In December 2009 the UK All-Party Parliamentary Group for Earth Sciences of the House of Commons organised a meeting to discuss Tanzania. The Political and Economic Implications of Tanzania’s Mineral Resources – including Tanzanite,was presented by Liv Carroll, Senior Geologist at Wardell Armstrong, and Dr David Hargreaves, Director, Fairtrade Gemstones, both in the UK.
Tanzania is a poor country with a history of failing development. Following independence in 1964, the country became a socialist state under Julius Nyerere with endemic proportions of corruption that denied economic relief to the population. The one-party state continued until 1995, with collective agriculture and state-controlled industry under which nearly all foreign investment ceased. Multi-party elections in 1995 reversed these trends and saw an influx of foreign investment led by the mining industry, a sector ignored byprevious governments.
At the meeting Carroll explained that the rocks in the country generally increase in age away from the coast. The Karoo sediments, host to the coal deposits in South Africa, also occur in the south of the country. Coal deposits at Kiwira, near the Malawi border at Mbeya, have been worked since 1988. So far, however, the mining has not met expectations. It has not delivered enoughcoal to fire Tanzania's Tanesco 200MW power station, producing only about half that amount.
Proterozoic gneisses and Archean granite-greenstone terrains abound – they host the country’s gold and precious stone deposits. These high-value commodities are attractive to both large- and small-scale miners as they have a high value-to-weight ratio, ‘a critical feature in a country with poor infrastructure such as Tanzania,’ stated Carroll.
The Proterozoic Usagaran(east) and Ubendian (west) series of metamorphosed gneisses have an importance in the genesis of gemstones. Hargreaves mapped out the distribution ofgemstones occurrences that include rubies, sapphires, diamonds and tanzanite. Artisanal miners can recover these stones, which provide portable cash andsupport a second tier of traders.
Tanzania therefore has a large artisanal mining workforce. Hargreaves illustrated its involvement, and the risks it faces, with tanzanite mining.This calcium aluminium silicate with a trace of vanadium is unique to Tanzaniaand has a blue/purple hue.
Tanzanite One Ltd, registered in Bermuda, operates Block C at Merelani, 70km south of Arusha, in the northwest of the country. It has a partnership with Tiffany & Co, New York, USA, to market the stones and ensure stable prices. However, Blocks A, B and D are operated by artisanal miners that can either flood or starve the market according to local conditions. At times, over 30,000 people have been working at Merelani and unfortunately, in 1998, over 100 were killed when heavy rains flooded the artisanal shafts.
The granite-greenstone terrain that outcrops in central and northern Tanzania is typical of Archean/Proterozoic greenstone belts that account foraround 40% of global gold production. Exploration began in earnest in the late 1980s, only to accelerate with the change in Government incentives that were eventually incorporated into the 1998 Mining Code. Today, there are five major gold mines operated by large international companies such as AngloGold Ashanti(Geita), Barrick (Bulyanhulu, Buzwagi, North Mara and Tulawaka) and Northern Mining Exploration (30% of Tulawaka). Overall, annual gold production in Tanzania is around 50t or 1.6Moz with over 70% coming from these five mines.
Artisanal gold mining is also common. In the Lake Victoria Goldfields there are thousands of artisans recovering what gold they can. Some of the greenstone gold is associated with shear hosted quartz veins that artisans can only workto a certain depth without mechanisation and consequently, where possible, their focus is to recover alluvial and coarse, native gold in veins exposed at surface.
Speaking in code
Not all mining has been welcomed. Barrick’s North Mara mine has suffered serious invasions, including one in December 2008 when heavy equipment was torched by local groups – some US$15m of plant was destroyed. This dissatisfaction has resulted in criticism of the 1998 Mining Code. While mining can offer a kick start to the economy by inward investment, employment and taxation of the mined product, there are many countries who wish to attract similar investment and creating legislation that offers a competitive environment for foreign direct investment is of primary concern. Such codes reflect the underlying financial conditions at the time they were written.
In 1998, the price of metals was low, with gold averaging US$300 per ounce in January, or about one quarter of the price in January this year. This led to slim margins on gold mining and, as a result, the Tanzania code was designed to attract the investment required to begin industrial gold mining.
In the discussion following the presentations, Mark Parker, Managing Director of African Eagle, an UK-incorporated mineral exploration and development company, which is developing the Dutwa nickel laterite project to the east of Lake Victoria, stated, ‘A balance must be struck that allows investment, in particular the training and education of mine workers who take their skills to the workplace, at the same time satisfying national aspirations to share in the wealth that mining creates. Looking at a time snapshot of metalprices will not create a sensible response. Working in Tanzania isexpensive…Creating an improved infrastructure from roads to government administration will improve the investment outlook and may attract small to medium size companies that are conspicuously absent today’.
The Tanzania code is still under revision andarguments continue over whether to raise taxation to benefit the country, or leave it as is to encourage more investment and trickle down jobs.