May 17, 2018 / 9:10 AM / 9 days ago

Tanzanite miner gets bill as Tanzania cracks down on lost mineral revenues

NAIROBI, May 17 (Reuters) - Tanzanian gemstone miner Tanzanite One has agreed to pay compensation and overdue taxes to the government after unspecified violations led to losses in public revenues, the president’s office said.

President John Magufuli’s government accuses mining firms of cheating Tanzania out of its fair share of mineral wealth through tax dodging and smuggling, allegations they deny.

Tanzanite One, which claims to be the biggest miner of tanzanite - a blue-violet gemstone found only in the East African nation - acknowledged mistakes but did not disclose what violations had been committed or how much it would pay in compensation.

Africa’s fourth-largest gold producer is overhauling regulations in its mining sector to secure a bigger slice of the pie from its vast mineral resources that also include graphite, diamonds and other rare earth minerals.

The president’s office said Tanzanite One also agreed to adhere to regulations in the 2010 mining laws that only Tanzanians are allowed to mine gemstones unless it was deemed that they did not have the capacity, in which case they can enter into a partnership with foreigners.

The exact amount the company will pay to the government will be agreed on later, but it would pay compensation in instalments starting within the next two weeks, the president’s office said in its statement.

Tanzanite One will ensure that it never makes the same mistakes again and was grateful that the company was able to come to an agreement with the government, Faisal Juma, a director at the miner, was quoted as saying in the president’s office statement.

Last year, a parliamentary committee that investigated tanzanite mining said there was massive smuggling of the gemstone. Its investigation claimed that Tanzania had received only 5.2 percent of revenues from global tanzanite trade over the past decade.

In April, Magufuli inaugurated a wall with security cameras and checkpoints around tanzanite mining concessions in northern Tanzania to control illegal mining and trading activities in the area.

“Forty percent of Tanzanite produced here was being lost, our minerals used to create jobs for other people in other countries,” he said at the time.

Last year, he directed the central bank to buy the precious stone to boost reserves. (Reporting by Omar Mohammed; Editing by Elias Biryabarema and Susan Fenton)

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