By Hamza Kondo < Small-scale miners in Merelani worry that the Tanzanian people are not benefitting enough from tanzanite mining operations there. Photo courtesy AFGEM.

For the latest news on this story, see Tanzanian Judge Dismisses AFGEM Suit. UPDATED: 9/10/01
Other related stories: Merelani Mining Conflict Results in Death; Tanzanite Miners Await Ruling Against AFGEM.

MERELANI, TANZANIA - Hostility between local small-scale tanzanite miners and African Gem Resources Co. (AFGEM) escalated to violence over Easter weekend.

On April 15, a homemade petrol bomb was thrown into AFGEM's Merelani processing plant by an unknown person or people. Arusha Regional Police Commander Alfred Tibaigana confirmed that at the time of the bombing about 20 people were seen gathered near the plant, and then the device was thrown into it and exploded.

No one was hurt by the blast, and according to AFGEM representatives there was no damage. The remains of the bomb were taken to Dar es Salaam, Tanzania's capital, for further examination.

Tensions between local miners and AFGEM had been high over the past few weeks. In one instance in late March, police were called in to break up fighting between small-scale miners and AFGEM personnel.

In an effort to soothe the tensions, Minister of Energy and Minerals Edgar Maokola Majogo visited Merelani on April 9-11 to meet with the parties concerned.

The minister's visit was met by angry small-scale miners, mainly young men under the age of 25, with signs condemning the central government for allocating Block C of the Merelani mines to AFGEM, a South African mining company. Some of the signs read, "We don't like AFGEM here, it will finish our tanzanite," or "Give Block C to small-scale miners to enable them to get their living with their children." One mourned the loss of Mwalimu Julius Nyerenyere, the first president of Tanzania, who kept the Merelani mines under government control until he resigned in the mid-'80s.

AFGEM's tanzanite processing plant in Merelani. Photo courtesy AFGEM.

The Merelani tanzanite mines are divided into four sections or "blocks," lettered A through D. Of the four, Blocks B and D are being mined by local small-scale miners, and AFGEM was given the mining rights to Block C in 1998. The other block is not currently producing tanzanite.

The minister spent most of his visit touring the mining facilities, although local miners noted angrily that he spent most of the visit with AFGEM and less than one hour on Blocks B and D combined. On the last day of his visit, Majogo met with representatives of tanzanite mine stakeholders to discuss the tension between the miners and AFGEM.

Tanzania Mineral Dealers Association (TAMIDA) Chairman S. Sammy Mollel presented Majogo with a report detailing miners' complaints against AFGEM, and called upon the government to regulate the company's activities.

Mollel told Majogo that AFGEM was advertising in international jewelry trade magazines that local small-scale miners are illegal miners, and that tanzanite sold by TAMIDA members is inferior to AFGEM's.

"The strategy of AFGEM to establish a tanzanite brand for their company and advertise worldwide that AFGEM is the only producer of 'true blue' is against the national and global policy of trade liberalization," Mollel told Majogo. "AFGEM is aiming at monopolizing the tanzanite trade. We won't accept this style [of business] at any cost."

Mollel continued, "AFGEM's tanzanite advertising promotion abroad is mainly aimed at defaming local small-scale miners and dealers at large. This, Mr. Minister, is against our own policy of inviting investors in the country, which advocates the need for cooperation between investors and local stakeholders." Mollel's statements were met with cheers by the audience.

TAMIDA members are worried by AFGEM's claims that it controls two-thirds of the tanzanite deposit at Merelani, and that it only expects its mines to produce for another 15 years. The report suggested that AFGEM is a threat to Tanzania's mineral resources, and that the government should cancel the company's license in order to preserve the tanzanite reserves for future generations.

Other complaints range from run-ins with AFGEM's security dogs to accusations that the company is not employing local people or helping to develop the local economy as promised. The TAMIDA chairman also questioned why AFGEM had failed to join a Tanzanian gem dealers' association like TAMIDA.

"AFGEM's management does not keep their words, so it is difficult to trust their promises, Honorable Majogo," one popular small-scale miner nicknamed "Mama Kuku" told the minister at the meeting.

For its part, AFGEM says that its business activities, especially its branding campaign, have been misunderstood. In a letter to a Tanzanian newspaper, AFGEM Tanzania Chairman Ami Mpungwe wrote, "The tanzanite industry has been in existence in Tanzania for 33 years, and yet during this time, the country as a whole has seen little or no benefit, no formal employment, no investment of capital or re-investment of profits, no foreign exchange earnings, and no value added industry.

	A group of Masai children from the Merelani area. Photo courtesy AFGEM.

"AFGEM's mission is to create a 'win-win' situation for all players in the industry by growing the world market for tanzanite, ensuring reliablesupply (thus stabilizing prices and nurturing the industry's confidence)and formalizing sales channels. . . .

"In light of what is expected from AFGEM's mining licence, the question must arise: Will AFGEM monopolize the market? The answer is a fervent 'No.' The world wholesale market for tanzanite has been estimated to be in the region of $200 million per annum. AFGEM currently represents between 2 percent and 3 percent of the total market, and our five-year plan is to achieve a 30 percent market share."

Mpungwe also emphasized that 95 percent of AFGEM's employees at the mine are Tanzanian, not foreigners. "AFGEM's operations at Merelani are managed as a Tanzanian company, with Tanzanian shareholders, Tanzanian directors and myself as chairman. AFGEM, at the invitation of the Tanzanian government, is providing the necessary capital, technology, and expertise to develop tanzanite mining in Tanzania - something we, as Tanzanians, have been unable to do for the past 33 years."

In response to local miners' accusations that the company is not developing the local infrastructure as required by their license agreement, AFGEM officials point to projects like funding the school in the nearby Nayaisinyai village, upgrading the roads in the area, the opening of a medical clinic, and a program to boost awareness of HIV and AIDS in the community.

"Certainly, the past year has been focused on recommissioning the mine and building a strong team," says Joanne Herbstein, manager of corporate communications for AFGEM. "Community development is a major priority for this year."

At the stakeholders meeting Majogo expressed support for the miners' position, and indicated he would work toward reconciling the two sides.

"AFGEM [should] stop immediately branding tanzanite and marketing campaigns aimed at establishing an AFGEM tanzanite monopoly locally and internationally. Tanzanite is owned by Tanzania, therefore no one is allowed to brand it with an aim to block other stakeholders in the local and world market," Majogo told the assembled miners.

Instead, the minister wanted AFGEM to sit down with TAMIDA, the Arusha Regional Miners Association (AREMA), and other tanzanite stakeholders to find mutually acceptable ways of advertising tanzanite as a Tanzanian resource and not the product of an individual company.

"I am implementing President William Mkapa's directive, [which] he gave during the opening of the new Parliament, whereby he called upon our ministry to make sure that tanzanite is well advertised as a Tanzanian product at the world level," Majogo emphasized.

To help solve the problems at Merelani, the minister promised the immediate formation of a special national commission under the principal secretary of his ministry to look into all the causes of the situation there. The commission would get what he referred to as "scientific solutions" to develop the gem industry in Tanzania.

"Meanwhile, I instructed the Arusha Regional Commissioner, Ole Njoolay, to establish a working committee to coordinate a friendly [relationship between] Merelani mine operations by all stakeholders, large and small," the minister stated.

Clearly, though, at least some factions within the mining community are not satisfied. Regional Police Commander Tibaigana confirmed that he had been told a group of the small-scale miners were planning to seize AFGEM's Merelani plant to force them out of the area, but he did not elaborate.

AFGEM says it has no intention of leaving. "We are committed to Tanzania and to our Tanzanian workforce, and we are committed for the long haul," said Herbstein. "Our greater intentions and strategic vision are significant enough for us to deal with the hurdles that these minorities are creating for us."

Regardless of AFGEM's commitment to the project, the popular mood in Merelani and across Tanzania is firmly against them. The final answer may be, as one Tanzanian observer commented, that "AFGEM and any other big company is not wanted at Merelani by small-scale miners and local tanzanite stakeholders."