Petra stops work at Tanzanian mine

Petra Diamonds has temporarily stopped its Williamson mine in Tanzania after the government seized a diamond parcel of nearly 72,000 carats and started questioning key staff at the opencast mine.

London-listed Petra is the latest mining company in Tanzania to stop its operations.

Earlier in September, Acacia shut its underground mine at Bulyanhulu — cutting production by 100,000oz and lining up substantial job cuts for the 2,000 people the mine employs after the government slapped it with a $190bn tax bill — and stopped gold exports.

Petra’s shares dived nearly 6% in Monday trade on the London bourse as investors digested the news from Tanzania against a backdrop of peak financing of major expansion projects in SA and a possible breach of its debt covenants after delays in completing its new processing plant at Cullinan near Pretoria.

Petra said on Monday that it had not been officially told why the parcel of diamonds had been stopped from leaving Tanzania and that the government regulator had been intimately involved in setting the value of the parcel at $14.8m, a price set by the state’s Diamonds and Gemstones valuation agency.

News reports from Tanzania indicated that the government thought the parcel of diamonds to be worth $29.5m and Petra stood accused of underdeclaring the size of the parcel bound for Antwerp.

Petra released all documentation on the value and royalty receipts of the parcel it had received from the Tanzanian authorities at the end of August, showing the valuation set and signed off at $14.8m.

Investec said: “Given Tanzania’s history of improbable accusations against Acacia, we’d be backing Petra’s side of the story, not that it will help them.”

Investec’s analysts valued Williamson at $28m, or just 3% of the total asset value in Petra before debt.