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Gems in Tanzania, a high-potential mine in Africa

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Gems in Tanzania, a high-potential mine in Africa

Africa’s mining sector is moving towards a more sustainable and secure future. At the same time, mining in Tanzania is attracting interest from the global jewelry market.

Mineral and gemstone resources in Africa

According to the International Monetary Fund (IMF), sub-Saharan Africa holds more than 30 % of the world’s mining reserves. However, the profits generated by the mining sector are not commensurate with this advantage.

Economic impact of mining

The mining sector contributes 10 % to the gross domestic product of the 15 richest countries in sub-Saharan Africa. Increased revenues from artisanal mining are enabling significant economic growth. In Tanzania, for example, the sector contributed more than 7 % of GDP in 2021. In South Africa, it accounted for 475 billion ZAR or 7.56 % of GDP in the same year.

In addition, the mining sector creates employment opportunities, with almost 10 % of production coming from artisanal miners. However, this economic potential is not evenly distributed. Some resource-rich countries remain among the poorest. This underlines the importance of equitable and sustainable management of these resources.

Jobs created by the mining sector can help reduce poverty and stimulate local growth. Mining revenues can be reinvested in the development of local infrastructure, such as schools and hospitals. Taxes and royalties paid by multinational mining companies are an important source of revenue for governments.

Focus on gemstone mining countries in Africa

Africa is a continent rich in mining deposits and gemstones. One of the most active countries is South Africa. South African territory contains a wide variety of minerals, including gold, diamonds, and coal. Botswana, Africa’s leading producer of quality diamonds, accounts for 35 % of the continent’s diamond production. Botswana is the second largest diamond-producing country in the world, with production expected to reach 16 million carats by 2020.

Other countries such as Algeria, Angola, Zimbabwe, and Mozambique are also notable for their mining activities. Zimbabwe, in particular, is the world’s leading diamond producer by value.

What’s more, mining in Africa is not just for men. Zimbaqua in Zimbabwe is the first mine in Africa to be run entirely by women. This is a significant development in a traditionally male-dominated sector.

Tanzania, a land of resources

Like the countries of East Africa, Tanzania is rich in mineral deposits and gems. The country is one of the world’s leading gemstone mining locations.

Minerals mined

Tanzania is Africa’s 8th largest producer of diamonds and boasts the inexhaustible Williamson mine. Located in the north of the country, 100 Km from Lake Victoria, the mine concentrates the country’s diamond production. It is one of the oldest active mines in the world, with an estimated reserve of 38 million carats. But diamonds are not the country’s main attraction. Tanzania’s soil is rich in precious gems such as rubies and other rare materials. The list includes Mahenge spinel, Mozambique garnet, and Tunduru sapphire. Tanzania produces a whole range of gemstones, from sapphires and emeralds to beryl and, of course, tanzanite.

Tanzanite, Tanzania’s blue gold

As the name suggests, Tanzania is the world’s only producer of this gemstone. Tanzanite is 1,000 times rarer than diamonds. Its reserves are estimated at 105 million carats or 21 tons. Its color varies from blue to violet, with a slight change in reflection depending on the angle from which it is viewed.

The cost of tanzanite depends on several factors, including color, size, and quality. However, the cost has never exceeded 1,000 USD per carat. On the world market, the price of a high-quality cut carat generally ranges from 275 USD to 700 USD. Tanzanite mining plays a significant role in the local economy, directly providing 14,000 jobs.

Leading minerals on the international market

With the growing interest in sustainability in line with the Sustainable Development Goals, the demand for ores on the global market is increasing. These critical metal deposits are essential for the production of batteries, electric vehicles, and solar panels.

Cobalt and lithium, in high demand

The development of copper, cobalt, and lithium mines is currently an undeniable resource for the continent. Their prices are rising sharply and the market for them is stimulating investment. For example, the Lobito Corridor expansion project, supported by the US-EU partnership, is benefiting from a 250 million USD investment from the US government. The Lobito Corridor serves Angola, Zambia, and the Democratic Republic of Congo, strategic mining areas, particularly the copper-cobalt belt.

Focus on African diamonds

Although rare, global diamond production is estimated at 142 million carats in 2020, most of which will come from African countries. Apart from Botswana, which tops the list, Africa’s diamond-producing regions are as follows. Angola, or more specifically the northern Lunda region, ranks second with 8.5 million carats in 2020. South Africa, where 1st of Africa’s diamonds are mined, ranks 3rd with production of 7.7 million carats in 2020.

The Democratic Republic of Congo ranks 6th in the world diamond-producing countries with a production of 3.7 million carats. Namibia ranks 7th with an output of 1.9 million carats. At 8th is Lesotho, which produces 1.1 million carats and is notable for its Mothae kimberlite mine. Tanzania is the 10th diamond-producing country, with the production of 260,000 carats. Sierra Leone and the south of the Central African Republic are also major diamond producers.

Challenges of mining in Africa

Despite its mineral wealth, mining in Africa is often associated with environmental problems and questions of legitimacy. For these benefits to be realized, mining needs to be regulated effectively and transparently.

Social ethics and environmental risks

In Tanzania, as elsewhere on the African continent, the prices of minerals and gems are undervalued. In the local market, their cost is disproportionate to the quality and environmental risk of mining. For example, the current price of tanzanite is too low for its rarity and beauty. Gaps in equipment, sizing capacity, and complex regulations are not competitive advantages for local miners. What’s more, existing mines are being deepened to around 750 800 meters, underlining the need for investment to ensure their continued operation.

To increase revenues from the mining sector, governments are implementing policies and regulations on the export of mineral resources. In the case of Tanzanite, the export of rough stones weighing more than 1 gram or the equivalent of 5 carats is prohibited. Despite this, Tanzania does not enjoy local marketing of this gemstone.  The best small stones are still found in Jaipur. In addition, India’s rough reserves are frozen and fluctuate wildly in price.

Illegal trade and high taxes

It is estimated that between 60 % and 70 % of exported Tanzanite is smuggled. To combat this, the Tanzanian government has introduced a certificate of origin to prevent illegal trade. However, this measure remains insufficient due to high taxes, which reach 18 % in Tanzania. A reduction in taxes is therefore needed to encourage gem exports. Of the 15 resource-rich countries in sub-Saharan Africa, only 3 impose low taxes on mining companies. The remaining 6 impose much higher taxes, which can reduce the profitability of local mining activities.

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