Tanzanian High Court rules in favor of AFGEM

The High Court of the United Republic of Tanzania has struck down three mining associations charges against African Gem Resources Limited (AFGEM) and the Tanzanian government, claiming illegal practices in AFGEM obtaining a license to mine, taxes paid by the mining conglomerate to the Tanzania government, misconduct by in operating its mine, and its marketing practices, according to an AFGEM spokeswoman.

“In a unanimous decision of the full bench of the High Court of the United Republic of Tanzania, the law suit faced by African Gem Resources Limited (`AFGEM’) has been struck off in its entirety with costs,” says Joanne Herbstein, AFGEM company spokesperson in a statement. “Three mining associations in Tanzania filed various charges against AFGEM, members of its directorate and the previous Tanzanian Minister of Energy and Minerals. The allegations related to the legality of AFGEM’s mining license, taxes paid, alleged misconduct by AFGEM staff towards small-scale artisanal miners and AFGEM’s alleged monopolization of the tanzanite market.”

Over the past year, words between the local small-scale miners and the large South African mining company have come to blows. It has been violent, with at least one shooting death. Accusations from the local Tanzanians are that AFGEM has broken promises to improve the Tanzanian infrastructure in exchange for the lease. The facts are that AFGEM legally leased Block C, one of the more prolific mine sites, from the Tanzanian government, and the local miners had to move off the hill. The reported ruling would suggest that the lease agreement was more of a politically incorrect situation for AFGEM and the Tanzanian government, rather than anything done illegally by AFGEM.

The local miners also had concerns about AFGEM’s marketing strategy. They say that it would make it impossible for the small-scale miners to survive. AFGEM says that their marketing campaign will increase the popularity of the gem. Nothing yet has happened in this arena, and with the world market’s slow economy, tanzanite sales, like the sales of most gemstones, have slowed, and we have yet to see any kind of large scale marketing campaign by AFGEM. Still, AFGEM plans to make the mine a successful venture.

“With the positive outcome of the court case,” notes Herbstein, “AFGEM’s management will reassess the mining strategy with a view to speeding up the development of the mine and subsequent expansion and development of the world market for tanzanite.”