Africa’s gold rush: By building refineries, countries on the African continent seek to extract more value from their own mineral wealth than by exporting raw commodities. Read the full story by peterhobson15 DG_Lewis
ENTEBBE - In a refinery just outside Uganda’s main airport, workers slip bars of freshly refined gold into clear plastic bags sealed with a sticker of the national flag - black, yellow and red - and the label “Ugandan’s Treasure.”
The refineries, which often win high-level political backing, can be positive because they offer miners and states a way to extract value from their own mineral wealth rather than just exporting raw commodities. But if not properly controlled, they risk adding to problems of smuggling and funding conflict.
By refining gold - in some cases obliging producers and traders to sell their gold to home-grown refineries - states hope to capture value that is being lost. Some new refineries have invested in systems to ensure they process gold from legal and environmentally responsible miners. Just 13 of them – those for which Reuters was able to obtain data – state they can handle more than 1,400 tonnes of gold a year, worth around $70 billion. That means they could treat around twice Africa’s estimated total gold production, and nearly a third of the world’s supply.
The Organisation for Economic Co-operation and Development has developed global sourcing standards against which it recommends refineries are audited. Outside South Africa, no African refineries have yet followed that recommendation, said Louis Marechal, an OECD expert on responsible business conduct at who has traveled widely in Africa consulting with governments and companies on how to regulate and source gold responsibly.
Neil Harby, chief technical officer at the LBMA, said several refineries in countries including Ghana are partnering with LBMA-accredited refineries, which support their efforts to control sources and offer an outlet to the global market by re-refining the gold they produce. In a landscape where new refiners compete for metal to treat, AGR has taken risks with the sourcing of its metal. Last year, it processed gold from Venezuela, where the state-run gold industry has been sanctioned by the United States since 2018 to try to prevent the government from using it to earn hard currency.
Uganda has long been a conduit for gold worth billions of dollars mined in neighboring Democratic Republic of Congo. The trade fueled regional wars, funded rebel fighters and led to United Nations sanctions on traders involved, to try to staunch the flow. AGR was one of four refineries to which Uganda’s tax authority wrote in September. The letter, seen by Reuters, complained of “rampant cases of fraud in the gold trade business including forgery and misrepresentation of customs documents, stamps and signatures.” It did not specify details, and the tax authority declined to elaborate.
By not paying tax and avoiding the banking system, they can pay above market price for the gold and pocket the profit they make on the resale of the goods.
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