Tanzania Government to Escort Diamonds all the Way to Antwerp

This is an economic war, the Minister told law enforcement officials. “You know this better than I do. Don’t go to sleep. You know what to do during war.

By TZ Business News Staff.


The Tanzania Government has announced intention to now escort diamonds from the Williamson Diamonds mine in northern Tanzania to the  market to avoid  tricks its partner Petra Diamonds may play on earnings.

The Minister of Finance and Planning, Dr. Philip Mpango, announced the intention at a meeting with law enforcement agencies in Dar es Salaam, in the wake of a discovery Petra Diamonds undervalues exports of the precious stone.

The Government confiscated 71,840.3 carats (14.3 Kgs) of diamonds at the Julius Nyerere International Airport in Dar es Salaam on 31 August, 2017 five minutes before the stones were airborne en route to Antwerp, Belgium.

The Minister said in a video tape made available to TZ Business News “we wanted to ascertain the declared value of the consignment was correct…and we discovered we are being swindled.”

To evaluate the consignment,  the government–using a team of specialists from the Dar es Salaam-based African Minerals Science Centre (formerly a SADC operated institution known as the East African Minerals Science Centre) and the Ministry of Energy and Minerals (including two retired officers recalled)—discovered the correct value of the consignment was USD29,509,821.83 compared to the declared value of  USD 14,804,375.65.

Prof. Abdulkarim Hamis Mruma, the minerals expert present at the minister’s meeting said the valuation followed internationally accepted methods of grading diamonds, where stones were first graded by sizes, shape, color, then checked for cracks. After the thorough checking an internationally accepted price chart was then used to derive the correct value.

Dr. Mpango, who said he is under instructions to protect Tanzanian money, wherever it may  be,  said “if you discover you are being swindled you don’t just sit back. You take action!”

Explaining the swindling part, the minister complained that the Government has never received any dividend whatsoever  from its partnership with the London Stock Exchange listed Petra Diamonds  in the Williamson Diamonds Mine in northern Tanzania.

The team of experts discovered an average 230,000 carats of diamonds are exported out of the country each year, and that using lower valuation this suggests some USD46 million was leaving the country each year while the government gets nothing from it–and that is a low estimate.

Dr. Mpango instructed law enforcement agencies to get vigilant in the protection  of minerals resources of all kinds in the country—including rubies and other gemstones. The Finance Minister ordered a thorough investigation of all Tanzanian officials—past and present– in all gemstone chains to evaluate their wealth in cars, houses, land plots and any other wealth after which legal action should be taken against found to have contravened the law.

“This is an economic war,” the Minister told officials from law enforcement agencies. “You know this better than I do. Don’t go to sleep. You know what to do in a war.”

The Director of Public Prosecutions Mr. Biswalo Mganga said the Minister’s instructions will be worked on and  ill-gotten wealth will be confiscated where investigations showed that was the right thing to do.

Director of Public Prosecutions Mr. Biswalo Mganga

“We cannot accept being swindled this way in places where we have our Tanzanian officials working,” Dr. Mpango lamented. “And they even escort the parcels.” From this point on, the government will be present at the sales point, he said. Parcels will be escorted from the production chain all they way to the auction, he said. But we need to find honest, patriotic Government workers.

The minister ordered the recruitment and training of  new people in the gemstones industry, but after careful vetting.

In the meantime, Petra Diamonds’ recent stock market value has dropped after confiscation of gemstones which have now been nationalized.  The company which holds a 75% majority stake in the Williamson Diamonds mine, leaving the other 25% to the Tanzania Government issued a statement it has suspended operations at the mine in the wake of the seizure.

Shares in the London-listed company fell nearly 28% in the wake of the confiscation before recovering to settle at about 6% lower, down 6.2p at 83.75p. The diamonds were confiscated at the Dar es Salaam airport on 31 August as they were being readied for export to Antwerp in Belgium.

South African media reports said  Petra Diamonds has suspended operations at its mine in Tanzania after the government seized a consignment of diamonds and held a number of staff for questioning in the latest crackdown on the mining industry the country.

Shares in the FTSE 250 company initially dropped 28 per cent on Petra’s confirmation that it had been blocked from exporting a parcel of stones from its Williamson mine, where production has now been halted, to Petra’s marketing office in Antwerp. The share price then recovered to trade down 8.5 per cent at 82p at lunchtime.

“Operations at Williamson have temporarily been stopped for health and safety and security reasons,” Petra said in a statement. Hassan Abbas, the Tanzanian government spokesman said the ministry of energy and Petra “are engaged in some discussions to resolve any pending issues.

Accusations against Petra Diamonds mark the latest step by the Tanzania President John Pombe Magufuli to assert greater control over the mining industry and boost its contribution to the economy. The government has already passed laws to increase mining taxes.

Although Williamson Diamonds mine  is a small part of Petra’s business — the mine is expected to contribute about 6 per cent of production and 11 per cent of revenue this year — the decision to suspend operations could see the company breach its banking covenants, according to South African media reports.

The company, which operates three mines in South Africa, last week received a waiver from its banks for a key test of its loan covenants. At the end of June the company’s net debt stood at $554m. “Under normal operating conditions, Petra would easily pass the covenant tests with plenty of headroom,” said Edward Sterck, analyst at BMO Capital Markets. “However, the suspension of operations at Williamson . . . make passing the tests a tighter prospect.”