Dar in the dark over sale of Williamson Diamond

Saturday January 10 2009
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Mining equipment at Williamson Diamond Ltd in Mwadui, Shinyanga. A team of experts is scrutinising Tanzania’s mining laws and policy ahead of a thorough review of both so that Tanzanians are assured of more direct benefits from the mining sector. Photo/FILE

The mystery surrounding the ownership of Tanzania’s largest diamond mine — Williamson Diamond Ltd — has deepened with the acquisition by a new Middle Eastern investors’ group of a majority share in Petra Diamonds Ltd, the South Africa-based firm that last year purportedly bought a 75 per cent share in Williamson.

The EastAfrican has established that the Dubai-based Saad Investments Company has acquired 43 per cent shares in Petra Diamonds, a Bermuda-registered company with offices in South Africa and the UK, which in September 2008 reportedly “issued” $10 million to purchase Williamson Diamond from South African giant De Beers.

De Beers owns 75 per cent of Williamson through its investment arm, a holding company called Wilcroft Ltd, while the Tanzania government owns 25 per cent.

The mystery arises in the first place because the Tanzania government which, despite being a minority shareholder, has the right to approve any transfer or sale of De Beers’ majority shareholding — says it rejected the Petra offer, while the Petra website continues to claim that it is about to add Williamson to its stable.

In October 2008, the government issued a statement denying media reports that De Beers had sold its shares in Williamson Diamond.

According to the Petra website, “Petra Diamonds is a rapidly growing diamond-mining group, focused on the African continent.


A number of recent acquisitions have established Petra as one of the world’s largest independent diamond groups by resources, with a total resource base of 265 million carats, worth $27.3 billion.

“In South Africa, Petra has five producing mines — Cullinan, Koffiefontein, Helam, Sedibeng and Star. The group has also reached agreement to acquire two further assets from De Beers — the Kimberley Underground mines, also in South Africa, and the Williamson mine in Tanzania.

“The group is on track to increase its annual production from 200,000 carats in the year to June 2008 to over one million carats in the year to June 2009.”

No Petra spokesmen were available on phone last week to confirm the reports, as the office was closed for end of year holidays.

But an official with Petra Diamonds told The EastAfrican from the UK last week that as far as she knows, the bid by Petra to acquire 75 per cent of Williamson has not been completed yet.

“This sale has not been completed yet. When it’s through, we will announce that,” she said.

Saad Investments is registered in the Cayman Islands and operates out of Saudi Arabia. The company is 70 per cent owned by the trustees of the Saad Settlement (Barclays Private Bank & Trust) and 30 per cent by Maan A. Al-Sanea.

According to the company, its purpose is to hold and manage the offshore assets of Al-Sanea and his family. The financial arm of the company is based in Geneva, Switzerland.

The Saad Group employs more than 8,000 people and its activities are conducted from Al-Khobar, Saudi Arabia, according to the Saad Group’s website.

Last week, the Tanzania government reaffirmed that De Beers had not sold its shares in the country’s largest diamond mine and that the shareholding structure still remains the same.

William Ngeleja, Minister for Energy and Minerals, told The EastAfrican that the government was still in negotiations with Wilcroft, De Beers’ holding company, over the sale of its shares in Williamson Diamond.

Mr Ngeleja said the government is cautious in the way it handles issues that have a direct bearing on the economy and development of the country.

“Even though it is too early to say anything on the issue, the government has yet to settle some outstanding legal issues with Wilcroft before any transaction to offload shares in the diamond mine can go through,” said Mr Ngeleja. “As things stand now, the shareholding structure remains the same.”

He said once the shareholders sort out pending issues, a decision will be made as to how to offload the shares.

A source at the Tanzania Chamber of Energy and Minerals told The EastAfrican that there were certain legal implications of the sale of shares to Petra Diamonds that needed to be settled before the transaction could be completed.

Although Gareth Penny, managing director of the De Beers Group, said the sale of its shareholding in Williamson Diamonds is part of an ongoing drive to position the group for long-term growth by reviewing its portfolio of mining assets and focusing on those with the best strategic fit, analysts took it as a signal of disapproval of the upcoming reforms proposed by the Bomani Committee, commissioned by President Jakaya Kikwete last year.

“As we build the De Beers of the future we are also creating new opportunities for other players in an increasingly diversified and competitive global diamond industry,” Mr Penny said.

Johan Dippenaar, Petra’s chief executive officer, had then commented: “Petra already owns three major diamond mines, Cullinan, Koffiefontein and, on completion, Kimberley Underground. Williamson will add a further major mine to our portfolio, with the potential to deliver considerable value to our shareholders.”

Currently, a team of experts is scrutinising Tanzania’s mining laws and policy ahead of a thorough review of both so that Tanzanians are assured of more direct benefits from the mining sector.

The sector is facing numerous challenges, such as its minimal contribution to the gross domestic product in comparison with its growth, minimal monitoring and concerns over export of raw minerals.

The move to review the mining policy came after Members of Parliament criticised the sale of government shares in Mwadui Diamonds, Kiwira Coal and Bulyankulu Gold mines.

The 75 per cent share of Williamson was controversially sold by the Tanzanian government in 1994 to De Beers at a mere $180,521, although the company owns land, diamond mines and infrastructure of considerable value, causing an uproar and leading to the formation of a parliamentary probe committee in 2004.

Analysts say that, at 146 hectares, Williamson is the largest kimberlite pipe ever to be mined, having been operated continuously as an open pit mine for almost 70 years, during which time it has produced over 20 million carats, while some 40 million carats (995 million tonnes of kimberlite) still remain.

Reported by Joseph Mwamunyange, Wilfred Edwin and Mike Mande