Uganda launches gold refinery, amid fears of dirty minerals

February 20, 2017 GMT

KAMPALA, Uganda (AP) — A gold refinery primarily owned by a Belgian investor was launched in Uganda Monday amid concerns about the source of its minerals.

The African Gold Refinery, worth $15 million and the first of its kind in East Africa, has drawn the attention of activists who are concerned that minerals from conflict-prone countries in the region will be among its raw materials.

The refinery has been operating since 2014, but was officially inaugurated Monday at a ceremony attended by Ugandan President Yoweri Museveni in the lakeside town of Entebbe, about 44 kilometers (27 miles) from the capital Kampala.

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

At least some of Uganda’s gold exports are likely to be from Congo and South Sudan, raising concerns about conflict minerals, according to Global Witness, a transparency watchdog based in London.

“Uganda’s gold sector is shrouded in mystery. You have to ask who is really benefiting. The gold trade was worth $200 million to the Ugandan economy last year but there are no official figures on where the gold came from or where it is going,” said George Boden, a campaigner at Global Witness. “This raises serious questions about whether gold that may have funded conflict and human rights abuses in (eastern Congo) and South Sudan could be entering the international supply chain and whether the right taxes are being paid.”

Alain Goetz, African Gold Refinery’s chief executive, did not respond to emailed questions.

Adam Mugume, an executive with Uganda’s central bank who is in charge of research, told an economic forum in Kampala last week that there was concern over the origins of Uganda’s gold exports, although it is known that only small quantities are produced locally by artisanal miners.

Gold is now Uganda’s second leading export commodity, after coffee. The value of gold exports rose to $204 million in the 2015/16 financial year, up from $250,000 in 2013/14, according to government figures.

In 2010 Uganda signed the Lusaka Declaration on Illegal Exploitation of Natural Resources — a deal in which regional countries committed to cleaning up the mineral trade by implementing guidelines on due diligence by the Organization for Economic Co-operation and Development.

Boden, the transparency campaigner, said Uganda lags behind others in the region in implementing laws that would ensure the responsible sourcing of minerals.

“While (Congo) and Rwanda have already brought the OECD guidance into national law to help ensure companies operating in their gold sectors source and trade minerals responsibly, it is alarming that Uganda has not,” he said. “This is all the more important as Uganda’s gold exports have rapidly increased in size and African Gold Refinery is opening its new refinery today.”