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‘There is no illegal tanzanite mining in Tanzania’

28 august 2017

excl_28082017_xx.jpgRichland Resources, which wholly-owned TanzaniteOne until the Tanzanian government forced it to relinquish half of its stake to the State Mining Corporation (STAMICO), exited the country in 2015 to focus on its operations in Australia.

The formalisation of the JV with Stamico in December 2013 saw Richland receiving assurances that illegal miners in Block C would be removed, allowing reinvestment in the mining infrastructure and consequently improve output.

However, owing to what Richland called “government inaction”, they continued to experience interruptions in most of the undersigned mining areas in the mining licence area.

Before its departure, the company bemoaned a “significant” increase in illegal underground mining at its then joint venture tanzanite operation.

It said illegal miners were entering underground areas from neighbouring blocks posing danger to its employees.

But, local dealers don’t see any problem of illegal tanzanite mining in the country as suggested by Richland.

Begoti Enterprises marketing manager Bahati Mollel told Rough & Polished that Richland’s claims of illegal mining was a ruse and their eventual departure of the country was because they had “harvested” enough.

He also commented on challenges they are facing in marketing cut and polished tanzanite.

Mollel, however, posited that there was need for locals to meet international standards to ensure penetration of international polished markets of their stones.

Below are the excerpts.

As dealers, what sort of gemstones do you mainly trade in?

Tanzanite. We also deal in red garnets and several other minerals.

Where do you source your tanzanite?

We buy from Merelani and sell the stones to different markets.

Which countries do you normally sell your tanzanite?

The best market is Thailand, although Kenyans also buy our stones.

As buyers what sort of challenges are you facing?

Markets, sometimes you can have a lot of production but the market is very low, so we need to have a good market.

What else is hampering your operations?

We lack qualified cutters, but we do have institutions these days where our boys [and girls] are learning how to cut the stones and am sure in the near future we are going to have very good finished products.

The issue of local dealers paying VAT, giving foreign buyers a competitive advantage over you, has been a subject of much controversy in Tanzania (interrupted)

Local buyers from Tanzania pay 18 percent VAT, yet foreign buyers don’t. So we cannot compete with them when it comes to pricing and at the end of the day we lose a lot. It’s something that we don’t understand. A foreigner who is finally using the product is not paying the 18 percent VAT, but a local buyer is paying VAT.

What is the quality of stones that you are getting from the small-scale miners?

We buy rough as they come, we don’t mind the condition, but we prefer good quality. We buy clean or not. However, we will be happy if we get clean ones because that’s where we are going to get a big margin profit.

Middlemen like you are often accused of ripping-off small-scale tanzanite miners. What is your comment on that?

That’s what we call propaganda, because you are not forced to sell, you can sell to anyone. We don’t force you to sell at gunpoint. You put your stones on the table, we weigh them, check the clarity and quality. After that we come to an agreement and if we don’t agree then you can sell to anyone who can give you better prices. It is a very open business.

So in terms of illegal mining, how do you determine that the stones that you are buying were not illegally mined? Bigger mines, for example TanzaniteOne, when it was controlled by Richland Resources complained about the intrusion of its claims by small-scale miners and ended up leaving the country as a result… (interrupted)

Actually they didn’t leave the country because of illegal mining, they left because they had harvested enough and were satisfied with what they had. So they decided to leave.

Let’s come back to my question of illegal mining, how do you determine that the stones that you are buying were not illegally mined?

We don’t have illegal mining. We have small-scale miners and large-scale miners in the country. Tanzanite is tanzanite, the standards are just the same.

So you are saying all the reports of illegal mining that Richland claimed were false?

There is nothing like that, I wish you could go there and see, because there are too many stories about that. They talk about tanzanite in this way: ‘it is being mined by young kids’, etcetera. I wish you could just go there yourself and see. They are just trying to monopolise the market and to brand the stones indicating that this is from Tanzaniteone and it is the original tanzanite and if it doesn’t have this logo then it’s not original.

What is the government doing to help you establish your business, because when you trade you contribute tax to the fiscus?

We have good infrastructure in the mining area, we have new tarmac roads. It was a very rough road and had problems going there, you had to have a 4x4 vehicle. You go there three or four times and the car is broken. Now we have clean tarmacs that are very smooth, at least we have to thank the government for that.

Apart from putting the infrastructure in place, what else have they done?

Actually, the infrastructure is the most important thing so far. They are now working on water.

I understand you have a workshop where you cut and polish gemstones… (interrupted)

Yes, we do, we are currently employing 19 people and they are all from Tanzania.

Is the business flourishing as far as cutting and polishing is concerned? Are you getting enough supply of rough from the small-scale miners?

Well you cannot get enough supply from the small-scale miners all the time, no, it is very difficult. You know you have to go very deep nowadays and the cost is going up. It is changing almost every day; it is getting difficult. We used to get them at 200-250m or 300m, now its 700m and you can even go further to 1200m and others 2000m plus.

Doesn’t that pose danger to the diggers?

Now most of the mines are equipped very well not like in the past. New machines, new technology and the shafts are very good. Its different from what they used to produce before, although its very costly, it’s the only way you can get a very good production.

Do you get a lot of demand for cut and polished stones or rough stones?

When the people come they mostly look for rough claiming that ‘your cuts are not good, they don’t meet the international standards’. They make too many stories so they ask for low prices, but we thank the government for not allowing the rough to go out. You go with your tanzanite and you are told ‘oh this is from Africa, poor cuts and we have enough come and see the drawer, look!’ Then you come back very sad. But what we need to do is to have proper training from outside: Sri Lanka and Thailand

So you have just told me the challenges you have in selling cut and polished stones, what are you doing to ensure you don’t sell your stones for a song?

We are trying to give something that can compete on the market, a finished product with all the qualities. At least 90 percent of what is required out there and the government has brought some trainers from Sri Lanka and other countries. Now they are here, they are going to teach our men and women. I hope we are going to do well in cutting and polishing. We are going to improve.

Any new market that you are targeting?

The Chinese market is coming up, it’s just that they don’t offer good prices.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished


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