Tanzanite producers might have had a sense of relief as the world economy began to show signs of recovery early last year following a battering that dampened the gemstone market.
However, a shocker in the form of a ban on exports of raw tanzanite larger than five carats came mid-last year before they opened their champagne bottles that had been put in the ice for some time waiting for the full convalescence of the gemstone market.
Dar es Salaam said that the move to impose the moratorium was meant to maximise the local benefit related to the gemstone economy as unprocessed tanzanite attracted low price in overseas markets and that the government had been getting only five per cent as royalty from the rare gem.
The U.S was the largest market for the tanzanite even though in recent years it had attracted buyers in Europe, the Middle East and the Far East.
As if the export ban was not enough, Tanzania also said it would not be issuing new mining licenses to foreign companies, adding that mining would be reserved for locals.
Foreigners were now only allowed to establish joint ventures with locals to participate in the industry.
“The purpose behind this move is to develop a cutting and polishing industry in Tanzania itself and boost local employment. The gemstones under purview of the new legislation include diamonds, tanzanite, emeralds, rubies, sapphires, turquoise, topaz and others,” the Tanzanian government said mid last year.
Tanzania Mineral Dealers Association chairman Sammy Mollel was also quoted then by the local media as saying that several lapidaries (gemstone cutting and polishing equipment) had either closed down or were not operating at full capacity, as a result of increased export of rough tanzanite.
He said 400 gemstone cutters across the east African country had over the years left the business due to lack of rough gemstones, adding that the existing facilities could cut and polish up to 1,500 pieces of tanzanite gemstones a day.
"Our capacity will be built fairly quickly once enough rough tanzanite is available in the market," he was quoted as saying.
The ban proved to be a major setback for India’s city of Jaipur where nearly 250,000 people were employed in the cutting and polishing of the raw gem for re-export.
One-third of the tanzanite exported to Jaipur came from Tanzania.
Not only was Jaipur affected but local producers such as TanzaniteOne, which accounted for least 35 per cent of the total tanzanite exports.
TanzaniteOne’s said the large portion of its rough production profile was above five carats.
Faced with such a reality the company announced in June last year that it was “proactively” preparing a comprehensive compliance programme that would include the possibility of a sale of material into the domestic market and the required continuation of exportation of rough material in excess of five carats, whilst building the strategy to fully comply with the government order.
“We are actively working with the Government of Tanzania looking at ways to develop a commercial and sustainable cutting industry in the country,” company chief executive Bernard Olivier said then.
“As one of the longest running mining operations in Tanzania and a regular contributor to the domestic economy we are working closely with the Government to support new industry while ensuring that operational margins are sustained.”
Now, almost a year later, TanzaniteOne reported that it was still negotiating with the Tanzanian government together with other stakeholders in the industry, regarding the implementation of the ban, which came into effect end of 2010.
It said although the negotiations continued it saw it fit to set up its own cutting and polishing facility in the country, a move seen as a way to circumvent the export ban of the raw tanzanite.
The company said it had already completed phase 1 of the development of the cutting and polishing facility located at its Block C tanzanite operation.
The cutting facility was commissioned last December when a total of 216 carats were polished.
TanzaniteOne said it was positive that it would be able to maintain its revenue stream through the continued expansion of sales from its own cutting and polishing facility, agreements with other cutting facilities in Tanzania as well as the sale of material not affected by the ban.
Whatever the outcome of the so-called negotiations tanzanite producers were currently engaged in with Dar es Salaam, the export ban was there to stay.
It appeared there was no better way to survive the tide than setting up of own cutting and polishing facilities as TanzaniteOne had already started.
African countries had been of late clamouring for full benefits of their commodities, hence talk of nationalisation and beneficiation in resource-rich countries such as South Africa, Zimbabwe and Botswana to mention but three.
Mathew Nyaungwa, Rough&Polished, from Namibia
