Empire Voice: Minerals

Showing posts with label Minerals. Show all posts

Hundreds of Tanzania mine workers have lost their jobs. FILE PHOTO | AFP

By ADAM IHUCHA,

The tumbling price of gold and poor gemstone output have forced mining companies to lay off hundreds of workers.

Two leading mining firms — Acacia Mining Plc and TanzaniteOne — have announced plans to shed 1,685 jobs or 16 per cent of the mining industry’s 10,000 strong formal workforce by the end of this year.

Whereas Tanzania’s largest gold miner, Acacia Mining Plc will cut 1,050 jobs in the next few months, TanzaniteOne will lay off 635 workers.

Acacia said in a statement that the move to cut back on staff was taken in response to the current slump in the price of gold and low performance. The world market gold price has fallen from $1,800 per ounce three years ago to $1,072 per ounce last week.

“As a result, approximately 1,050 of our people, representing 27 per cent of our workforce, have either left or are expected to leave over the next few months,” Acacia’s statement reads.

Bulyanhulu mines will be most affected by the cuts. Acacia also operates Buzwagi and North Mara in northwest Tanzania.

The restructuring is expected to lead to an annual saving of $25 million, prior to a restructuring charge of approximately $11 million predominantly incurred in 2015.

This is one of a number of initiatives to ensure costs within the business are optimised and in turn enhance cash flow generation.

Acacia is also working to further refine capital expenditure, renew discussions with contractors and major suppliers to improve their rates, rationalise corporate administration spend and ensure its community spending is in line with the corporate strategy.

Acacia CEO Brad Gordon says that after honouring its debts in June, Acacia had $145 million cash in its coffers, which fell to $99 million at the end of September.

In September 2015, the company reported that it had incurred a $13 million net loss in the third quarter, owing to lower output and high operational costs.

“Acacia had been one of the shining lights on the London Stock Exchange but the underperformance in the September quarter led to a 25 per cent fall in our share price relative to our peers” Mr Gordon says.

FINANCIAL DIFFICULTIES

Tanzania’s largest miner, which has produced nearly eight million ounces over a decade, said the $13 million loss was against a net profit of $28 million in the third quarter of 2014.

The loss reflected a 20 per cent slump in revenue to $193 million on the backdrop of declines in output and sales.

During the quarter, gold production at the company’s mines fell 14 per cent to 163,888 ounces while sales went down six per cent to 176,116 ounces.

The cost of producing an ounce of the precious metal rose nine per cent on the year to $1,195, which Acacia attributed to short-term operational challenges at its Bulyanhulu and Buzwagi mines.

TanzaniteOne has justifiedits decision to shed 50 per cent of the workforce by citing the decline in Tanzanite gemstone production.

Last week, TanzaniteOne, owned by Sky Associates and the State Mining Corporation announced that it would send way 635 staff out of its 1,284 strong workforce.

TanzaniteOne mining manager, Apolinary Modest said that the company was undergoing financial difficulty, thanks to the low production of the precious stone at Mererani Hills in Simanjiro district, Manyara Region.

Mining is one of biggest private sector employers in Tanzania, providing jobs for nearly 10,000 people.

By ADAM IHUCHA--Tanzanite gemstone exclusively mined in Mererani hills in northern Tanzania worth $400 million was smuggled out of the country to Kenya and India in 2013.

Commissioner of minerals, Paul Masanja says that nearly 80 percent of entire Tanzanite gemstone’s output was smuggled over porous borders into Kenya, an important regional hub for international gemstone markets.

“Whereas Tanzania exported $38 million worth of tanzanite in 2013, Kenya and India’s gemstone imports were valued at $100 and $300 millions, respectively” Mr. Masanja explains.

This means that the smuggling of Tanzanite gemstone denied the country its fair share of $400 million just in 2013 alone.

Disclosure comes at a time when the country is enforcing tighter control and stricter laws, in its efforts to curb the Tanzanite smuggling and boost the country's returns from the precious stone.

For instance, in July, 2010, Tanzania, the world’s sole source of Tanzanite, outlawed exports of rough stone weighing above one gram, in a bid to compel the world’s gemstone dealers to invest in the country and spur development of local processing industry.

The embargo was part of the Mining Act of 2010, which intends to create massive employments for Tanzanians, recoup profits and thus boosting the economy of scale through Tanzanite gemstone value addition.

But, five years now, statistics show a lion’s share of rough Tanzanite still finds its way to India, where it creates a multi-million dollar business empire and thousands of jobs.

Tanzania Mineral Dealers Association (TAMIDA) Chairman, Sammy Mollel says that Tanzanite exported in raw form creates 250,000 jobs in Jaipur, India.

“Our problem is implementation, but the rationally behind the ban was to make Arusha an Africa’s gemstone hub, where all gemstones would have been cut and polished for exports” Mr Mollel explained.

Tanzanite exports statistics from Tanzania Minerals Audit Agency (TMAA) indicate that from 2010 to 2013 the country exported a total of 21,171,460 grams both rough and cut Tanzanite gemstone worth $83 million.

Of the total figure 21,056,270 grams were rough Tanzanite equivalent to 99.45 percent worth $54 million, compared to 115,160 grams of cut tanzanite, representing 0.54 percent valued at $29 million.

Literally, nearly 99.5 percent of Tanzanite output over the period under review was weighing less a gram, implying that the state rushed to control exports of less than one percent of production.

This means that 0.5 percent of Tanzanite production was processed locally, creating merely 119 jobs, Mr. Mollel says, leaving as higher as 99.5 percent been exported in a raw form, generating 250,000 employments in Jaipur city of India.

No wonder the India’s Jaipur city in 2013 exported cut and polished tanzanite into the world market worth $300 million, nearly eight times of what Tanzania, earned in the same year.

This means that the country could earn eight times, from Tanzanite trade, if the gemstones were exported as finished products. Globally, tanzanite trade earns $500 million a year, with Tanzania, which is the only source of the precious stone recording export revenues of $38 million equivalent to 7.6 percent of trade value.

This implies that the country where the rate of unemployment stands at 10.7 percent, not only exported thousands of jobs, but also lost multi-million dollars in earnings to India where its rough gemstone is being processed, before the finished gemstones finding their way to the US, which remains the largest market for tanzanite, second in popularity only to sapphire.

In 2012, Tanzania was home to more unemployed 15 to 24-year-olds per capita than 109 other countries.

In a survey by the NGO known as Restless Development, out of over 1,000 young people across Tanzania, only 14 percent reported working a formal, wage-earning job.

According to the World Bank each year, 900,000 young Tanzanians enter a job market that is generating only 50,000 to 60,000 new employment opportunities.

Deputy Minister for Energy and Mineral, Stephen Masele says that unscrupulous local master dealers are to blame for sabotaging the state initiative.

“The government did what it takes to ensure Tanzanite gemstone benefits its people, but some few local dishonest master dealers are conspiring with foreigners to smuggle massive gemstone in raw form” Mr Masele noted.

Analysts say the state needs to impose a total ban on export of the entire Tanzanite production, if the Tanzanians are to benefit full from the gemstone trade.

A natural resources law Lecturer at Tumaini Makumira University Elifuraha Laltaika says lack of enforcement can be linked to lack of capacity on the part of the government, in terms of manpower and technology.

“However, this is unpleasant news and the government should remedy it as a matter of urgency.

There is no further we can go, it is like cooking food using a leaking pot." Mr Laltaika says. Dr. Dalaly Kafumu, a Tanzania’s renowned geologist-cum-politician believes that for Tanzanians to reap full benefits, the rule that created Tanzanite-rich Mererani hills near Arusha a controlled area should be enforced.

Commissioner, Masanja bought the idea of Dr. Kafumu, saying they will seriously enforce the Mererani controlled area law in their latest efforts to tighten noose on mineral smugglers.

“We are going to fence the entire Mererani hills with a 10 sq km and would be under 24 hours surveillance by mineral wardens who can arrest smugglers and confiscate Tanzanite gemstone” Mr. Masanja explained.

Once enforced, the controlled territory means that henceforth no one will be allowed to access Mererani mining area without permission from the state.

All miners operating in Mererani mining territory will have to be registered and issued with identity cards.

The state will also have to determine the procedures, documentation and specific means to be used to establish a traceable chain of documentation from dealer to the buyer.

Tanzania Revenue Authority (TRA) also will be required to review the documentation, including export permits and certificates of origin, once the declaration come into force.

Subscribe to: Posts ( Atom )

Empire Voice

featured Slider

Tanzania mining industry cuts jobs as gold price slumps

How Kenya and India Plunder Tanzania's Blue Gem

About Me

Fellow Bloggers

Search This Blog

Total Pageviews

Labels