Tanzania Seizes $15M Worth Of British Diamonds, Plans To Nationalize
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Image Courtesy of Petra Diamonds
(Kitco News) - The Tanzanian government made another bold move against miners, this time seizing millions worth of diamonds from a British mining company.
The East African nation said it is planning to nationalize the diamonds, which were on their way to Belgium for export.
The local mine majority owned by London-listed Petra Diamonds (PDL:LN), Williamson Diamonds, was in charge of transporting the diamonds and it allegedly under-declared the value of the minerals heading for export, according to the local government.
Tanzania has put the value of precious stones at $29.5 million, which doubled Williamson’s declared value of $14.7 million.
“While Williamson Diamonds Ltd declared in its documentation that the value of the diamonds was $14.798 million, a fresh valuation done by the government established that the actual value of the diamonds is $29.5million,” Tanzania’s Finance and Planning Ministry said in a statement. “Among the legal action to be taken include the nationalization of all the diamonds seized after it was established that there was cheating involved in declaring the actual value of the minerals.”
The London-listed Petra Diamonds responded by saying that it has not been provided a formal reason for the seizure, which happened on August 31 at the Dar es Salaam airport, known as the country’s commercial hub.
Tanzania’s Finance and Planning Minister Philip Mpango, said that the East African nation loses out on more than $46 million annually from exports of under-declared diamonds that pass through the Dar es Salaam airport.
On top of seizing the diamonds, Mpango announced that a criminal investigation will be opened against all officials involved in declaring the value of the diamonds. The Minister also called for arrests of the diamond mine employees and public officials involved in this incident.
Petra owns 75% of the Williamson Diamonds, while the other 25% belongs to Tanzania’s government.
In response to the news, Petra’s shares slumped 28% on Monday. Since then, the company has somewhat recovered, with shares now trading at around $85.10.
This incident is just one among a number of shocking steps taken by the Tanzanian government recently in its crackdown against the mining sector.
In July, the government slapped Acacia Mining with a staggering bill of $190-billion in alleged fines and unpaid taxes. Tanzania sent a $40 billion tax bill along with an additional $150 billion in penalties and interest owned, according to a statement released by Acacia.
In the midst of all the accusations and in light of Tanzania’s track record with international mining companies, banking and asset management group Investec said it is inclined to believe the miners.
“Given Tanzania’s history of improbable accusations against Acacia, we’d be backing Petra’s side of the story, not that it will help them,” Reuters quoted Investec as saying.