East African Business Week (Kampala)
6 October 2008
Dar Es Salaam, Tanzania — As was anticipated, the deal between the government of Tanzania and a diamond mining giant De Beers to enter into a contract of selling its shares in Williamson Diamonds Ltd (WDL) to the UK Petra Diamonds Ltd (Petra) has hit a hitch.
Through its Minister for Energy and Minerals Mr William Ngeleja, Tanzania has refuted recent assertions that the 75% stake in Williamson Diamonds Ltd (WDL) had been acquired by another investor, Petra Diamonds.
The reason advanced by Mr Ngeleja is that Tanzania government, being one of the shareholders was not given the right to "first refusal" before Messrs Wilcroft sold off its shares to Petra Diamonds.
A press release jointly issued by the Tanzania government, De Beers and Petra early last month suggested that Tanzania had sanctioned De Beers to enter into contract of selling its shares in Williamson Diamonds Ltd (WDL) to Petra Diamonds Limited (Petra).
The same minister was quoted in the statement as saying, "Tanzania is pleased to welcome Petra as its new partner in Williamson Diamonds Limited. This is an exciting opportunity to breathe new life into Williamson Mine and Tanzania's diamond mining sector."
According to the contract, De Beers Societe Anonyme (De Beers) would sell its entire 75% equity shareholding and all its claims over Williamson Diamonds Limited (WDL) to Petra through the sale of 100 percent of Willcroft Company Ltd.
In terms of the sale agreement the cash consideration is $10 million, and the transaction will also transfer rehabilitation liability, but this would cover only the Wilcroft shares, not the whole of WDL as an entity.
Last week Mr Ngeleja "clarified" that "what happened is that Wilcroft as a subsidiary of De Beers is the one that had been sold off to Petra Diamonds not government 75%shares in WDL." According to him, the government will decide on the fate of its shares soon.
Early last month when the news of the deal came public, the Member of Parliament for Karatu (CHADEMA) Dr Wilbrod Slaa told EABW that he was surprised to hear such changes and feared of a foul play in the whole deal.
He said the Bomani Committee which was appointed by the President to look into the mining sector and give its recommendations to the government has presented its report including the need to review all mining contracts.
Dr Slaa added that since 2004 Williamson Diamond Ltd (WDL) has never paid anything to the government under pretext that it was making a loss.
He was worried that this abrupt change of hands from De Beers to Petra might mean a lot of things. "Either they have collected enough or some government officials have leaked some vital information in the mining sector," he said.
Since 1958 WDL has operated as an incorporated joint venture between the government of Tanzania and De Beers.
De Beers' shareholding in WDL is held through its wholly-owned subsidiary, Willcroft Company Limited. WDL operates the open-pit Williamson Mine at Mwadui in the Shinyanga Region of northern Tanzania.
Petra, a long time player in diamond industry has proven diamond mining expertise and, in recent years, has acquired a number of other mines from De Beers Consolidated Mines, a South African subsidiary of De Beers.
The transaction gives Petra the opportunity to use its expertise to unlock the significant value at the Mwadui deposit (the world's largest kimberlite mine currently in production at 146 hectares) and to invest for the continued sustainable development of mining operations at the Williamson diamond mine and the communities the mine supports.
Petra already owns three of the world's major diamond mines, Cullinan, Koffiefontein and on completion, Kimberley Underground.
Williamson will add a fourth world class mine to Petra's portfolio, with the potential to deliver considerable value to our shareholders.
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