Pe­tra sus­pends min­ing after di­a­monds seizure by the state

Govt ac­cuses the com­pany of un­der­valu­ing the Bel­gium-bound di­a­monds by as much as $14.8m

The East African - - NEWS - By AL­LAN OLINGO The Eastafrican

Tan­za­nia’s Pe­tra Di­a­monds has sus­pended op­er­a­tions at one of its mines after run­ning afoul of Pres­i­dent John Magu­fuli’s ad­min­is­tra­tion. Pe­tra be­comes the sec­ond firm, after Aca­cia, to have its min­er­als seized.

Last week, Tan­za­nia an­nounced that it would na­tion­alise the di­a­mond con­sign­ment owned by Pe­tra that was en route to Bel­gium after the gov­ern­ment claimed it had been un­der­de­clared by more than $14.8 mil­lion.

“While Wil­liamson Di­a­monds declared in its doc­u­men­ta­tion that the value of the di­a­monds was $14.798 mil­lion, a fresh val­u­a­tion done by the gov­ern­ment es­tab­lished that the ac­tual value of the di­a­monds is $29.5 mil­lion. Le­gal ac­tions to be taken in­clude na­tion­al­i­sa­tion of all the di­a­monds seized if it is es­tab­lished that there was cheat­ing in­volved in declar­ing the ac­tual value of the min­er­als,” Tan­za­nia’s Fi­nance and Plan­ning Min­istry said in a state­ment.

The di­a­mond miner in its re­ac­tion to the seizure, and sub­se­quent ques­tion­ing of its em­ploy­ees as part of an in­ves­ti­ga­tion into the coun­try’s min­ing in­dus­try said it is be sus­pend­ing its op­er­a­tions for safety and se­cu­rity rea­sons. Pe­tra, how­ever, said it would en­gage the gov­ern­ment in or­der to re­solve the is­sue.

“Pe­tra con­firms that a par­cel of di­a­monds (71,654 carats) from the Wil­liamson mine in Tan­za­nia has been blocked from ex­port to Pe­tra’s mar­ket­ing of­fice in An­twerp and cer­tain key per­son­nel from Wil­liamson are be­ing ques­tioned by the author­i­ties. How­ever, the grounds upon which th­ese ac­tions have been taken have not been for­mally made known to the com­pany as yet,” the com­pany said.

The firm de­nied that it had un­der-declared the value of di­a­mond con­sign­ment and noted that all its mine op­er­a­tions are con­ducted trans­par­ently and in com­pli­ance with Tan­za­nian laws and the Kim­berly Process.

The Kim­berly Process is a gov­ern­ment-led cer­ti­fi­ca­tion scheme, ini­ti­ated to clean up the di­a­mond trade. It re­quires mem­ber states to set up an im­port and ex­port con­trol sys­tem for rough di­a­monds.

“Tan­za­nia has com­plete over­sight over the di­a­monds pro­duced at the mine, which are phys­i­cally con­trolled by a num­ber of dif­fer­ent gov­ern­ment rep­re­sen­ta­tives in con­junc­tion with Pe­tra from the point of re­cov­ery un­til the point of sale,” it said.

Scal­ing down

“We are not re­spon­si­ble for the pro­vi­sional val­u­a­tion of di­a­mond parcels be­fore they are ex­ported as this is car­ried out by Tan­za­nia’s di­a­mond and gem­stone val­u­a­tion agency. This pro­vi­sional val­u­a­tion is used to cal­cu­late the Com­pany’s pro­vi­sional roy­alty pay­ments to the gov­ern­ment. How­ever, ad­just­ments to fi­nal roy­alty pay­ments based on the ac­tual sales pro­ceeds for the di­a­monds, once sold, are then made at the end of the ten­der process.”

The val­u­a­tion doc­u­ments seen by The Eastafrican show that the firm’s 30-day per­mit for ex­por­ta­tion of the stones was granted in Shinyanga and signed by the Com­mis­sioner of Mines on Au­gust 29. Ac­cord­ing to the cer­tifi­cate, the con­sign­ment was to be ex­ported through the Julius Ny­erere In­ter­na­tional Air­port to Bel­gium.

The ship­ment in­voice shows that the 14.5kg con­sign­ment was mined be­tween June 8 and Au­gust 22 this year, while it paid an in­spec­tion and clear­ance fee of $147,989, be­ing one per cent fee of the to­tal value of the con­sign­ment, to the Tan­za­nia Trea­sury on Au­gust 29.

It also re­ceived a val­u­a­tion cer­tifi­cate from the Min­istry of En­ergy and Min­er­als de­tail­ing the con­sign­ment’s weight and con­tents prior to the seizure.

The Wil­liamson mine, is ma­jor­ity owned by Pe­tra (75 per cent) and 25 per cent owned by the Tan­za­nian gov­ern­ment.

In a state­ment, the firm said that this scal­ing down will see a sig­nif­i­cant re­duc­tion in its work­force cov­er­ing the cur­rent 1,200 em­ploy­ees and 800 con­trac­tor roles.

“The process of mov­ing to a re­duced op­er­a­tional state will be com­pleted in three months and will in­clude one-off costs of up to $25 mil­lion in ad­di­tion to the nat­u­ral un­wind­ing of around two months’ worth of work­ing cap­i­tal ap­prox­i­mately $35-40 mil­lion),” the firm said.

Pe­tra said this will in­clude preser­va­tion of as­sets and equip­ment to en­able the mine to re­sume op­er­a­tions should the ex­port ban be lifted and the op­er­at­ing en­vi­ron­ment sta­bilised.

Pic­ture: REUTERS

An un­der­ground tun­nel in Pe­tra Di­a­monds’ mine in Cul­li­nan, out­side Pre­to­ria. The mine is the world’s main source of the pricy blue di­a­monds.

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