due diligence in their supply chain.

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