Tanzanite is a precious stone said to be a thousand times rare than the rarest diamond. True to that claim, the tanzanite gemstone is mined in only one location in the world; a small area in Simanjiro District in Tanzania.
Given the scarcity of tanzanite you would expect that the single mining country, Tanzania would be stock rich, or at least earn the lion’s share of what the gem is valued.
This is not the case. In fact, the exact opposite is true. Tanzanite trade globally earns USD 500 million a year, but Tanzania’s export revenues are a paltry USD 20.75 million, or equivalent to 4.15 percent of the global export value!
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The overwhelming question is why and more importantly how can the situation be resolved? how can Tanzania increase its earnings from its monopoly mining of tanzanite?
The answer to the root question is; lack of value addition. Tanzania may be the only place tanzanite is mined in the world but it certainly is not a monopoly when it comes to tanzanite’s value addition chain.
Here is another fact to consider. Thousands of miles away from Tanzania across the Indian ocean the unprocessed rough tanzanite employs over 250,000 people in the city of Jaipur, India who deal in processing the uncut stone compared to the 119 people hired to mine the Tanzanite in Siminjiro, according to numbers published in a 2016 study by economists Wilfred Mbowe and Nicas Yabu.Some of the factors that have inhibited the processing of tanzanite in Tanzania is low financing which makes it hard to acquire tanzanite processing technology.
According to a Bank of Tanzania research, unpredictable supply of rough tanzanite, which is constrained by the use of poor mining technology, high competition for the rough tanzanite and small size of recovered stones also reduces the chance of processing the mineral in-country.
Then there is also the lack of skilled labour. Tanzania is simply not investing in the value addition of tanzanite, at least not as much as India is and that is why the latter earns a lot more from a gemstone it does not mine.
Some of the recommendations that came out of the 2016 study was the establishment of a tanzanite cutting and polishing export zone at the Mirelani area in Arusha, Tanzania. The government listened.
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Tanzanite export processing zone
Following the recommendation, the government of Tanzania established the Mirerani Export Processing Zone Authority (EPZA) in 2018. In what turned out to be a worldwide industry discussion, Tanzania’s late President John Magufuli did not just decide to process tanzanite in the country, but reformed the entire mining industry.
The former president ordered the seizure of numerous raw minerals filled containers bound for export and while the unfinished cargo sat at the port awaiting its fate, he pushed through with the reforms.
At that time, the president said Tanzania was losing more than $16.3 million in illegal tanzanite exports through the selling of unprocessed tanzanite but there were other extenuating allegations including tax evasion and undervaluing of the unprocessed minerals.
To start the process, President Magufuli ordered fencing off the entire area where tanzanite is mined – 81.99km square of real estate. The result was that tanzanite revenues shot up by US$ 460,987 from a low of $74,439 that same year.
Then the government established an economic processing zone in the area which now serves as the market trading base of cut tanzanite which is of much higher value than its raw counterpart.
According to local news reports the reforms for tanzanite trade and refining has of date attracted 48 major mineral traders and a total of 105 mineral export permits have been issued for export to major destinations including India, Germany, China, USA, Thailand, UK, Spain and Switzerland.
Tanzania is endowed with vast natural resources. Should the country invest in processing and value addition of its resources, then each sector should see increased revenue and more employment opportunities.
The country is ranked the fourth richest country in the continent in terms of natural resources behind South Africa, Democratic Republic of Congo and Nigeria.
Tanzania’s proven mineral reserves include more than 2,000 tons of gold, 50.9 million carats of diamond, 12.6 million grams of tanzanite, 209 million tons of Nickel, 13.6 million tons of copper, and 880 billion cubic feet of natural gas deposits according to government sources.
According to the research paper released by the BoT, “the mining sector has been growing at about 10.2 percent since 2000 and accounts for about 45 percent of Tanzania’s total merchandise exports. Despite the high growth, the sector’s contribution to GDP is still low at 3.3 percent (in 2011) and absorbs only one percent of the labour force.”
Also Read: African economies must diversify, value add for quick recovery
Lessons from DRC and Zambia
Zambia and DRC form the larger part of the Copper belt, a long stretch of land filled with minerals extending from the Central African Republic through the DRC and into Zambia.
The Copper belt accounts for the world’s largest supply for cobalt, the precious mineral used in the production of lithium-ion batteries, the batteries that power phones, laptops and, electric cars.
The electric car is the car of the future. Since it runs on lithium batteries made from cobalt, it is clean and sustainable and according to a report by the United Nations Conference on Trade and Development (UNCTAD) at least 23 million electric vehicles will be sold over the next decade.
According to the UN report, the market for rechargeable car batteries is currently estimated at $ 7 billion and is only going to grow at an unprecedented rate to reach US$ 58 billion by 2024.
So, rather than continuing to sell raw cobalt, DRC and Zambia have decided to refine and process the cobalt themselves and even build the batteries locally.
The two governments have now signed a memorandum of understanding and formed the Zambia–DRC Battery Council to spearhead the refining of cobalt for electric vehicle batteries.
Owing to the demand of electric cars and other lithium-based batteries, “…global demand for cobalt has tripled since 2011 in the battery sector alone. It further predicts that demand for cobalt will reach 190,000 metric tons by 2026,” reports Benchmark Mineral Intelligence.
The two countries have now positioned themselves to seize this market and rather than supply it with cheap raw materials, they will now feed the market the lucrative finished products.
