It has been 40 years since the discovery of the first tanzanite gemstone in Merelani, Tanzania, by a Masaai tribesman in a mountainous region, 40-km south of Mount Kilimanjaro, but the precious mineral is, in the last few years, becoming more sought after than it has ever been, says tanzanite-mining and marketing company TanzaniteOne CEO Ian Harebottle.

Harebottle says that tanzanite has, through an extensive marketing campaign, driven largely by the Tanzanite Foundation, which is an industry-supported nonprofit organisation that strives to grow the tanzanite industry through consumer demand, developed a much-coveted brand value proposition in addition to its inherent value as a precious gemstone.

The economic outlook in North American may be on the decline, but the demand for tanzanite in this market, so, too, in various other international markets, is increasing, with TanzaniteOne reporting an increasing market share in the coloured-gemstone industry around the world.

“It is very encouraging for the tanzanite industry and Tanzanite-One, through the efforts of the Tanzanite Foundation’s extensive marketing campaigns, that we find ourselves in the position that even though the US market in general, may be on the decline, tanzanite sales in terms of volume, price and margins are very much on the up.”

THE VALUE OF TANZANITE
The Tanzanite Foundation describes tanzanite as an exquisite royal blue-lilac stone with periwinkle hues, which has earned itself a rightful place next to diamonds as a must-have gemstone.

Harebottle says that tanzanite is one of the most precious gems of all, when taking in to account its rarity, beauty, legacy, and history.

“If you consider all of these factors together, then tanzanite is certainly right up there, if not even ahead of, diamonds, emeralds, sapphires and rubies,” he says.

Tanzanite is even outselling diamonds by unit sales at various premier jewellery stores, owing in part to its current value, which is one-tenth of the value of diamonds, with the same quality and brilliance, all of which make it a really good value proposition for the consumer, states Harebottle.

Harebottle says that there remains, roughly, 25 years of tanzanite resource available for mining, and that the product thus needs to be marketed strategically and carefully, with a thorough understanding of market ethos and philosophy, if the gem is to attain its rightful place in terms of consumer recognition.

“Tanzanite is outselling diamonds by unit sales in many of the top jewellery stores, and in some locations, we are outselling them by dollar value sales. The industry has brought the product to the attention of the consumer who has recognised and appreciated its rarity, legacy, and romance – in short, tanzanite has it all,” comments Harebottle

FUTURE OUTLOOK
“TanzaniteOne’s aim and objective is to become the world’s leading coloured-gemstone-mining com- pany, with a specific focus on premium coloured gems, and while tanzanite is a natural first choice, there are other gemstones that are also deserving of this recognition,” says Harebottle.

There are new markets constantly emerging for the tanzanite gemstone, and this includes the UK, Dubai, India, as well as South Africa, says Harebottle.

“These are some of the markets that have shown strong growth and real enthusiasm for the product. However, we are also beginning to see a growth of enthusiasm in the Far East, including China and Russia. We see significant potential in these markets,” he adds.

“To some extent, one could say that the coloured-gemstone-mining industry is roughly at the same stage at which the diamond-mining industry was some 100 years ago. Up to now, this sector remains largely fragmented and operating on a small scale. A very real oppor- tunity exists for some level of formality in this sector, which will ultimately deliver real growth and benefits for all stakeholders,” states Harebottle.

CONSOLIDATION OF BUSINESS OPERATIONS FOR CONTROLLED GROWTH
TanzaniteOne has, in the last few years, changed its operational structure from a vertically inte- grated mining company, with both upstream and downstream mining and refining operations respectively.

“The upstream process, which includes geology, exploration and the mining of gemstones is, in itself, a challenging operation,” says Harebottle.

He says that TanzaniteOne has chosen to focus its efforts on this side of the business alone, while choosing rather to partner with key downstream beneficiation and retail outlets.

“This sector is very complex in itself, and demands specialised skills,” he says.

“Our historic focus was on tanzanite alone, looking at explor-ation, mining, cutting, polishing, branding, retail, and distribution.

We were very vertically integrated and dedicated only to tanzanite. Now, having recognised that each one of these components is a significant business in itself, we have chosen to focus our efforts on the sector where we are most competent: the mining of coloured gemstones,” explains Harebottle.

A NEW GEM ON THE HORIZON
In line with its strategy to leverage its position as a premium coloured-gemstone producer, TanzaniteOne has just acquired the rights over a significant portion of the world’s known tsavorite resource from Kirkwood Resources and Greenhill Mining.

The Lemshuku-Shamberai tsavorite project, in Tanzania, was bought for £5,9-million, in October of last year.

Harebottle says that the tsavorite acquisition was a natural first step for the company, on account of its having a similar product and market mix, as well as a similar geology and the close proximity to the company’s tanzanite-mining operations.

TanzaniteOne will expand its operations in the mining of coloured gemstones to include other pre- mium coloured gemstones, but tanzanite-mining will remain a priority for the company, states Harebottle.

“Within the next five to six years, tanzanite will most likely remain the most significant part of our operations. The tsavorite project, a brilliant rare dark green gemstone, is anticipated to come on line within 18 months. Other projects will most likely follow after that, and, within six or seven years, we may see tanzanite accountinmg for only 50% or less of our total mine output, but it will always be an important component of our total business,” says Harebottle.

The Lemshuku-Shamberai tsavorite project is at stage one in the mining process, which is the geological exploration stage, explains Harebottle.

“TanzaniteOne is now taking the project to stage two, which would include bulk sampling, upgrading the resource clasification from inferred to indicated, and develop- ing the mine layout and plan. We have the licences, but are still in the process of developing the project, so that we can take it further. We see it taking about 18 months before we begin mining at the tsavorite site,” says Harebottle.

COMPANY’S WORTH IN MARKET LISTING
TanzaniteOne is a Bermudan- registered mining group of com- panies, that is commited to supporting the global marketing of its products and is led and directed from Arusha, in northern Tanzania.

The mining and marketing company is listed on the London Stock Exchange’s Alternative Investment Market (Aim).
The company has shown con- sistent profit margins in the last few years, says Harebottle.

“Since first listing on Aim, we have managed to consistently deliver profits, we continue to generate significant levels of cash, and we have issued dividends to our shareholders in each of our reporting periods, all of which make us unique, I believe, in terms of the mining companies listed on Aim,” comments Harebottle.

The company reported a turn-over of $41-million in 2005 and $36- million in 2006. The drop in total revenue for 2006 was largely owing to the changes in consolidating its operations towards an upstream focus, says Harebottle.

“We would look to getting back to our 2005 position and then to show consistent steady growth from this year onwards, and this is out of the tanzanite business alone. Our other projects should deliver added growth on top of this, once they come on line.

We have divested some of the downstream side of our pre-2006 business, and for this reason our turnover in 2006 was somewhat compromised.

By divesting from the downstream segment, we have now adopted a policy of preferred distribution partnering, whereby we would look to work with the downstream channel in such a way as to ensure that we all have a similar vision for our product, and that each segment down the channel is able to achieve fair and consistent margins and value, and to position-ing our product, in such a way, that it is appropriately valued by the consumer. We have found this to be rather successful.

We are now more focused, our efforts have been well received by the downstream channel, and we are now able to grow our business both in terms of the esource and turnover,” explains Harebottle.

THE ORIGINS OF DISCOVERY AND LOCATION
The world’s only known tanzanite deposit can be found in Merelani, Tanzania, on a 6-km strip of land that is about 40 km south of Mount Kilimanjaro, and 70 km east of the town of Arusha.

Tanzanite was only discovered in 1967, and was named tanzanite by Henry Platt, who was the president of the leading jewellery retailer, Tiffany & Co at that time.

The tanzanite-mining site was divided into four blocks by the Tanzanian government in the early eighties, to accommodate an eclectic mix of large, medium-sized and small independent mining companies.

TanzaniteOne is the leader among the medium to large scale inde- pendent mining companies that have acquired a licence to mine tanzanite at the 6-km tanzanite site in Tanzania.