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Date: April 29, 2024 Mon
Time: 11:38 pm
Time: 11:38 pm
Results for kimberley process
1 results foundAuthor: United Nations Economic Commission for Africa Title: Tracking and Certification of Mineral Output in Southern Africa Summary: The illegal exploitation of minerals and fraudulent manipulation of the volume or the value of exported minerals are enduring challenges for producing countries in Southern Africa. Illegal exploitation of minerals in particular has regularly been linked to instability and conflict in the region. There have been calls for effective mechanisms for regulating the exploitation and movement of the minerals. Regulation of the mining industry in Southern Africa is quite challenging partly because of its history and partly because of its nature. Some of the mineral exploitation occurs in areas with difficult access either because of conflict or because of the nature of the terrain. This makes it difficult to verify any declarations of output issued from such areas. The estimated yield of each mine is based on the scientific analysis of samples collected at various stages of mineral processing. Intimately connected to the prospects for development, the mining industry is also capital intensive and taxing on the personnel and equipment of various stakeholders, including corporate institutions and Governments. This study was conducted against the backdrop of the commitment by SADC member States to gather information on the identity, origin and volume of SADC mineral output in order to develop standardized mechanisms for tracking and certification. This was motivated by the growing conviction within the region that the mineral value chains were being undermined by leakages through neighbouring countries. Gold is said to be illegally imported from the Democratic Republic of the Congo (DRC) into Kenya, Burundi and Uganda and re-exported further. Limited benefit accrues to the DRC as a result of the process. Diamonds are said to be illegally imported from Zimbabwe into Mozambique and South Africa for onward exportation. Similar allegations are heard about illegal tin, coltan and woframite which are exported through Rwanda. Monitoring mineral value streams in the producing countries is complicated by the large informal small-scale mining sector active within them. There are also concerns about such practices as transfer pricing by large-scale mining conglomerates taking advantage of intra-group agreements involving the holding companies based in low tax jurisdictions and the subsidiaries based in the region. Transfer pricing abuses take various forms, including over- or under-invoicing of exports and imports, overloading of costs onto the subsidiary, service contracts and intra-group loans. Through such agreements, the holding companies are able to transfer income and allocate costs in a hidden manner that unfairly favours them. These malpractices reduce revenue which would have accrued to the producing States, thus exacerbating poverty amidst a rich natural resources heritage - the so-called 'paradox of plenty!' (UNECA, 2010). The SADC Mining Protocol was adopted in September 1997 by twelve member States and came into force in February 2000. The SADC Mining Sector Co-coordinating Unit (SMSCU), under the previous SADC structure, promoted adoption of the Mining Protocol. The Protocol recognizes that a 'thriving mining sector can contribute to economic development, alleviation of poverty and the improvement of the standard and quality of life throughout the Region.' In principle, the SADC Protocol seeks to'harmonize national and regional policies, strategies and programmes related to the development and exploitation of mineral resources.' In this spirit, SADC aims to develop and adopt common mineral certification standards, in accordance with internationally acceptable standards, in order to minimize illegal trade in minerals and thereby optimize the benefits to member States. SADC member States intend to 'adopt policies that encourage the exploration for and commercial exploitation of mineral resources by the private sector.' Furthermore, the Protocol seeks to facilitate the development of small-scale mining through, among other initiatives, the establishment of marketing facilities, including exhibitions and mineral exchanges. The study on which this report is based proposes a tracking and certification regime that is motivated by the above tenets. It suggests that the same goals that motivated the formulation and adoption of a tracking and certification system for diamonds in Guyana could be adapted by SADC. The key points are: (a) To provide reliable data to States on producer, exporter and purchaser behaviour; (b) To ensure the payment of the royalties and taxes due to the State; (c) To strengthen the State's oversight function along the mineral value chain; and (d) To prevent the mixing of minerals that are lawfully produced and/or acquired with illicitly produced and/or acquired ones in order to reduce illegal trade in minerals and consequently increase legal revenue flows through legal trade at both the national and subregional levels. The Kimberley Process Certification System (KCPS) was prompted by the concern summed up in (d), specifically that lawful output could and, in several demonstrable instances, had been contaminated by rough diamonds originating from zones of conflict. The study on which this report is based concerns minerals other than diamonds. Since some of them, like emeralds, share many characteristics with diamonds, the study borrows some lessons from the KCPS. The scope of the study determined by the terms of reference, namely: (i) To assess legislation and licensing procedures relating to mining, sale and transportation of minerals to overseas markets and their effectiveness in preventing fraudulent trade in mineral commodities; (ii) To examine national technical reporting requirements for mining and export of SADC mineral products and their efficacy in providing needed data for preventing fraudulent trade in mineral commodities; (iii) To review national, regional and international systems for tracking and certifying mineral products and make proposals for a possible tracking and certification system that would ensure an effective product audit trail of SADC minerals; (iv) To examine export documents and regulations and recommend how they might be adjusted to form part of the certification audit trail; (v) To examine customs conventions and formalities to assess how these might affect the formulation and application of rules of origin for a SADC-wide certificate of origin for SADC mineral products; and (vi) To assess current regional integration efforts in trade and how these might help or hinder the development of a SADC certificate of origin for mineral products. The study considered prevailing legislation and licensing procedures in several countries in order to assess their effectiveness in preventing fraud in the trade of minerals. It found that most national legislation did not prioritize this objective, and could not be considered effective in preventing the most pernicious form of illegality in minerals marketing, namely transfer pricing. It found that a tracking regime on its own is not the appropriate vehicle for policing transfer pricing, and that this could be better done by combining centralization of the marketing of minerals and creating incentives for localized beneficiation of mineral output. Details: Addis Ababa: United Nations Economic Commission for Africa, Subregional Office Southern Africa, 2014. 54p. Source: Internet Resource: Accessed October 20, 2015 at: http://www.uneca.org/sites/default/files/PublicationFiles/tracking-and-certification-of-mineral-output-in-southern-africa.pdf Year: 2014 Country: Africa URL: http://www.uneca.org/sites/default/files/PublicationFiles/tracking-and-certification-of-mineral-output-in-southern-africa.pdf Shelf Number: 137044 Keywords: Crime PreventionIllegal MarketsIllegal TradeKimberley ProcessMetal TheftMineral TheftMiningTheft of Natural Resources |