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Our gold sourcing process is transparent - African Refinery
Top: President Museveni (with hat) looks at gold samples during the launch of the African Gold Refinery in Entebbe in February. FILE PHOTO
What you need to know:
In February, the African Gold Refinery (AGR) was launched in Uganda with the aim of adding value to both Ugandan gold and that from elsewhere in the region. Since the refinery started operating in Uganda, gold exports have surged. In 2016, gold exports were more than $300m, pushing Uganda’s total exports to a 1 per cent increment. One of the concerns around the gold export is where it was sourced. AGR has been under the scrutiny for this reason. Mark Muhumuza talked to Mr Alain Goetz, the chief executive officer, AGR on their processes. Below are the excerpts:
Uganda is not yet a large gold producer compared to Tanzania or Democratic Republic of Congo. What percentage of the gold you refine comes from Uganda? What is its value?
African Gold Refinery (AGR) will only be able to make a detailed analysis of its market supply by the end of this calendar year – 2017.
Fortunately, our supply is from licensed traders hence the source can always be ascertained going backwards. We are currently assessing their acceptance and checking procedures.
Of the gold Uganda exported valued at $300m (Shs1.08 trillion) in 2016, what was AGR’s contribution to it and why are we able to see such high export figures?
AGR explicitly declared that roughly $200m (Shs723b) is a direct consequence of AGR.
However, AGR’s customers remain the owners of that exported gold. Refining, up to logistics was the only participation of AGR in the process.
Once again, I would like to stress that AGR is not a gold buyer or seller but a refiner. AGR is providing four types of services: Refining, melting, assaying and logistics.
Your readers need to note that the dramatic increase in export figures recently is a direct result of the high levels of transparency AGR adheres to where by every single gram of gold is now being declared to the authorities with completed legal export documentation.
AGR maintains a zero tolerance to smuggling so all the figures of the refined gold are now being seen.
Take us through your procedure of certification when sourcing for the gold.
Again, I will emphasise that AGR does not source, trade, purchase or sell gold. AGR is only a refiner of the gold, while also providing complimentary services to its customers like melting, assaying and logistics.
Importantly, prior to accepting gold from anyone seeking our refining services, our Due Diligence Management System plays an essential role in ensuring we are dealing with clean gold.
Before any customer gets an account with us, they are obliged to comply with AGR’s stringent initial requirements that are well spelt-out on our company website.
It’s only after AGR’s Compliance Department gives its approval that a potential AGR client is allowed to proceed to the next phase – the traceability system.
Global Witness has raised concerns about the source of gold you refine. They note that it could be coming from the DRC, and that it is conflict gold. What do you say about their allegations?
As explained in detail above AGR’s due diligence on the source of gold for every potential customer seeking our refining service is very thorough. Verification of certification before any gold is accepted is paramount.
Importantly, Uganda’s mining sector and law enforcement officials are extremely against gold smuggling as well.
Understandably, Uganda’s gold export statistics have grown whereas there are no import statistics on where the gold comes from. For the last two years, AGR has been refining. Where has it been sourcing gold from?
Like noted earlier, AGR will only be able to make a detailed analysis of its market supply by the end of this calendar year – 2017.
Gold export figures recently shot up because we at AGR are adhering to strict transparency policies where by every single gram of gold is now being declared to the authorities with completed legal export documentation.
AGR maintains a zero tolerance to smuggling so all the figures of the refined gold are now being seen.
How are you able to defend the source of gold to take out any allegations that you are refining smuggled gold?
AGR reiterates that it is committed to responsible sourcing of gold, with utmost transparency, quantitative and qualitative measures on supply chains of minerals whilst ensuring adherence to human rights, health, safety and environmental protection.
The Dodd Frank Act in the US maybe repealed by President Donald Trump. It would take away measures to ensure conflict minerals don’t end up on the world market. What is your take on the repealing of the law? Has this law been useful or not?
Over the years, experts have adduced that the Dodd-Frank Act is only benefiting the Western audit and compliance industry, which carry out the certification business. In general, this law is anti-African and anti-American business.
Actually, I strongly believe our region will benefit a lot once this law is suspended by President Trump.
What are benefits for Uganda considering it is not considered a gold producer?
Also, considering the tax exemptions you would like to get and are getting, how does Uganda benefit?
At the launch of AGR on February 20, President Museveni, said: “I have removed the 1 per cent import tax on gold and the 5 per cent royalty tax on gold miners from Mubende, Busia, Buhweju and wherever gold is mined in Uganda, they should bring their gold to AGR.”
All AGR customers are paying 18 per cent VAT from the total service charges.
Shs1.8b in taxes has been by AGR to URA Direct employment of 75 Ugandan staff at all levels of the business (broadly, there is indirect employment to many other Ugandans since our staff are spending money daily, on food, transport, fuel and so on, hence they are paying VAT at the same time.
Thus, the more employment that AGR can offer, the more benefits to the Ugandan economy.
There is a:Vital transfer of skills and technology.
Major inward investment of more than $23m (Shs83.1b).
Consistency and expansion of its corporate social responsibility programme.
Those are just few, amongst numerous, benefits to the country and its inhabitants.
AGR continues to examine other ways in which it can contribute to the social welfare of the community within which it operates.
