Failure to secure licences slows export of Rwanda’s minerals
Rwanda’s mining sector has been affected by depressed metal prices. PHOTO | FILE
What you need to know:
Phoenix Metals Ltd — a leading tin smelter in Kigali — has failed to secure a conflict-free smelting certificate to enable it to export freely to global markets.
Phoenix Metals Ltd began smelting cassiterite into tin earlier this year, expecting a value increment of approximately 40 per cent from its initial turnover of $1.5 million annually. The smelter has two furnaces that each have a capacity of smelting 300 tonnes per month.
Even though government officials and managers at Phoenix Metal did not give the reasons for the delay in the issuance of the certificate, independent auditors usually require tin smelters to prove the origin of the minerals backed up by proper documentation.
Phoenix Metals Ltd has committed, by being on CFSP Active List, to undergo the audit and enact any corrective action that may be found necessary. The audit on average takes between four and six months.
Phoenix Metals Ltd — a leading tin smelter in Kigali — has failed to secure a conflict-free smelting certificate to enable it to export freely to global markets.
This follows the strict enforcement of the Conflict-Free Sourcing Initiative (CFSI), under the global Conflict-Free Smelter Programme (CFSP) that has made tracing, auditing and certification of minerals compulsory to ensure that they are “conflict-free.”
“This smelter is on the CFSP Active List. The time it takes a smelter to complete an audit cycle varies, and the average time ranges from four to six months; however some smelters take longer. During this time CFSP will not share details about a smelter’s progress, in accordance with provisions in the non-disclosure agreement,” said Tara Holeman, vice president of programme management Quality Electronic Industry Citizenship Coalition.
Membership of the CFSP is open to companies that use or transact in tantalum, tin, tungsten or gold (3TG) and open to associations of companies that use or transact in 3TG.
Phoenix Metals Ltd began smelting cassiterite into tin earlier this year, expecting a value increment of approximately 40 per cent from its initial turnover of $1.5 million annually. The smelter has two furnaces that each have a capacity of smelting 300 tonnes per month.
“The auditors came up with a list of things that need to be fixed, and the company is currently working on those recommendations. There are some issues that need to be improved, in the internal processes as well as our general traceability and certification processes,” said Evode Imena, Rwanda’s State Minister for Mining.
Even though government officials and managers at Phoenix Metal did not give the reasons for the delay in the issuance of the certificate, independent auditors usually require tin smelters to prove the origin of the minerals backed up by proper documentation.
Phoenix Metals Ltd has committed, by being on CFSP Active List, to undergo the audit and enact any corrective action that may be found necessary. The audit on average takes between four and six months. Ms Holeman said the coalition would not comment until the audit is completed.
The company had initially secured a grace period of six months, granting it access to global markets before completing the certification process.
But now without the certificate, Rwanda’s tin ingots could be discriminated against by buyers in Europe and America, despite the country aiming to process its minerals before exporting them.
Last year, tin ingots used to cost $19,000 per tonne while unprocessed cassiterite fetched $10,000 per tonne on the global market.
This means the country is losing a huge amount by exporting unsmelted tin ores.
Mineral exporters also have to incur a $1,500 fee as a purification charge before cassiterite is allowed in the market.
Rwanda has 548 sites with cassiterite (tin ore), wolframite (tungsten ore) and coltan (tantalum ore), the most important minerals mined and traded in the country.
Phoenix Metals, which is a privately owned tin ore processing plant in Karuruma near Kigali, has a capacity to process 2,200 tonnes of tin per year.
The delayed issuance of the certificate is a setback to Rwanda’s mining sector, which is currently feeling the impact of depressed metal prices.
“The sector is struggling. Nobody wants to invest more money in mining as investors are not sure about what the future holds,” said Jean Malic Kalimba, chairman of the Rwanda Mining Association, the industry’s umbrella organisation.
Data from the National Bank of Rwanda shows that in the first half of the year, the country’s exports decreased by 6.2 per cent in value to $275.28 million from $293.61 million in the first half of 2014 as a result of poor performance in the mining sector due to falling international prices.
Mineral export revenue dropped to $64.24 million from $93.45 million during the first half of this year while volumes fell to 3.79 thousand tonnes compared with 5.22 thousands tonnes recorded last year.
