Tanzania to repossess Petra Diamond’s mine

Saturday September 9 2017

Miners in the Mwadui mine in northern Tanzania. PHOTO | FILE

Miners in the Mwadui mine in northern Tanzania. Cutting tanzanite locally will minimise smuggling, create employment for locals, and contribute more revenue to the government. PHOTO | FILE 

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Tanzania is likely to repossess a diamond mine currently being run by a London Stock Exchange-listed mining company, Petra Diamond Ltd, after President John Magufuli directed a review of Williamson Diamond mine’s contract, which operates Petra’s Mwadui diamond mines.

A parliamentary probe into the diamond trade alleged massive fraud and recommended, among other things, repossession of the mine, a proposal that got an immediate nod from the president.

National Assembly Speaker Job Ndugai had in June formed two House teams to review how Tanzania benefits from the diamond and tanzanite mineral trade.

The teams scrutinised ownership, excavation and regulations around these operations and presented their findings to the government on September 6 in Dodoma, but were not tabled before parliament.

President Magufuli, after receiving the reports, ordered an overhaul of the country’s mining laws in order to seal any existing loopholes.

“All experts on mining tanzanite and diamond should start dealing with all this issues relating to contracts and the country’s mining laws,” he said.

Corporate tax

As of 2015, Tanzania was the 10th largest diamond producer in Africa, after Botswana with 17.3m ca. Angola accounts for 7.1m carats South Africa 6m carats, Democratic Republic of Congo 3.15m carats, Namibia 1.92m ca, Sierra Leone 0.5m carats, Zimbabwe 0.5m carats, Lesotho 0.35m carats and Ghana 0.24m carats.

The MPs, besides accusing Petra of not paying corporate tax since it started operations in Tanzania in the 1990s, cited irregularities around the contracts, licences and declarations on both the quantity of the minerals and assets purchased.

“From 2007, Williamson Diamonds has never paid corporate tax. The diamond producer declared losses every year but still holds a licence that elapses in 2030, which doesn’t make sense... why keep operating if they are not making profit?” posed Mussa Azzan Zungu, who chaired probe team.

The state owns 25 per cent of the business with Petra Diamond Ltd owning the rest.

“The government will work on all the team’s recommendations. Law, security and enforcement agencies should investigate these allegations quickly. I would love to see Tanzanians benefit from their natural resources, especially minerals,” President Magufuli said.

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Tanzania is the only country where the rare gemstone, tanzanite, is mined but the country has so far not benefitted from the mineral which was first found in 1968.

“The entire tanzanite business system is steeped in robbery, fraud, irregularity and secrecy from small scale miners and large companies alike,” said Dotto Biteko, who chaired the tanzanite probe team, when presenting the report.

According to the Mr Biteko, only 20 per cent of tanzanite mined is presented for the requisite taxes and royalties to the government through the proper channels while the remainder is sneaked out.

“The government has no access to the important mining chambers of the Williamson mine at any stage, from drilling, packaging, loading and exportation,” added Mr Zungu.