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Mineral Certification could earn Uganda billions from ‘Conflict Minerals’

 

 

 A conflict  mineral can be defined as a mineral mined in an area of armed conflict or one with great potential for armed conflict, and traded either illicitly or openly to finance armed violence and conflict.

The four most commonly mined conflict minerals are Cassiterite (Tin), Wolframite (Tungsten), Coltan (Tantalum) and Gold ore. Combined, they are referred to as the 3TGs. 

Without these minerals, the world as we know it would still be stuck in the medieval days.

Tin as a derivative metal is at the heart of the global construction industry and is often used as solders for joining pipes and circuits, plating of steel, in alloys (brass, pewter, bronze) and in PVCs.

On the other hand, Tantalum powers the global communication and transport industry. It is used in capacitors in most electronics, carbide tools and jet engines with the likes of Boeing and Airbus on the long list of major consumers.


Tungsten is a key ingredient in the manufacturing of metal wires, electronics, electrical contacts and is also used for heating and welding applications; while Gold, apart from being a historical currency, is also key in the making of jewelry, electric plating and wiring. 

To appreciate the value of these minerals even more, one can look at the top 10 largest listed public companies by Forbes in 2016. On that list, you will find Apple and General Electric rubbing shoulders with the likes of Exxon Mobil. This is a big indicator of how much revenue is generated from the trade of these minerals for the upstream exporters and the source countries especially in the Great Lakes Region, where some of the largest deposits in the world are found. 

The high returns from the illicit trade of the 3TGs have funded militias in the Democratic Republic of Congo for decades. Concerned that increasing trade in conflict minerals could fuel more violence in the countries where they are mined, on July 16, 2010, the U.S Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Section 1502 of that Act required the U.S Securities and Exchange Commission (SEC) to put in place rules forcing publicly listed companies to inter alia, disclose the source and origins of their mineral commodities in an effort to ensure that their business and public consumption of their commodities in the U.S was in itself not fueling conflicts in the areas where those minerals are extracted, including the Great Lakes Region.

These measures by the U.S Congress were as a result of the breakdown of rule of law especially in the Great Lakes Region, particularly in the Democratic Republic of Congo. Section 1502 was therefore an opportunity to promote Responsible Mineral Supply Chains and ensure that these high value minerals and the revenues generated from their trade did not end up in the hands of the militias and warlords in the Democratic Republic of Congo and its neighbouring countries, including Uganda.

But even prior to the Dodd Frank Act, the Organisation for Economic Co-operation and Development (OECD) had already taken measures to curb irresponsible sourcing of conflict minerals by consumers in the developed North.

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas is an on-going, proactive and reactive process through which companies ensure that they respect human rights, observe international law and comply with domestic laws including those governing the illicit trade in minerals.

Other closer-to-home initiatives had also been in place by the ICGLR Member States through the Protocol Against Illegal Exploitation of Natural Resources that was established on the 30th November 2006. The main objectives of that Protocol were first, to ensure that mineral commodities leaving ICGLR countries complied with the OECD guidelines; and secondly, to establish the economic value of the commodities being produced by the upstream miners as well as the bottom line in terms of their contribution to their respective Gross Net Product (GNP).

This commitment by the ICGLR Heads of State was once again renewed by 10 Heads of State including President Yoweri Museveni in the Lusaka Declaration of the ICGLR Special Summit to Fight Illegal Exploitation of Natural Resources in the Great Lakes Region.

The Lusaka Summit also approved the development of six tools to curb illegal exploitation of natural resources namely, (1) Regional Certification Mechanism; (2) Harmonization of National Legislation; (3) Regional Database on Mineral Flows, (4) Formalization of the Artisanal Mining Sector; and (5) Promotion of the Extractive lndustry Transparency Initiative (EITI) and (6) Whistle Blowing Mechanism.

Almost seven years since the Lusaka Declaration, only 2 of the 12 ICGLR member states have made progress on the first key tool of establishing a Regional Certification Mechanism (RCM) in their respective countries, namely the Democratic Republic of Congo (DRC) and Rwanda.

While Uganda has received international and U.N Security Council condemnation for the plunder of DRC and is often labelled a transit route for illicit minerals from neighbouring countries including Southern Sudan, little is known about the value of mineral commodities that get smuggled out of our porous borders in the opposite direction.

Our failure to establish a Regional Certification Mechanism in Uganda has not only left us a punching bag at every OECD Conference every year, but denied the country billions of shillings in lost revenue from the smuggled 3Ts across the borders of our Regional Certification Mechanism implementing ICGLR partner states.

At a 3Ts Exporters Conference organized by ICGLR Secretariat and Regional Audit Committee in Nairobi early this year, Ugandan miners and exporters of 3Ts expressed frustration and disappointment in Uganda’s failure to domesticate and embrace the Regional Certification Mechanism.  Without the ICGLR certificate, these exporters lose the capacity to command international prices for their commodities resorting to smuggling of minerals across Ugandan boarders into RCM compliant neighbouring countries. 

As exporters continue to struggle to balance their books, the government of Uganda continues to lose billions of shillings in smuggled 3Ts at a time it should be cashing in from the increased demand for these commodities.

To remove the mining sector from the bottom of our economic table to the forefront of economic recovery, employment generation, youth and women empowerment as well as sustainable development, it requires the government to appreciate the economic potential of the mining sector. The Regional Certification Mechanism can at best enable Uganda plug the plunder of the country’s natural resources. 

The Certification Mechanism has enabled Rwanda to follow every dollar generated from the exploitation of its mineral resources which has enabled it to set a target of US $ 400 million as revenue from mining every year. They are able to do so because they have the systems in place to track their minerals from the source to the market. Uganda too can follow suit.

 

                                                                                                                 Bwesigye Don Biyina

The Author is the Executive Director,

The Africa Centre for Energy and Mineral Policy (ACEMP) and

Chairman of the ICGLR Regional Audit Committee

 

donbbThis email address is being protected from spambots. You need JavaScript enabled to view it.

 

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