By Daily News Reporter/Agencies
PRESIDENT John
Magufuli's major mining reforms have caught attention of world mining
experts,
after small scale miners started posting big successes also in
the sector.
Last week, a
small-scale miner, Saniniu Laizer made headlines globally, when he
became a billionaire overnight, after selling to the government two of
the largest tanzanite rocks ever mined.
According to the
International magazine, 'Fortune' Tanzania has been highlighted as one
of the countries that have made major reforms in the mining sector,
which benefit majority of its citizens.
The magazine writes
that Mr Laizer's wealth from the local artisanal mining represents more
than just an amazing stroke of luck for one man.
The two tanzanite rocks were bought by the government at the cost of 7.7bn/-.
"It represents a
rare victory for an African government for being able to regulate
artisanal mining, a practice that employs more than 40 million people
around the world and implicated in exploitative labour practices, human
rights abuses, and environmental degradation," read part of the article
published in its full length in the magazine.
It added that with
tanzanite, Tanzania has managed to use market mechanisms to channel the
insatiable forces of demand and supply to create a more sustainable and
possibly less damaging industry.
Tanzanite is one of
the world's rarest minerals. It is found in only one tiny patch of the
globe, just five square miles in size, in the Mirerani Hills of northern
Tanzania, the legacy of a violent clash of tectonic plates 585 million
years ago that would also spawn the volcano that is today Mount
Kilimanjaro.
Only first
discovered by a gold prospector in 1967, Diamond Company De Beers
brought the gem to market for use in jewelry the following year. But in
the past decade its popularity has soared, setting off a mining boom in
the Mirerani Hills.
One large-scale
commercial mine, operated by a Bermuda-registered company called
TanzaniteOne Ltd, has an official concession to operate in the area in
partnership with the State Mining Company in the country.
Small-scale mining
is key to the production of many valuable minerals, where 20 per cent of
the world's gold supply, 80 per cent of sapphires, and 20 per cent of
diamonds are mined this way, according to the IGF.
Key metals for
electronic components are also extracted by small-scale mines, which
include 25 per cent of the world's tin and 26 per cent of the supply of
tantalum, used in computer chips and smartphones.
The magazine
illustrated further on the efforts applied by the government to
safeguard its mining, which included building a fence in 2017.
"The fence did
reduce the amount of tanzanite being mined illegally, but it also drove
prices higher and made smuggling tight," it explained.
In 2019, the
government also instituted a new policy, where it decided to expand the
legitimate market for tanzanite as well as gold and other minerals.
It began licensing
small-scale miners and set up official government mineral trading
centres where they could sell their production at fair prices.
Other reforms
involved the establishment of official mineral markets in all areas
close to mining sites, so that small miners could sell their production
directly, without having to rely on sometimes unscrupulous middlemen to
take the minerals to markets in bigger cities, which had been a source
of corruption in the trade.
The markets also
allow the governments to efficiently tax mining production and change
tax rates to miners, who have to pay reduced rates of a 7 per cent
royalty rate on sales.
Previously miners
paid a litany of taxes and fees: 5 per cent withholding tax, plus 18 per
cent value-added tax on mineral sales, plus 7.3 per cent inspection
fees, and a 0.3per cent government service levy on top.
The new, flatter
tax structure is "well designed to curb smuggling," Matthew Salomon, the
senior economist for the Institute of Taxation and Economic Policy,
told trade publication Mining Technology. "The lower tax rate should
provide incentives for small-scale miners to transact through the hub."
That newly minted
tanzanite billionaire, Laizer, shows that Tanzania's efforts to
formalize the informal mining economy is starting to work and he is a
clear testimony of one of the small-scale miners recently licensed by
the governmen
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