Tanzania Ban on Raw Tanzanite Exports to Boost Income

Tanzania, the world’s only source of tanzanite, will create jobs and increase earnings from the blueish-hued gemstone by banning the export of raw stones, Minerals and Energy Minister William Ngeleja said.

The ban, effective immediately, is part of the Mining Act and is aimed at increasing the contribution of the industry to Tanzania’s economy, he said by mobile phone on June 5. Ngeleja declined to say how much revenue Tanzania earns from Tanzanite sales or how the ban will affect income.

Tanzanite, which is 1,000 times rarer than diamonds, is mined from the world’s only known deposit, at the foot of Mount Kilimanjaro, Africa’s tallest peak. Sales of the stone are under pressure as economic uncertainty dampens demand from jewelers and consumers of luxury goods in the U.S., the largest buyer.

Tanzanite One Ltd., the world’s largest tanzanite miner, is awaiting official notification of the ban from the government, Chairman Ami Mpungwe said by mobile phone yesterday. “Until we get such a clearance, we cannot say anything concrete.”

The company is focused on increasing tanzanite production and is targeting output of 2.2 million carats for 2010, Chief Executive Officer Bernard Olivier said in Tanzanite One’s annual report, published on its website.

Mining provides direct employment for about 14,000 workers in Tanzania, Africa’s third-largest gold producer after South Africa and Ghana. About 42 percent of Tanzanian exports are minerals, mainly gold, as well as diamonds and tanzanite.

Rough Tanzanite

A ban on Tanzanite exports will create additional jobs in the mining industry, said Sammy Mollel, chairman of the Tanzania Mineral Dealers Association.

“Many gemstone cutting and polishing operations have either closed-down or are operating beneath full capacity because of increased exports of rough tanzanite,” he said by mobile phone yesterday. Tanzania has about 400 specialist gemstone cutters, Mollel said.

Tanzania’s parliament passed a law on April 24 that raised royalty payments and gives the government a stake in all future mining projects. As well as Tanzanite One, AngloGold Ashanti Ltd., Africa’s biggest gold producer, and African Barrick Gold Ltd., a unit of the world’s largest producer of the metal, operate mines in Tanzania.

The law change threatens to “significantly” reduce the competitiveness of Tanzania’s mining industry, the nation’s Chamber of Minerals and Energy said on May 3.

Certain provisions in the act, such as the processing of gemstones locally, could “stagnate development” of the industry, Emmanuel Jengo, executive secretary of the chamber, said at the time.

Shares in Tanzanite One were unchanged at 10.25 pence in London, giving the company a market value of 11.6 million pounds ($16.7 million). The stock has fallen 34 percent during the past 12 months.

To contact the reporter on this story: Wilfred Mwakalosi in Dar es Salaam via Johannesburg at pmrichardson@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan in London at ajordan11@bloomberg.net

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