From CNN: Uganda, Gold, and the Refinery Business

http://www.cnn.com/2010/WORLD/africa/10/28/uganda.gold/index.html

For years, the only problem with Uganda's multi-million dollar gold export trade was that the vast majority of it came from foreign soil. Now, one Russian businessman is working to change that.

Until now, the majority of the gold exported by Uganda has come primarily from the Democratic Republic of Congo, a relationship heavily criticized by human rights groups who claim smuggled Congo gold is a "conflict mineral" that is funding the deadly civil war in the East African nation.

Yuri Bogoroditsky is the managing director of Victoria Gold Star, owners of the first ever gold refinery in Uganda. He says he wants to make Uganda a legitimate player in the gold industry -- buying the raw material, refining it, and exporting the finished product -- all from his Kampala refinery.

The $1.5 million refinery, opened in May of this year, can process up to 1.2 tons of raw gold per month -- nearly equaling the $35 million of gold Uganda exported in all of 2008, according to a government report.

Deep underground gold reserves were discovered in Uganda last year.
Bogoroditsky says that unlike in the Congo, where gold lies fairly close to the surface, Uganda will need investments in proper mining operations to reap the benefits of its own gold deposits -- investments that are starting to roll in.

"We already have several contracts with official miners here," Bogoroditsky told CNN. "And also we plan to establish the official connection with governments of surrounding East African countries."

Bogoroditsky and his investors chose Uganda's capital city because of its relative stability and its proximity to vast gold resources in nearby countries like Tanzania, Kenya and the Congo.

The refinery has already drawn buyers from the United States, United Kingdom and South Africa in recent months, and Bogoroditsky said he also planned to legally import the precious mineral.

Last month, the Congolese government -- which had previously signed a deal with Bogoroditsky's refinery -- banned gold mining from several eastern provinces due to the conflict there, effectively cutting off a large supply of the raw material to the young refinery.

"What we're doing from our side, we're not dealing with any rebels, we're not dealing with any smugglers of the gold," said Bogoroditsky. "Even the presence of the factory here is a big defense against the cheaters."

Bogoroditsky continues to maintain the legitimacy of his refinery's own product and stand by his goal of legitimizing the gold trade in general for Uganda -- a goal that, if attained, could put the country and the rest of East Africa on the map as a destination for gold buyers around the world.

"This is going to be a good thing for Uganda if transparency, accountability, is the guiding principal," said Ibrahim Kasita, business editor of New Vision newspaper in Kampala.

"Once everyone knows where this gold is coming from, once everyone is involved, once everyone is allowed to participate, I think it's a good business for Uganda, Ugandans and the government," said Kasita.