Tanzania: Cabinet Officials Named in Mine Scandal Resign On Magufuli’s Order

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A Tanzanian deputy minister and a cabinet member resigned after President John Magufuli asked government officials implicated with wrongdoing in an investigation into the nation’s diamond and Tanzanite mining industries to step down.

Edwin Ngonyani, a deputy minister of Works, Transport and Communication said he’d resigned Thursday evening and declined to comment on the allegations. George Simbachawene, a minister in the office of the president in charge of regional administration and local government, who was also named in the probe, announced his resignation on a YouTube video posted by Azam TV.

“I chose to resign because I have been implicated by the two reports presented to the president today so that the state organs can investigate freely,” Ngonyani said by phone.

Two committees formed in July to look into the sector found widespread irregularities that led to unfavorable contracts and loss of government revenue, according to a statement posted on the parliament’s website on Wednesday. Between 2007-2017, Petra Diamonds Ltd.’s Williamson mine didn’t pay corporate tax after reporting losses, according to Mussa Azzan, a lawmaker that led one of the committees. Instead, the company paid the alternative mineral tax of 1.96 billion shillings ($875,160) only.

“The committee asks itself, if WDL has been making losses all this time, why is it investing heavily in mining instead of shutting down the mine and moving on,” Azzan said in a video recording of a speech made in the capital, Dodoma, on Wednesday. “The committee believes, their continuing to operate for a long time as per their license to operate until 2033, means the company is making significant profits, and should pay the necessary profits.”

Petra Diamonds said in an emailed statement that its operations in the Williamson mine, in which it holds a 75 percent stake, are conducted in a “transparent manner and in compliance with legislation in Tanzania.”

Lost Resources

The committee also found contradicting reports between different government agencies on the real value of diamonds exports. Ministry data showed they generated $362 million over 2007-2016, while information from the Tanzania Minerals Audit Agency valued shipments at $374.6 million. The government received royalties worth $18 million during the same period, according to the ministry, while TMAA statistics indicate it got $15 million.

The investigations revealed that mining companies have been “playing” with Tanzania, Magufuli said. “Tanzanians, we need to get to a place where we are pained by the lost resources from our country,” he said.

If the mining industry continues to be a “problem” for the economy that’s East Africa’s second-biggest, then the companies should consider leaving the resources to be developed by future generations, Magufuli said.

“I heard others are reducing their workforce, I wish they would say they are leaving,” he said. “Because if they leave, we can just take ordinary citizens who can go in there and mine.”

Tanzanite, a blue gem, is only found in Tanzania. The nation produces so-called “bubblegum” pink diamonds including a 23-carat stone from Williamson, according to Petra’s website.

Source: Bloomberg