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Raw Materials: a blessing or a curse?

Ranking

no ranking for this case

Topic: Raw Materials

Policy recommendations

  • The European Union should allow ACP countries to maintain their sovereignty and policy space in relation to the appropriate use of their own natural resources. They should be able to use investment regulations, tariff barriers and export restrictions to promote equitable, local and sustainable economic development.
  • The European Commission through its development policy should stimulate resource-rich developing countries to implement their own industrial policies, to protect their infant industries by using legitimate barriers to trade, and by introducing environmental measures. This should allow resource-rich developing countries to move up the value chain, so that the added value to (semi) processed products will remain in the country of origin and would thus stimulate economic development.
  • Within its development budget the EU should allocate sufficient resources to the building of energy and environmental infrastructure to enable developing countries to stimulate economic development.
  • The EU should use its political and economic power to set clear rules in relation to the extraction of raw materials. Like suggested in the February 2011 RMI update an EU code of conduct for EU companies operating in third countries should be developed and measures should be taken to enforce such a code of conduct.
  • In order to provide for more transparency in the supply chain and to minimize the role of European companies in fuelling conflicts over resources, the EU should implement Country by Country reporting, following the US example of the Dodd Frank Act.
  • Within the EPA negotiations the EU should be more flexible as suggested in the RMI update and make sure developing countries can demonstrate the use of export taxes as a policy tool and therefore keep using them.
  • In all policy initiatives and actions elaborated on the basis of the strategy laid down in the Raw Materials Initiative that affect developing countries, DG Development should be closely involved, and ACP partner countries and civil society organisations should be consulted.

 

 

Personal Story

Augustin Bida is executive secretary of FECOMIRWA, Federation de Cooperatives Minieres au Rwanda. He knows everything about mining in Rwanda, and the conditions in artisanal mines. Mainly peasants, artisanal miners work long hours in poor conditions for low pay.

Rwanda, bordering the Democratic Republic of Congo, is a major exporter of minerals like coltan and tin, which you can find in your cell phone. I visit Augustin Bida in the FECOMIRWA headquarters, where minerals are collected, processed and exported. He tells me about the work of FECOMIRWA and the challenges they face. One of the major issues for FECOMIRWA is a lack of qualified personnel. Augustin: “because we lack adequately trained personnel, tunnels are not always well-constructed using secure building principles, which can result in collapse. We need more technicians to upgrade production and safety.” Lack of qualified personnel is not just an issue of safety, but also when it comes to processing minerals.

Because mined minerals are barely processed, Rwanda and FECOMIRWA generally export a still very raw product. “This costs us a lot of money because we export still raw minerals, our exported tin ore is only 60% tin, which means 40% of the exported product is valueless. We still have to pay transport costs for that however.” When you are talking about exporting around 40 tons of minerals each month, this quickly runs up to a high price. Furthermore, Rwanda loses out on a lot of jobs and economic activity as a result of this. Processing now takes place in the importing countries like China and Hong Kong, instead of in Rwanda, where it can create jobs and revenues to benefit the local economy.
Another point that Augustin addresses is a lack of infrastructure. Many artisanal mines lack Electricity, which means tunnels cannot be lit. Waterpumps can also not be installed, which means miners wash the minerals in the rivers near the mines. “Formally this is not allowed, and it pollutes the River.”

Augustin ends our meeting by showing me around the FECOMIRWA headquarters. He demonstrates where the minerals are crushed, and explains how the ‘tagging’ system works. To prove that the minerals exported by Rwanda are conflict free, all minerals are tagged at the mine site. The tag shows the origin of the mineral. This enables buyers of FECOMIRWA’s minerals to know where their minerals are from. In our Fair Politics research report you can read all about why this is still a flawed system!

Jasper van Teeffelen, Kigali, September 2011