Situated in northern Tanzania is a mining (and perhaps tourism) town called Arusha.
Here one can find a number of boutique stores selling polished gemstones.
However, of all the gemstones mined in areas surrounding Arusha, tanzanite stands out as it was regarded as 1000 times rarer than diamonds.
Tanzanite is mined on the foothills of Mount Kilimanjaro, just above 80 kilometres (51 miles) from Arusha.
Although this gemstone was expected to contribute heavily towards the country’s export receipts, illegal mining and smuggling had been a major hindrance.
Richland Resources, which wholly-owned TanzaniteOne until the government forced it to relinquish half of its stake to the State Mining Corporation (STAMICO), recently exited the country to focus on its operations in Australia.
It agreed to dispose of its stake in the company for $5.1 million to Sky Associates.
“Given the continuing operational uncertainties in relation to the tanzanite mining operations of TML, including the sustained period that it has not been possible to operate profitability, and the need for funding to be provided, the board of directors strongly believe that this deal is in the best interest of the company's shareholders,” said Richland chief executive Bernard Olivier in a statement last November.
Richland Resources bemoaned a “significant” increase in illegal underground mining at its joint venture (JV) tanzanite operation with the State Mining Corporation of Tanzania (Stamico).
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.
It said illegal miners were entering underground areas from neighbouring blocks posing danger to its employees.
Olivier was also once quoted as saying that although 2013 saw the beginning of action by the Tanzanian government against illegal tanzanite miners, a comprehensive solution failed to be implemented and one of their employees was tragically shot dead by armed attackers.
The illegal mining impacted on Richland’s financial position, with the company reporting revenue for the year ended December 31, 2013, of $11.6-million, 29 percent weaker than the previous year’s $16.4-million.
In 2010, Tanzania imposed a moratorium on exports of rough tanzanite exceeding 5 carats or 1 gram to maximise the local benefit related to the gemstone economy as unprocessed tanzanite attracted low price in overseas markets.
However, the country’s energy and minerals minister George Simbachawene admitted at the just ended Arusha Gem Fair that the moratorium had failed to yield results.
Gem dealers, whom the government had expected to start adding value of the tanzanite within the country, stand accused of failing dismally to implement the policy.
“Instead, larger stones of Tanzanite have continued to be smuggled outside the country and found in major gem shows in Tucson, Bangkok and Hong Kong,” said Tanzania’s energy and minerals minister George Simbachawene.
“This practice is unethical in gem industry and denies the government its revenues.”
Tanga Small Scale Miners Association chairperson Olam Mustapha told Rough & Polished on the sidelines of the Arusha Gem Fair that they were opposed to illegal mining and smuggling of gemstones.
“We condone illegal mining and smuggling of gemstones,” he said.
Mustapha singled out the dealers as the culprits as far as smuggling is concerned.
Tanzania’s minerals minister said the government was now working with all stakeholders to come up with the right solution to this problem.
“We are still emphasising that all foreign buyers should buy only clean and authentic tanzanite, which has been exported legally from the country with a certificate of origin,” said Simbachawene.
It appears Tanzania should do more than talking with stakeholders to ensure illegal mining and smuggling are nipped in the bud.
Richland wasn’t convinced with the amount of effort that the government was putting to end illegal mining.
Therefore, punitive measures, not just imposing moratoriums on exports, should be put in place to discourage these twin evils if Tanzania wants to derive maximum benefits from its gemstones.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
