JOHANNESBURG (miningweekly.com) – Following extensive interdepartmental restructuring, gemstones producer and developer Richland Resources’ wholly-owned subsidiary TanzaniteOne Mining has identified 229 of its 670 employees at its Merelani mine, in Tanzania, for possible retrenchment, pending the outcome of negotiations with government.

Richland had already suspended 41 employees for serious employment breaches identified during the review of operations, the company said on Wednesday.

“Our involvement in tanzanite extraction has been fraught with issues for the last few years and the unchecked illegal mining situation has led to the current round of potential job losses and cost savings,” Richland CEO Bernard Olivier said. 

TanzaniteOne had on April 14 announced that it could no longer support further investments into Tanzania owing to a two-year period during which key working areas at Merelani were occupied by illegal miners.

Since this announcement, TanzaniteOne management and Tanzania State Mining Corporation (Stamico) had worked in consultation with Richland to reduce costs, improve revenue and streamline operations at Merelani to prevent any temporary mine closure occurring while government completed its work, making the area secure.

In response to TanzaniteOne’s decision, the Tanzania Ministry of Minerals and Energy issued default notices during May 2014 to all small-scale miners with licences adjacent to Block C, which is owned by TanzaniteOne and Stamico, and who may have been illegally mining into Block C from these neighbouring blocks.

“We are pleased to see that the government of Tanzania has issued court orders against illegal miners but, until Block C is made totally safe, it is inevitable that the TanzaniteOne and Stamico joint venture (JV) cannot sustain full employee levels and costs,” Olivier said.

He added that the Merelani project had the potential to be very profitable for TanzaniteOne and Stamico, and that the restructuring and efficiency programmes were yielding immediate results.

Following discussions between TanzaniteOne, Stamico and government, the company's three X-ray body scanners had also been released to monitor employees.

The scanners had been introduced at the Merelani operations in 2008; however, in 2010, the Tanzanian government blocked their use and the equipment had since been in storage.

TanzaniteOne was currently awaiting servicing and recommissioning quotes for the system restart.

The scanners were scheduled for installation across the Merelani project within mining, sorting, processing and beneficiation operations by the end of 2014. 

Meanwhile, the company was also working on a number of additional cost-reduction and revenue-generation initiatives relating to Richland’s operations in Tanzania.

“The Tanzanite Experience (TTE) retail chain generates yearly revenue of about $2.9-million and options being reviewed in relation to the realisation of value from TTE are a potential sale of TTE, and a review of the operations and strategies of TTE,” Richland said.

The company was also reviewing its Tsavorite project, located about 20 km from the tanzanite mine, for a potential sale or JV with interested parties, as well as in terms of reducing its financial contributions to the Tanzanite Foundation.

"The global retail market for coloured gemstones is thriving and we are taking active steps to deliver value from our mining expertise and marketing relationships. As Richland monitors the Tanzania situation we shall move ahead with our recently announced sapphire redevelopment in Queensland, Australia,” Olivier concluded.