Rwanda-Mining-Association-Day2-3TGKigali2013

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Rwanda-Mining-Association-Day2-3TGKigali2013

  1. 1. 6TH OECD MEETING / CONFLICT MINERALS, KIGALI, 13-15 NOV 2013 RMA Chairman’s Statement Theme: Traceability in Rwanda Distinguished Participants, Ladies and Gentlemen, I am very pleased today to talk about traceability in Rwanda, where I will try as much as possible to touch on where we stand today. Over the past few years, one can realistically say that, there has been enormous progress. The impressive progress has been made possible by Rwanda’s good infrastructure, significant mining in 3Ts that dates back to colonial times and the good security. These factors have from the onset facilitated a test bed for traceability and transparency initiatives that have registered tremendous success. Examples include; 1. The activities of the German BGR which actually started before 2010 (that is, before the Dodd-Frank Act came in place, and before the OECD related requirements): The CTC pilot programme and BGR fingerprinting; 2. Rwanda was the first (and is still the only) country with almost complete coverage by iTSCi tagging; 3. Electronic tagging (internal system) was introduced by Rutongo Mines; 4. Rwanda fully embraced the ICGLR Regional Certification Mechanism; and 5. The first ICGLR mineral export certificate has been issued to Rutongo Mines (others will be following soon as the process is ongoing). Ladies and gentlemen, Traceability in detail is not flawless. There have been some related problems for some smaller players. But now the system is implemented to all licensed mining sites. All in all, the program at the moment provides a good coverage. We do not want to downplay the necessity for continuous improvement. One always can become better. However, it is important to highlight that it is not lack of traceability which hampers the further development of Rwandese mining sector and the off take of our mineral production by world-leading western companies, but the collateral damage caused or (to make it less harsh) the unintended consequences imposed by the Dodd-Frank Act and the SEC rules. The Due Diligence and traceability efforts in the Rwandese mining sector make the output of at least the larger mines fully acceptable for smelters under the Conflict Free Smelter Scheme. For example, MSC is a CFS compliant smelter fed by concentrates from Rwanda, covered by due diligence and traceability. So, the 1
  2. 2. problem is not the acceptance by smelters, but acceptance by the customers of the smelters. The OECD guidelines have been developed around the idea of the smelters being the bottleneck – this makes a lot of sense. In contrast, the SEC rules do not distinguish between perfectly audited material treated by a CFS-compliant smelter and dodgy material coming “somewhere” from the covered countries, but rather, it distinguishes merely by origin: As such, a downstream company having anything from the covered countries in the feed, BE IT CERTIFIED CONFLICT FREE or not has to; 1. Submit a Conflict Mineral Report; and 2. Undergo 3rd Party Auditing. Thus, for downstream companies, the covered countries are simply BAD whatsoever. There is nothing like asking the smelters to make sure that the feed does not come from the covered countries. That is the de-facto ban. And I have seen copies of the letter that ask for this outright ban. So, what is the consequence? The Rwandan mining sector, despite all its efforts can essentially only sell to the Asian market – at lower prices than the world market, with less off take security and less opportunity for technical cooperation. This means also that, transparency and the customers in Europe or the US are negatively affected. For example, transparency is lost, when the material is channelled through Asia instead of going through western smelters with direct customer base in the US industry affected by the SEC rules. Again, products of foreign brands can be sold on the US market regardless their possible content in Conflict Minerals. The Rwandan mining industry thus calls upon all the stakeholders in the OECD process to ensure that traceability and Due Diligence provide unhindered access to the markets. The material from the covered countries treated by a smelter audited under the CFS protocol should be accepted as part of conflict free region and not be considered something of lesser quality/ higher risk. This is something, the downstream industry expressly does not want in its supply chain. Ladies and gentlemen, I want to conclude by also calling upon the support from NGOs. It would be good to have support by the NGOs. Sincerely, it cannot and should not be in the interest of the miners and consumers that material validated as Conflict-free cannot find access to the western market and has to go through less transparent supply chains in Asia. 2
  3. 3. I want to end by thanking the organizers and I am optimistic that our cooperation that includes all key stakeholders will continue to make things much better until we reach perfection. Thank you very much for your kind attention! 3

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