Permanent Secretary for Trade and Commerce, Emmanuel Hategeka has told IM that Rwanda’s mining sector “presents huge potential for investors and for the country’s growth. But it also faces challenges: it is underdeveloped and predominantly made up of artisanal mines; it is subject to false and misleading accusations about involvement in Democratic Republic of Congo; and well-intentioned, but poorly-designed US legislation threatens exports.
“To overcome these, the Rwandan Government has prioritised the sector and has taken bold steps to build trust and confidence in the industry.
“Like neighbouring countries in the Great Lakes region, Rwanda, is blessed with large deposits of commercial minerals such as cassiterite ore, gold, wolframite and coltan. The mineral sector is an important source of export revenue for the country. In 2012, it accounted for 29% of merchandise exports, generating $136 million of direct revenue and a further $5.8 million through re-exports. These were almost entirely comprised of three mineral products: tin, tantalum and tungsten.
“While there is still room for growth, the trend over the last five years has been promising and the value of mineral exports has increased at an average annual rate of 1% since 2008. It means that minerals are now the second largest forex generator after tourism. And Rwanda’s ability to efficiently extract and sell mineral resources is central to the country’s ambition to increase foreign exchange earnings, reduce the trade deficit and become self-reliant.
“Traditionally, Europe has been the main market for Rwanda’s mineral exports, with over 80% of output exported to Europe in three of the last four years. However, last year there was both increased demand from Asia, and a seemingly growing reluctance of European markets to purchase Rwanda’s mineral exports since the introduction of the US Dodd Frank Act.
“The Dodd Frank Act requires manufactures using minerals originating in the DRC or an adjoining country to ‘submit a report to the Commission that includes a description of the measures it took to exercise due diligence on the conflict minerals’ source and chain of custody.’ Compliance began on January 1 2013, with first reports due by May 2014.
“The Act was introduced to address trade in ‘conflict minerals’ from the DRC, but it neglects to address the damaging impact on the mining sector in Rwanda and the wider Great Lakes region, as US and European companies face extra risks and costs when sourcing minerals from the region.
“This is why Rwanda has been working with international partners to put in place traceability and tagging mechanisms that meet the highest global standards. Rwanda has become the first in the Great Lakes Region to introduce mineral tagging under the ITRI/iTSCi regime.
“We are also the first to begin issuing the International Conference on the Great Lakes Region mineral export certificates. As a result, Rwanda can now issue certificates to mineral shipments originating from certified mines. This also allows us to trade minerals internationally while assuring buyers that our mineral exports are conflict free.
“One hundred people now monitor the movement of minerals, while five mine inspectors oversee the system. We are also putting in place electronic scanning, have the largest amount of Analytical Finger Printing data in the world, and are working on establishing tighter border surveillance to curb mineral smugglers. This surveillance has already led to approximately 80 t of smuggled minerals being seized by the Rwandan Police Force.
“Far from allowing the trade of “conflict minerals”, the country is doing everything in its power to stop a trade which has caused loss of livelihoods, irreparable damage to communities and continual conflict and bloodshed in the Eastern DRC. We remain steadfast in our commitment to a transparent and open sector, and stand firmly against the trade in conflict minerals.
“We therefore call for a rethink of how the Dodd Frank Act is implemented. The Act must balance the need to protect against trade in conflict minerals, while avoiding stifling the legitimate growth of the mineral sector across the region. A de facto embargo of mineral exports from all Great Lakes countries risks crippling the region’s mining sector. And the greater risk is that in doing so, this legislation will also hold-back developing economies and exacerbate the challenges associated with extreme poverty.
“While the Rwandan economy is not reliant on mineral trade, the ability to export minerals will be key to the country’s ambition to become a middle-income country by 2020. Mineral exports are a major source of foreign exchange and help shift dependency away from foreign aid to a more sustainable and self-reliant source of income.
“This is why as well trying to build trust in our source of our minerals, we are putting in place measures to build confidence for investors. We have put in place new legislation to strengthen the sector, including the Mining Cadastre, a transparent and accurate national databank of minerals essential to mineral rights management, and a new Mining Law to ensure greater certainty for investors by providing exploration licences, extraction licences and extended mineral title durations.
“Our ambition is clear: we want a mining sector that supports our development, bringing jobs and wealth for our people. To achieve this, we need partners and investment, as we look to turn a nascent industry into a burgeoning sector. Accusations of trade in conflict minerals hang over us, and as a result we are subject to regulation, the unintended consequences of which threaten our development.
“We are doing everything in our power to alleviate these concerns and ensure that the sector is transparent, minerals are traceable and that we meet the highest international standards. And in doing so, we hope that we can build a sector that offers new jobs and opportunities, and raises standards of living for our people.”
