How to Sell Gemstones

2008-08-31 09:07:51
By Staff Writer

As massive poverty continues to rock the majority of Tanzanians, the latest data reveal that Tanzania`s wealth in terms of the top five metals out of eleven provable mineral deposits amounting to millions of tonnes.

It is hard to believe it, but that is the reality in a country where 38million plus population lives in abject poverty, below a dollar per day, while 89percent of the total population survive on a single meal per day.

According to a geological survey conducted last year by the ministry of energy and minerals, Tanzania has huge reserves in eleven key minerals which include gold, Nickel, Tanzanite, Diamonds, copper, Iron ore, coal, Limestone, soda ash, gypsum and phosphate.

The five key minerals and their provable amounts in brackets is Gold (2,222tones), Nickel (209million tones), Diamonds (Carat 50.9million), Copper (13.65million tones), and Iron ore (103million tones).

However since this was just a geological survey undertaken by experts last year, its actual result is approximated to be accurate by up to 70 percent.

So far, only three types of minerals - gold, diamonds, Tanzanite - are being fully mined by multinational companies which at the end of the day take 97percent, leaving only peanut to the original Tanzanian owners.

If well managed through sound, people-centered mining policies, the mining sector can catapult Tanzanians to the proverbial promised land in decades and generations to come.

Comparing these huge deposits and the actual situation of poverty in the country, the message that comes across one`s mind is that Tanzania is in what experts describe as `resource curse`.

The term `resource curse` refers to the observation that nations with rich endowments of natural resources (oil, metals, timber) often dramatically under-perform economically relative to what one would expect.

Common sense and simple economics suggest that countries blessed with an abundance of natural resources should live long and prosper.

Yet over many years, it has been observed that nations rich in oil, gas, or mineral resources have been disadvantaged in the drive for economic progress.

Why are we poor?

Perhaps the biggest question that begs an urgent answer is; why are we so poor despite having all these huge minerals deposits?

It is a question that policy makers and politicians have been avoiding to seek answers for.

Tanzania like many other African countries is highly blessed with rich natural resources, but its people are swimming in the deep sea of massive poverty.

But the appalling truth is that instead of financing people`s development, Africa's huge mineral resources were used to fund the brutal civil wars that ravaged millions of people during the past four decades.

Today in Africa only a few countries like Botswana, Ghana and South Africa have managed to use their natural resources, especially minerals, to facilitate development and welfare to their people.

This example is vividly manifested in the Democratic Republic of Congo, Sierra Leone, Ivory Coast, Nigeria, Sudan and Angola whereby masters of the wars used natural resources to finance their deadly power struggle.

However in Tanzania, there wasn't any civil war apart from the role played by the founding President, (the late) Dr Julius Nyerere, in liberating Southern African countries during the nationalist struggle.

While it is an undeniable truth that the move to allow the private sector to participate in the mining industry was brilliant one, the truth is that due to poor policies introduced by the third phase government, the whole idea has become a disaster to Tanzanians.

This is well echoed in the lucrative mining industry which has been mainly benefiting multinational companies, while paying the government a small slice of the cake.

Last year, for instance, the Minister for Energy and Minerals, William Ngeleja, told the parliament that during the period between 2001 and 2006, Tanzania produced gold worth $2.6 billion (Tshs3.38 trillion), but the government earned only $78 million.

In simple arithmetic, this is just 3 percent of the total revenues generated from thousands of tonnes of gold produced in the Lake Victoria gold belt. It also shows that the government earned an average of $13 million annually during that period from the multi-billion industry whose real investments currently is valued at $2.5 billion.

According to the available statistics from the mining industry, from June 2000 to December 2006, the two biggest gold mines in the country produced a total of 5,686,710 ounces of gold, which at the current gold price of $600 per ounce is valued at Tshs 4.3 trillion ($ 3.3 billion), but what the nation earned is frightening and a shame.

While mineral production has increased in Tanzania in the past few years with export per year estimated to be nearly $900 million (Tshs1.17 trillion), the contribution of the mining sector to the Gross Domestic Product (GDP) remains very minimal, accounting to 3 percent.

According to the National Economic Survey report released in 2006, the growth rate of mining and quarrying sector increased from 15.4 percent in 2004 to 15.7 percent in 2005, whereby the increment was attributed to new investments in Tulawaka gold mines in Biharamulo District, Kagera Region.

The report further states that, the contribution of the sector to GDP, which is the total value of goods and services produced in a country during a year, increased from 3.2 percent in 2004 to 3.5 percent in 2007.

We would like to hear from you about this story; what you think the problem is, and what needs to be done.

* SOURCE: Sunday Observer