Tanzania said that its ban of rough tanzanite over 5 carats has helped frustrate foreign companies that were relying on supplies from the country.
The country’s acting commissioner for minerals Ally Samaje told Rough & Polished on the sidelines of the Arusha Gem Fair late last month that it was not true, as alleged by dealers, that the ban on rough exports had promoted smuggling.
He also said that the ban was helping the country boost its value-addition activities, which in turn should see tax revenue going north.
Samaje also spoke about diamond mining in the country and the challenges of illegal mining that forced Richland Resources to leave the country.
Below are the excerpts.
Can you shed some light on diamond mining in Tanzania?
As far as diamonds are concerned, we have one large-scale mine in Tanzania, which is located at Shinyanga. The mine (Williamson Diamond Mine) had been there for a long time since the 1940s. It is still operating to date and operated jointly between the government and Petra Diamonds, which is a South African company.
The government has a 25 percent shareholding and Petra 75 percent. The diamonds that are produced there are being sold on auction basis. Once our officials have finished evaluating the diamonds, they are then shipped to Antwerp, Belgium where they conduct a special auction for the diamonds. If anyone wants to buy diamonds produced at the mine, they should know the date when the auction is conducted.
They normally conduct auctions, twice in a month, if they have enough production, but if it goes down then they will have an auction once in a month.
We also have a medium mine called El-Hillal Minerals, it is also producing diamonds, but not as much as Williamson does. They don't sell their diamonds like Petra Diamonds, although they are looking at a similar arrangement. They can sell their diamonds to anyone interested in buying their products after government officials have valued the stones.
We also now have diamonds coming from small-scale miners. We have three diamond producing areas in Tanzania and these are Nyamware, in Kahama District, Maganzo in Kishapu District and Mabuki in Misungwi District.
As you have seen at this fair there is a group of small-scale miners who have displayed diamonds from Maganzo and if you want to buy diamonds from them you have to go to those areas.
Your government is conducting an auction of confiscated diamonds, gold, tanzanite and other gemstones, which you said is the largest ever. Doesn't that worry you in terms of illegal mining?
By confiscating minerals, it is one of the initiatives that we have undertaken to try and curb smuggling because people should be afraid of doing so. Apart from forfeiting we are also arresting the perpetrators, so they should be afraid of that (smuggling).
Your previous partner at TanzaniteOne, Richland Resources, left the country to focus on mining in Australia due to illegal mining that was taking place within their blocks. They alleged that government failed to provide security as was agreed on. What are you doing to curb illegal mining?
Well, it’s just to summon those who trespass and cross the border into other blocks. Normally we do survey, we look at who has crossed the border and make sure they go back to where they are supposed to work. The problem is that if you do that, as they mine after a number of days, they cross again and some are in the areas that the other miner hasn't reached and you can’t be in a position to know where they are. This one is a long story that I can’t explain during this interview as it has a historical background. Even the way the licences were given to small-scale miners within their blocks has a historical background that [gave birth] to those problems.
Can you briefly tell us the historical background you referred to?
They were given 50 x 50 metres blocks and within that 50 metres block maybe you have three guys mining there and when we try to convince them 'that guys can you make some sort of joint venture and mine under one company', they say 'no, me I can’t do so'. That has complicated the issue, so not only did the small-scale miners cross borders into the TanzaniteOne block, they even do so among themselves. So we say because you were mining in that way, which caused government to allocate plots in that way, get restricted within your block. Don't cross the border to get into other blocks. The other blocks are well planned and mechanised, so if there are illegal workings they alter their plans. So to them they have got even some committee which normally resolves disputes. Let them continue with that, but they should not cross into blocks that are not theirs.
The government introduced a ban on exports of tanzanite over 5 carats (interrupted)…
The ban is still there, tanzanite more than 1 gram cannot be exported uncut and you can only be allowed to export during a gem fair like this one (Arusha Gem Fair, which took place late April). So the ban continues soon after the fair and normally the law provides that the commissioner has to give a notification that any minerals bought here, not in any other place, will be exported, despite the ban.
So what has Tanzania benefited from the ban?
The ban intends to make sure that we promote value-addition activities if you have seen the booths, there are a lot of cut gemstones, so we want to increase those activities. The aim is to make sure that as we achieve on that side we have more employment and we have minerals added value, which means we are selling at higher value and more taxes will be paid. Even those centres that are cutting and polishing will be paying taxes so in that way we will be expected to benefit much and those who are engaged in such kind of activities. If someone has skills to cut and polish he/she can establish his or her own centre because the cutting and polishing machines are not that expensive, they range between $2000 and $5000, so even a family can afford that. Not only that we have established a tanzanite gemological centre, it has been equipped with all the required machinery. We will be going at the level of jewellery making... and we are also trying to affiliate it with the Thailand Gemological Institute.
Some dealers are saying that the ban is promoting smuggling than curbing it. What is your take on that?
As you might have interacted with some of the people, they are saying this ban has accelerated the smuggling of gemstones, but we know the reason behind that, because by us banning we are chocking the other industry outside the country. So definitely we have to fight that pressure because some of them who were being used by those people are well established and were used to get raw tanzanite from our country, so always, they have to fight to make sure that they get raw materials.
Some local miners questioned why are you charging them royalties. What is your response to that?
The royalties are here to stay and won’t change. That one is uniform across the board. Royalty is charged to someone who exports minerals, he/she has been privileged to export minerals and should give something in return so that those that are not privileged can benefit out of that. So royalty is the simplest way for countries like us where people don't pay taxes willingly. Royalty is the only revenue that we get without putting much effort to monitor it.
What is your mining royalty percentage?
It’s 5 percent on raw gemstones and 1 percent on cut gemstones.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
