Tanzanite firms ‘are not paying us enough tax’ : President Magufuli

Tanzania President John Magufuli
Tanzania President John Magufuli

Tanzania has been losing more than $16.3 million in illegal tanzanite exports, as it emerged that only 25 out of 1,700 mining firms were paying tax, denying it much needed revenue.

Even as talks between the government and Tanzanite One Mining Ltd are going on, President John Magufuli on Friday said the tanzanite trading company has been cheating on the actual value of the precious gemstone for a long time.

The president, who was inaugurating a 24.5km wall surrounding Mirerani tanzanite mine, said yet another fence that will surround another tanzanite-rich area is in the works in order to have full protection of the nation’s resources.

The wall, part of the Tanzanite Tucson Protocol recommendation, had been proposed in 2002.

“The research conducted by Robert Grafen-Greaney, show that Plot C at Mirerani mine has tanzanite deposits of about 1,759 tonnes which as per present capacity of extracting 54,000 tonnes a year, the mine can be productive for the next 27 years,” President Magufuli said.

According to Minister for Minerals Angela Kairuki, the area is going to be restricted to registered miners and other service providers.

The area, whose wall cost $3.5 million, will be under the Tanzania People’s Defence Forces patrol.  It is the same army, under a directive from President Magufuli, that built the a wall around the country’s tanzanite mines to prevent smuggling and better control exports of the precious gems only found in Tanzania.

The wall was to be constructed covering blocks A, B, C and D at the 81.99km square of the Mererani mining site.

“Surveillance cameras will be installed and there will be only one entrance. Even if you swallow tanzanite, it will be detected,” President Magufuli said.

A government report on Tanzanite mining released in September last year recommended that a joint-venture contract between Tanzanite One SA and the State Mining Corp, or Stamico, be done away with as it ceased having any value for the country.

In 2013, Richland Resources and Stamico signed a 10-year agreement to each hold a 50 per cent share of TanzaniteOne.

“It’s a contract that is exploitative, and it’s as if the contract has been prepared by one side without the involvement of Stamico. We recommend an audit of all licenses with the view of issuing them afresh,” the committee chairman Dotto Biteko said.

President Magufuli estimated that in June last year, $90 billion had been lost in tax evasion arose from mining operations since 1998.

It is also around the same time that Tanzania seized diamonds worth nearly $30 million after accusing British company Petra Diamonds of under-estimating their value when trying to export the gems.

The deep blue or royal purple stones are mined in the Mirerani hills near Mount Kilimanjaro.

Ironically, Tanzanite is found solely in Tanzania yet the country is the world’s third largest exporter of the mineral.

Currently, India is the largest exporter of Tanzanite stones peaking at more than $300 million, followed by Kenya at $100 million and Tanzania at $38 million. Globally, the tanzanite trade earns more than $500 million a year.

“Our natural resources are being used to create employment and much needed foreign currency in other countries,” President Magufuli said.