India tanzanite sector in crisis

For years, India’s Jaipur city has made fortunes on the tanzanite stone, a precious gemstone mined in Manyara Region, thousands of kilometres from Asia. But that gravy train is tumbling down, thanks to tighter controls by Dar.

Tanzanite is mined in Manyara Region, but exported in raw form through illegal and legal means, creating a multimillion-dollar business empire as well as thousands of jobs in India, which enjoyed a well-established industry to process tanzanite.

By the end of last year, export of cut and polished tanzanite from India’s Jaipur, reached a staggering $82 million (Sh135 billion) annually. This amount is almost equal to what Tanzania earns from the exports of raw tanzanite over the same period.

Globally, tanzanite trade earns $500 million a year, with Tanzania, which is the only country that mines the precious stone recording export revenues of $100 million.

The government, however, hopes to boost earnings from Tanzanite to $250 million this year, thanks to several measures, including a ban on export of raw Tanzanite and introduction of a Certificate of Origin.

The Jaipur gem and jewellery fraternity is facing rough weather as the impasse over the export of the much-in-demand raw tanzanite from Africa continues for over four months now, the Times of India reported yesterday.

The stocks are running dry and there is no hope to replenish it, which is set to hit hard the export of cut and polished tanzanite from India pegged at $82 million yearly, according to a report published by the Times of India yesterday.

“Tanzania’s ban on export of tanzanite weighing over one gram has put scores of stone processing enterprises in the lurch as Jaipur is the biggest processing hub of gemstones, claiming 95 per cent of the total exports of finished gemstones.” India’s biggest English paper reported.

Recently, India’s union minister of state for commerce and industry Dr D Purandeswari asked her counterpart in Tanzania to lift the restriction on export of rough tanzanite gemstones weighing one gram and above, according to the Times of India newspaper.

According to the paper, India’s commerce and industry minister led a delegation of officers at the Third Indian Tanzania Joint Trade Committee Meeting held in the Tanzanian capital Dar es Salaam on September 24-25.

“Jaipur is main cutting and polishing centre for tanzanite in the world. Thousands of artisans are engaged in cutting and polishing of the rough tanzanite gemstones. The government of Tanzania imposed this restriction in December 2010, which has rendered many workers jobless in Jaipur as the supplies of rough stones weighing more than a gram were cut,”  Rajiv Jain, regional chairman, Gem and Jewellery Export Promotion Council was quoted by the Times of India.

In the joint trade committee meeting Purandeswari stated that the decision of the Tanzanian government has led to the scarcity of this gemstone in the global market as the Tanzanian gem cutting and polishing industry has not grown to the level where it can be the sole consumer of the raw gemstone, which earlier used to come to Jaipur for cutting and polishing. 

“If the scarcity of Tanzanite prevails further the global consumers may switch over to some other gemstones, which will be a loss to both countries,” she said.

Tanzanite, a blue gemstone, is said to be 1,000 times rarer than diamond. Bulk of the Rs 1,000-crore export of gemstones from Jaipur consists of tanzanite gemstones brought from Manyara in Tanzania where the gemstones are mined currently. 

The rough gemstones are brought to Jaipur which are then cut and polished by local artisans. The finished products find their way to the US which remains the largest market for tanzanite, second in popularity only to sapphire.

India processes about 95 per cent of the tanzanite produced in Tanzania, the only source for the gemstone. The ban was part of the Mining Act of 2010 and is aimed at increasing the contribution of the industry to Tanzania’s economy.

 The ban on export of unprocessed tanzanite was done to spur development of local processing facilities, thereby boosting the economy and contributing to the revenue.

However, it faced criticism from many dealers who claimed to have none of the equipment required for cutting and polishing of the stones.

“The city has gained proficiency in processing coloured gemstones including rough tanzanite over the past five decades. Of the 1 million people employed by the gemstone processing industry, about 200,000 are in Jaipur and about 30,000 are specialized in finishing of tanzanite. The ban has rendered these artisans jobless,” The Times of India reported.

Even as the Indian government lobbies for the lift of the ban on Tanzanite export the Tanzania’s acting Commissioner for Ally Samaje yesterday told The Citizen that lifting the ban was unlikely as it was now a policy matter. 

“As a ministry and country, we believe value addition would only be attained by encouraging local cutting and polishing of Tanzanite,” he said in an interview.

If anything, Mr Samaje noted that the government had held successful talks with neighbouring Kenya to help tightened the noose even more.

“Over the years, Kenya did not levy any royalty on gemstone exports and dealers from Tanzania took advantage to smuggle Tanzanite there. Now they have agreed to start charging a five percent royalty under a new mining law to be enacted soon,” he said.

Tanzania currently charges a five per cent royalty on the gross value of Tanzanite and has since 2010 banned export of the rare gemstone weighing 1gm and above of uncut and polished stone. 

The move was meant to spur local processing, raise government tax and create jobs for thousands of jobless youth.

In 2011, the country also introduced a demand that all Tanzanite dealers must obtain a certificate of origin when selling the mineral around the World. “This will help us earn the correct value for the blue gemstone only mined in Tanzania,” said Mr Samaje.

The official said the government however had allowed export of other raw gemstones other than Tanzanite, also at a royalty of five per cent, with the value drastically reducing to one per cent of the same but cut gemstones.     

Samaje confirmed that the measures to curb raw exports had caused shortage of Tanzanite in some countries like India and Thailand. He said he was aware that India had already send a letter to the government raising concern over the stagnation of its processing industries.
Source: The Citizen, reported from Dar es Salaam, Tanzania
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