UK diamond firm still chasing Mwadui shares

BAK · 2009-01-25T18:46:04+00:00

UK diamond firm still chasing Mwadui shares: Expects Tanzanian government to finally accept De Beers sale THISDAY REPORTER Dar es Salaam THE London-listed Petra Diamonds Limited has said it hopes its stalemate with the Tanzanian government over the controversial purchase of majority shares in the Mwadui-based Williamson mine in Shinyanga Region will be resolved within the next few weeks. Petra Diamonds Chief Executive Johan Dippenaar told journalists visiting the firms Cullinan diamond mine in South Africa this week that, he is confident the Tanzanian government will eventually come around. The company announced last September that it has acquired two further assets from South Africas mining giant De Beers, including a 75 per cent stake in the Williamson mine. However, approval for the Mwadui deal has been held up for some time by the Tanzanian government, which holds the remaining 25 per cent stake in the mine. Dippenaar said Petra Diamonds now expects the Williamson deal to be finalized within weeks. Energy and Minerals Minister William Ngeleja told THISDAY earlier this month that the government does not support the De Beers decision to sell its majority stake in the Williamson diamond mine to the UK company. According to the minister, consultations are currently in progress within government circles on the next course of action after the De Beers move. He said De Beers breached the Williamson mine ownership contract by opting to sell its 75 per cent stake to another company without giving the (Tanzanian) government first buy-out priority. The Memorandum and Articles of Association in the contract include a provision that requires De Beers to offer the government first opportunity to purchase its Williamson mine shares, before approaching the open market, in what is known as right of first refusal. And according to Ngeleja, the government maintains this right. The minister said the government will before the end of the month state its final position on the matter, but emphasized that we are yet to endorse the transaction (between De Beers and Petra Diamonds). Parliamentary sources say the government is expected to face tough questioning from lawmakers on the controversial sale of the Williamson diamond mine in the upcoming National Assembly session scheduled to begin in Dodoma on Tuesday next week. The deal has already sparked something of a political feud within the country. The Leader of the Official Opposition in the National Assembly and former chairman of the Parliamentary Public ccounts Committee (PAC), Hamad Rashid Mohamed, told THISDAY it was quite mind-boggling that, after purportedly posting losses in its Williamson mine operations for the past 14 years, De Beers still managed to get a suitable buyer. Said Hamad Rashid, who led a PAC investigation into the diamond trade in Tanzania in 2004: They (De Beers) cannot claim to have been making losses all those years while involved in diamond mining activities in the country. He called on the government to tighten controls in the mining sector and ensure foreign investor companies do not under-declare their actual revenues. On his part, incumbent PAC chairman John Cheyo said he was also shocked by the news of the Williamson mine sale. Cheyo, who was also a member of the presidential mining sector review committee chaired by former Judge Mark Bomani, voiced concern that De Beers might have opted to sell its stake in the mine after reaping a hefty profit. Likewise, Karatu Member of Parliament Dr Wilbrod Slaa described the sale of the majority stake in the Williamson mine as suspicious, particularly considering that De Beers has all along claimed to be incurring heavy losses in its operation at the mine. The Williamson diamond mine, with estimated resources of around 40 million carats of the precious stone, is 70 years old todate. De Beers returned to it in 1994, after 20 years out. In 2007, the mine produced 220,209 carats of diamonds, up from 189,396 carats.

Thread starter BAK
Start date Jan 25, 2009

BAK

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UK diamond firm still chasing Mwadui shares

BAK

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