Petra threatens investment cut over seizures

Dar es Salaam. Petra Diamonds has said it will cut investment in Tanzania if it is prevented from shipping stones to its overseas marketing office, Financial Times reported yesterday.

The London-listed company halted operations at its Williamson mine last week after the government seized a consignment of diamonds for export on suspicion they were undervalued.

“We won’t be stupid and just keep on pumping in money if it’s clear it will come to naught,” chief executive Johan Dippenaar said on Monday after Petra reported its annual results. “We’re monitoring the situation carefully.”

Although Petra has restarted production at Williamson following a four-day shutdown, it could breach its banking covenants if it cannot resume exports by the end of the year. It has net debt of $555 million.

Petra, which also operates three mines in South Africa, is the latest mining company to fall foul of authorities in Tanzania as President John Magufuli seeks more control over the country’s natural resources, a move that has created tensions between foreign-owned mining firms and the government.

Earlier this month Acacia Mining suspended operations at its main Tanzanian mine after the government blocked overseas shipments and presented the firm with a $190 billion tax bill over accusations it had misreported exports.

Mr Dippenaar said the diamond sales process in Tanzania is fully monitored by government agencies and the government is already a 25 per cent owner of the Williamson mine. “We’re hoping that the correct information is now properly shown to everybody,” Mr Dippenaar said.

“So they can see we’re not running an operation where things are left to us and they’re suspicious. There’s no need to be.” Petra said the parcel of 71,654 carats of diamonds that was seized had still not been released by the Tanzanian authorities, and it had not received an official explanation.

The government said the diamonds are worth more than declared and has charged two officials involved in the valuation process with “economic sabotage”.