Uganda launches its first gold refinery amid fears it will attract conflict minerals

Rights activists are concerned that the refinery may destabilised the region further by creating a ready market for conflict minerals.

 

The $15m worth African Gold Refinery (AGR), which has been in operation since 2014, was officially inaugurated on Monday at a ceremony attended by Ugandan President Yoweri Museveni.

The first of its kind gold refinery in East Africa is primarily owned by a Belgian investor, it will use raw gold from war-torn South Sudan and conflict-ridden eastern Democratic Republic of Congo, raising concerns about conflict minerals.

"Gold which is used to finance conflict might be finding its way into supply chains," George Boden, an activist at London-based rights group Global Witness warned.

The refinery has however dismissed fears of conflict minerals landing on its supply line.

"It's a very high compliance refinery. We do due diligence for every customer who comes in," Alain Goetz, the chief executive officer of Africa Gold Refinery (AGR), told Reuters.

Goetz sought to reassure that AGR would carefully select its customers, comply with the law and label its gold accordingly.

"Of course we want to sell to American companies, we will sell to American companies. With the compliance and the third party auditing, we'll comply with all the regulations including labeling," Goetz said.

The United States passed the Dodd-Frank Act in 2010, which requires companies to disclose whether their products contain minerals from conflict-ridden parts of Africa. The law aimed to hinder armed groups from exploiting minerals to finance conflicts.

The value of gold exports from Uganda has been rising in recent years, though not much is mined locally.

Between mid-2009 and mid-2015, Uganda's annual gold exports fluctuated between near zero to just under $40 million, according to central bank data.

The refinery, which is based in Entebbe, south of the capital Kampala, will process raw gold from the region as Uganda has only small mines and no commercial mine.

Uganda has in recent years opened up its mining sector in a bid to attract investors.

President Yoweri Museveni, while presiding over the launch said his government would abolish royalty taxes in order to remove hindrances to investment in the minerals sector.

Uganda has mineral deposits such gold, base metals, uranium, rare earths, iron, titanium, vermiculite, diamond in various locations.

The factory has an initial output capacity of 300 kilogrammes of pure gold per week, and the ability to increase that to 500 kilograms eventually. Goetz said the gold will be used for coins and jewellery.

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