Smugglers out to suck Kenya dry in mining sector

By Joe Kiarie

His face swathed in sweat in the dusty caves of minerals, Simon Nzole is a worried miner in Kamtonga area, Mwatate District.

 He estimates that since he started mining many years ago, he has dug out innumerous kilograms of Tourmaline and Tsavorite—much of it of gem quality. However, the hue and cry remains; the precious stones are smuggled out of the country.

 “We sell Tourmaline at Sh10,000 to Sh18,000 per kilogram (depending on its quality),” says Nzole. “We know it is worth much more but with no other market or source of income, we have no option but to sell it to the brokers.”

With this kind of deals, experts argue that Kenya is losing millions of shillings every year through this dubious business by foreigners and unscrupulous locals.

Much more is also lost as some multinationals engage in underhand practices to avoid paying taxes. Profits in this cutthroat business are so high that it has led to even cases of murder.

Revenue lost

“We are losing a lot of revenue by failing to document what is mined and how it leaves the country,” says Monica Gichuhi, Chief Executive Officer, Kenya Chamber of Mines.

The scale of the gemstone smuggling was revealed to The Standard on Saturday team during visit to Taita Taveta and Kwale, which are among the main hunting grounds for unlicensed dealers.

Other affected regions include Kitui, Kakamega and Meru. Roving gemstone buyers take advantage of the porous Kenya-Tanzania border to smuggle out precious stones.

Miners admit to possessing rubies stolen from large-scale mines where they had been employed. They sell these at about Sh2,000 a gram.

One carat (0.2 grams) of Type II natural untreated ruby can fetch up to $25,000 (Sh2.1 million) in the international market.  The same amount of tourmaline fetches thousands of shillings depending on the colour, cut and clarity.

Taita Taveta sits on the mineral-rich Mozambique Belt and has one of the richest mineral deposits in East Africa. It has over 40 high value gemstones, among them Rubies, Sapphires, Garnets, Tourmalines, Tanzanite and Quartz.  Geological experts say the county is the main global source of Tsavorite (green garnet) and Rubies. Both are in high demand internationally. Dr Campbell Bridges, the man who discovered Tsavorite in 1971, was murdered in 2009 after a three-year battle over his mines.

An unknown proportion of Taita Taveta’s gemstones is illegally mined and exported without the Government’s knowledge.

Unlicensed dealers take advantage of vague mining laws and lax law enforcement to suck the country dry.

By mining illegally, small-scale miners avoid paying millions in license fees. Smuggling eats into gemstone exports and deny the Government foreign exchange, among other earnings.

In the Mkuki plains that neighbours Kamatonga, small-scale miners face similar scenarios. Desperate to make ends meet, many give up quality gems at throwaway prices to dealers who control the market and set the prices.

 Selling cheaply

Joshua Mandevu recalls recently selling eight grams of pure garnet at Sh800. With a gram of such gem going for up to $5,000 (Sh425,000), Mandevu sold the stone worth Sh3.4 million at only Sh800.

In Kuranze area of Kwale County, Gladys Machua, a licensed small-scale miner, produces up to 100 kilograms of tourmaline weekly. She sells the gems to foreign dealers who cross over into Arusha in Tanzania, , which is the East Africa’s gemstones capital.

“I sell the stones at the price brokers propose since I have to pay my workers every weekend,” she says. “The Government should regulate the price, and help us in marketing to save us from exploitative brokers.”

At the heart of the underground trade are dealers from Sri Lanka, Thailand and Tanzania, who pose as tourists visiting the Tsavo National Parks. All three countries are famous for their own gems, including tourmaline and garnets. Politically connected Kenyans are also being increasingly involved in the smuggling rackets.

The main exchange centres are Voi and Mwatate. Credible sources also named a six-storey building in Nairobi’s Standard Street (name withheld) as another notorious illegal trading den. Most miners have no direct access to international markets and have no idea about the real value of various gemstones.

They are at the mercy of cartels that control prices and lock out most licensed local dealers. Once abroad, the gemstones are processed and sold on the international market with a falsified country of origin.

Our sources say the cartels often use the Holili border post to cross over to Tanzania with little, if any scrutiny is done by the Customs officials. Dealers with bulky loads use undesignated bush routes to avoid inspection.

By law, all miners are expected to have licenses. All minerals for export should be verified by the Wardens of Mines in the presence of Customs officers at the nearest point of exit before being sealed and exports permits and other documents approved.

Eng Elijah Mwadoe, the Taita Taveta County Executive in charge of the Environment, Natural Resources, Tourism and Wildlife, says the smuggling relies on corruption.