A US watchdog that monitors the use of proceeds from minerals in funding conflicts has postponed its audit of a tin smelter in Rwanda until next month.
The delay means Rwanda will continue selling raw ore and losing higher forex earnings that the country would have earned from exporting the mineral in value-added form.
The Conflict-Free Smelter Programme was scheduled to audit Phoenix Metals Ltd, the only tin smelter in Rwanda, last month, but did not send its assessors. The audit would have been the second and final one leading to the award of a conflict-free smelter certification.
The auditors have now ordered Phoenix Metals to separate its mineral buying business from its smelting ore in order to help track conflict minerals in the supply chain.
“Phoenix Metals was asked to separate the mineral buying and smelting business before the certification,” said Evode Imena, Rwanda’s State Minister for Mining.
Phoenix Metals invested $10 million in the tin smelter in 2002. The smelter has a capacity to process 15 tonnes of tin daily. Some 10 tonnes of cassiterite (tin ore) produce a tonne of ingots. Rwanda has enough cassiterite deposits to sustain the plant. Artisan miners dominate tin mining in the country.
The company has since the last audit in June 2015 registered a subsidiary to buy minerals directly from the miners. It takes between four and six months for a company to complete the audit cycle. Phoenix Metals has a provisional certificate to trade in minerals.
“We have been test-running the tin smelting plant since July. We have orders to supply the ingots directly to aeroplane manufacturers and electronic device makers but we cannot export the tin ingots without conflict-free smelter certification,” said Jean de Dieu Mutunzi, Phoenix Metals operations manager.
The World Bureau of Metal Statistics forecast shows tin traded at $21,114 in 2012 before picking to $22,000 per tonne in 2013, and dropping to $21,869 per tonne in 2014. The prices fell to their lowest last year at 16,250 per tonne. This year, tin prices are forecast to recover to $17,000 per tonne.
The Rwandan government recently banned middlemen from buying minerals to ensure smelters get enough supplies mostly by artisanal miners.
The audits are part of global initiatives to stop trading in minerals, said to be fuelling conflict in the Great Lakes.
Rwanda, which has outlawed trading in smuggled minerals, is suspected to be a conduit of smuggled minerals from the troubled Democratic Republic of Congo.
Currently, mineral smelters are subjected to audits by the Conflict-Free Sourcing Initiative, under the global Conflict-Free Smelter Programme, which has made tracing, auditing and certification of minerals compulsory to ensure that they are “conflict-free”.
The government is helping miners finance the traceability system at a cost of $6 million in annual fees.
Rwanda reduced the fees from $200 per tonne to $130 a tonne of cassiterite and for wolfram from $300 per tonne to $180 a tonne.
Mineral exporters also have to pay an additional $1,500 per tonne to purify the minerals before they are allowed on the international market. In 2014, unprocessed cassiterite fetched $10,000 per tonne on the global market.
“Even the impurities the overseas smelter remains with, have value which Rwanda is donating freely to overseas smelters,” an industrial player said.
Rwanda’s plan is to add value to all the three minerals (3Ts) mined as cassiterite, tantalum as coltan and tungsten mined as wolframite, in order for the country to gain premium revenues. The 3Ts, which account for 90 per cent of Rwanda’s mineral production are also found in the DRC and other Great Lakes countries.
Rwanda targets to boost mining revenue from the current levels to $400 million by 2017. Earnings from minerals declined from $203 million in 2014 to $117.81 million last year.