Tanzania shuts down its UK diamond office

Tanzania has closed down the London offices of its diamond sorting firm and transferred its operations to Dar es Salaam.

Commissioner of Minerals in the Ministry of Energy and Minerals Dr Peter Dalaly Kafumu said the closure is necessary following Petra Diamonds’ purchase of De Beers’s interest in the Williamson Diamond mine.

Dr Kafumu said that since Petra sells directly to the overseas market, the function of Tanzania Diamond Sorting (Tansort) in London has become redundant.

Four staff members who served at Tansort will be transferred to his docket while another employee, who was working under contract, retired some time back.

“Financial experts are in London to sort out payment and other terminal benefits,” he said.

Petra bought a 75 per cent stake in Williamson Diamond Mine from De Beers Societe Anonyme subsidiary Willcroft Company Ltd in 2008 for $10 million and changed the firm’s name to Williamson Diamond Ltd. The government owns the remaining 25 per cent.

According to Dr Kafumu, the law stipulates that if a mineral [diamond] company is selling via a third party then a government agency is needed to work out the prices.

However, if the firm sells direct to the market, there is no need for the agency.

Tansort was tasked to assess the price of diamonds that were exported to the UK from Williamson Diamond mine in Mwadui, Shinyanga region and collect five per cent royalty on behalf of the government.

Tansort, which was established in 1966, came into the limelight when it failed to disclose its accounts forcing the parliamentary Public Accounts Committee (PAC), to investigate its activities in 2004.

The committee suggested its immediate closure to save on misuse of public funds.

Between 1994 and 2000, De Beers paid $4.05 million to Tansort for the sorting of 901,300 carats of diamond. De Beers pays Tansort $4.5 per carat.

Nothing gets to Treasury

But according to government officials, no money paid by De Beers to Tansort has been remitted to the Treasury.

Thus in 2004, PAC was allowed to investigate Tansort’s activities and methods of payment of royalties from diamond sales.