Dar es Salaam, Tanzania — MININGREVIEW.COM — 19 February 2009 – The government of Tanzania has decided to allow Petra Diamonds – now one of the world’s largest independent diamond groups in terms of resources – to acquire a 75% stake in the country’s Williamson diamond mine.
Announcing this here, minerals and energy minister William Ngeleja said the US$10 million (R100 million) purchase from the local unit of De Beers Group would not be blocked. Tanzania had decided not to take up its first option to buy the stake, he told Bloomberg News here.
The minister went on to say that a condition of the agreement was that Petra conducted a feasibility study into the possibility of boosting production from the mine to 1 million carats a year. This would entail massive spending on the mine. “Current production capacity is about 200 000 carats per annum, and our intention is to go to 1 million carats, allowing the plant to break even so that the company can pay corporate tax,” he added.
Mining companies that operate at a loss are exempt from paying the country’s 30% corporate tax.
Petra – listed on London’s Alternative Investment Market (AIM) – announced last September that it had agreed to buy a 75% stake in Williamson from De Beers. Shortly afterwards, the government of Tanzania – which owns 25% of the mine – said the sale could not be completed because of a legal obligation to give the east African government the first option to buy the shares.
The open pit mine – located 161 km south of Lake Victoria – has been operating at about half capacity for the past three months, according to Tanzania commissioner for minerals Peter Kafumu. “The site’s aging equipment is inadequate for the task of mining the low-grade deposit at a depth of 400 feet,” he added.
Kafumu revealed that the feasibility study would probably be completed by June, and subsequent upgrading of the mine should take up to three years.