Tanzania Criticizes AFGEM


March 5, 2002

Tanzania Criticizes AFGEM

Tanzania's government publicly blamed AFGEM, the South African tanzanite mining company, for the crisis of confidence in tanzanite. In November 2001, The Wall Street Journal reported tanzanite sales funded the terrorist organization al Qaeda, but investigations by the U.S. State Department cleared the gem of any known funding of the Sept. 11 attacks. Now, Tanzanian officials believe the WSJ reports were initiated by AFGEM.

"We have written evidence that AFGEM invited WSJ reporter Robert Block to Arusha, and then to the tanzanite mining site at Merelani. He then went back to the United States of America and published an article which linked tanzanite with terrorism," Edgar Maokola-Majogo, Tanzania's minister of Energy and Mines told The African newpaper late last week. In the report, Maokola-Majogo claimed AFGEM was trying to create an international rejection of unbranded tanzanite mined by local small-scale miners. AFGEM recently launched a campaign for branded tanzanite in the U.S. and elsewhere. The company is in control of one of the mining blocks at Merelani, Tanzania.

AFGEM responded to the minister's remarks last week. "The Minister of Energy and Mines publicly stated that AFGEM was responsible for initiating The Wall Street Journal's trip to Tanzania, intimating that in some way AFGEM was a beneficiary of WSJ's unsubstantiated allegations that the tanzanite trade is linked to terrorism. AFGEM categorically denies these allegations," the company said in a press release.

AFGEM said that as the largest single investor in the tanzanite industry it suffered the most collateral damage to its business as a result of the reports. The press release said approximately $6 million in market capitalization was lost as investors pulled out as a result of the reports. AFGEM said it provided the WSJreporter with information it would have provided any other reporter, and says it made every effort to dissuade Block from pursuing the story, recognizing the negative image it would protray of tanzanite in the U.S.

AFGEM's release appeared to leave room for further negotiation with tanzanite stakeholders. "AFGEM remains committed to the unification and development of the tanzanite industry and shall continue to pursue constructive dialogue with all players and organizations that share a genuine desire to achieve common goals for the benefit of the entire industry," the release said.

– by Robert Weldon, G.G.

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