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Tanzania to cautiously extend ban on export of rough gemstones from tanzanite

22 may 2017

paul_masanja_xx.jpgTanzania, which imposed a ban on the export of rough tanzanite more than 1 gram to encourage local beneficiation, said it will cautiously extend the moratorium to other precious stones in the country once it has the capacity to cut and polish all gemstones, locally.

Gemstones found in the East African country included tanzanite, ruby, tsavorite, garnet, emerald, sapphire and alexandrite.

Commissioner for minerals Benjamin Mchwampaka told Rough & Polished on the sidelines of the Arusha Gem Fair, which took place early May, that they don’t want to “paralyse” the whole industry by imposing a blanket ban on the export of all rough gemstones when there is no capacity to add value in the country.

He, however, said both government and the private sector had started training locals in cutting and polishing in preparation for the future ban of rough gemstones.

Mchwampaka also said government would consider issues raised by mining companies following its directive to have them cede 30 percent of their equity to the “public” as well as list on the local stock exchange.

He said Dar es Salaam was also engaging Petra Diamonds over its shares in Williamson Diamonds and a decision on whether it should be subjected to the new regulations that would be reached at after discussions.

The Tanzanian government currently owns a 25 percent stake in the diamond mine.

Below are excerpts of the interview.

What is the state of tanzanite mining in the country?

As you know tanzanite is being mined under [three] scenarios: there is what we call large scale mining [medium and small scale mining]. [Under large scale mining] … a company called TanzaniteOne is operating Block C in a joint venture with STAMICO (on behalf of the government) and their shareholding being 50/50. We also have small scale miners who are on Blocks B and D where each Tanzanian interested has a primary mining licence to mine for tanzanite. We also have medium scale miners like Kilimanjaro Mines and Tanzanite Africa operating in the same area. So, I would say tanzanite mining is going on and the miners are observing the rules according to the type of licence they have.

Richland Resources, which previously owned TanzaniteOne constantly complained about illegal mining in Block C. Do you still have cases of illegal mining in the area?

I don’t know if the term illegal mining was appropriate…, but what I can say is that people from neighbouring blocks, mostly B and D found it difficult to know where the boundary was while mining underground. These people are common Tanzanians depending on their level of education they might not have been in a position to use GPS to know that ‘now I have crossed my boundary’. So, they were, I would say, intruding into somebody’s licence unknowingly, or sometimes knowingly. So, the big issue is there is no boundary, underground.

So, what have you done to arrest the problem?

We have been trying to educate them (artisanal miners), to tell them that they should stick to the boundaries of their blocks and not to intrude into somebody’s licence and the [problem] had been going on and off but what we can say right now a team of inspectors is over there working on this issue trying to produce some maps which show the extent of intrusion, if there is any, so that the government can take some measures, which we think will mitigate those kinds of incidences.

In terms of output, how many carats of tanzanite did you produce last year and what is the projected output this year?

Those statistics I don’t have them with me right now.

As far as beneficiation is concerned, what are you doing as a country to add value to your rough gemstones?

In case of tanzanite, maybe as you are aware, in our endeavour to make sure they are being beneficiated in the country, we passed a regulation, which requires tanzanite from 1 gram and above not to be exported in raw form, it has to be cut and polished in the country and we have been adhering to that since 2010, if I am not mistaken. The challenges which we face are that some of the players do feel that the capacity to cut every stone that is 1 gram and above is not yet ready in the country. However, the government is taking some initiative, for example, we have started a programme at the Tanzania Gemological Centre in Arusha, which is currently targeting women. We do a sponsorship through this show, the Arusha Gem Fair, we are having now. There is a fund, which has been set aside to sponsor women to undertake a course for six months in theory and one-month practical training. So it’s a seven-month programme where they receive training in cutting and lapidary issues. Once they graduate we have been liaising with established dealers here in Arusha and have places to absorb those people so that this issue of saying ‘we don’t have cutters’ can gradually be alleviated and apart from that we are also about to put fully-fledged programmes at that institution whereby people will now pay on their own to do lapidary, gemological courses and all that.

All those initiatives are taken to make sure that Tanzanians really know value addition. We are also encouraging the private sector to train people in cutting and polishing. We have such private institutions that are training people here in Arusha so we believe that gradually the local capacity to add value to our stones will build up and when that time comes I think the (ban) won’t be on tanzanite, but on all gemstones produced in the country.

Do you have any set deadline as to when you should extend the ban of rough exports to other gemstones?

We will do a thorough assessment; it will take time. We don’t want to paralyse the whole industry, because if you say we ban the export of all gemstones were there is no capacity to cut and polish them you actually paralyse the industry and you encourage smuggling. So, we are doing it strategically, bit-by-bit to make sure we have enough cutters on the ground who are trained to cut gemstones to the required standards and once we are sure beyond reasonable doubt that that capacity has been reached we will surely extend the ban which have put on tanzanite to other gemstones in the spirit of not exporting jobs and ensure the government gets the true value of each stone through the selling of value added products.

Let’s look at the new regulation that you put in place that requires mining companies to cede 30 percent of their stake to what you call the public. What is the way forward given reports that the move is facing some resistance?

This aspect is concerning companies that got the so-called special mining licences and that is large scale mining licences. Available records right now show that we have 14 of such companies so those are companies that will be required by law to list on the Dar es Salaam Stock Exchange and the regulation has given a timeline of up to 24 August this year to do so. So, yes, companies have shown some concern particularly those, which have the mining development agreement with the government because in that agreement there are some clauses which give them fiscal stability such that when some new regulations are introduced, which may affect their profits they should be protected. So, based on that that’s what they are trying to show concern to say ‘look we have an agreement with the government but the regulation, which came into place requesting companies to list did not exempt us’. So, we have received their complaints, the government is looking at them holistically, we are consulting … we understand listing has some challenges, people have to know how business is traded on the stock exchange and it’s not a culture of Africa so there are a lot of things to be done…educating the people that once the companies are listed they should be ready to buy the shares. That costs money, the liquidity of our people is not the same…government has already started with telecoms and now we are looking at the mining industry so definitely there are things to look at, but government, using its machinery, will work out the most feasible way whereby companies can list and people can buy shares so that the business can continue…

Petra Diamonds has a 75 percent stake in Williamson Diamonds and government owns the remaining 25 percent. So, does this new regulation apply to them or government will just add an additional 5 percent to make it 30 percent?

That has not been decided yet, we are still consulting, we will be meeting with Petra, as our partner, to see how best we can take this issue without affecting both sides…whatever we will agree upon in our initial meeting will be taken to the higher authorities in my ministry and eventually we will reach a consensus.

So, you don’t have a position regarding the matter because some officials were quoted as saying the government stake in Williamson Diamonds won’t stop Petra from offloading 30 percent to the ‘public’?

No, not as yet, because we haven’t discussed that.

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