READ THESE TWO STORIES AND DRAW YOUR OWN CONCLUSION

STORY NUMBER 1,Source: The Guardian

De Beers calls it quits at Mwadui Diamonds   2008-09-10 10:02:53  By Guardian Reporter Williamson Diamonds Limited`s all-time majority shareholder, De Beers, yesterday concluded a deal that saw its entire 75 per cent stakes changing ownership to Petra Diamonds Limited (Petra).  The transaction earned De Beers, which has operated its interests at WDL through Willcroft Company Limited in a joint venture with the government of Tanzania over the past 50 years, an instant USD10 million (about 11.7bn/-).  The deal is expected to be completed mid next month, according to a just-released statement.  WDL operates the open-pit Williamson Mine at Mwadui in northwestern Tanzania`s Shinyanga Region.  Petra is said to have proven diamond mining expertise and to have acquired a number of other mines in recent years from De Beers Consolidated Mines, a South African subsidiary of De Beers.  Mining industry watchers see the transaction boding well for the future of Williamson Mine largely because it gives Petra the opportunity to use its expertise to unlock the significant value at the Mwadui diamond deposits. Mwadui is still considered the world`s largest kimberlite mine currently in production in a 146-hectare area.  Commenting on the sale, Energy and Minerals minister William Ngeleja said: �The government is pleased to welcome Petra to Tanzania 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.``  Meanwhile, Petra CEO Johan Dippenaar noted: ``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 our portfolio, with the potential to deliver considerable value to our shareholders.``  ``This acquisition also marks Petra`s entry into Tanzania. We thank Tanzania for their support in completing this transaction and look forward to working with the government as our partner in taking the mine forward,``added a visibly elated Dippenaar.  De Beers Group managing director Gareth Penny explained that the sale of the shareholding in WDL was part of the company`s ongoing drive to position itself for long-term growth by reviewing the portfolio of mining assets and focusing on those with the best strategic potential.  Petra Diamonds was established in 1888 and operates in South Africa as well as Angola, Botswana and Sierra Leone.  Canadian geologist John Williamson discovered the Mwadui kimberlite in 1940 and began mining activities in the area soon after.  De Beers purchased half the total shareholding in WDL upon his 1958 death, with the then colonial government of Tanganyika taking the other half in lieu of death duties.  De Beers managed Mwadui Mine between 1958 and 1973, when the government of Tanzania took over the management of day-to-day operations.  De Beers was invited back in 1994 to oversee the mine�s management operations and, following recapitalisation, the shareholding was adjusted to 75 per cent De Beers and 25 per cent Tanzanian government.  The mine, which has a workforce of about 800 people and also uses the services of 400 independent contractors, last year earned USD23 million from 220,209 carats.

STORY NUMBER 2,Source: The Citizen

Govt rejects Mwadui acquisition

By Mwanamkasi Jumbe and Michael Kimaro  An investment row is simmering between the Government and South Africa's mining giant, De Beers, over the ownership of Williamson Diamond mine in Mwadui, Shinyanga Region.  Energy and Minerals minister William Ngeleja yesterday denounced De Beer's reported sale of its 75 per cent shares at the mine to Petra Diamonds Limited.  The denunciation at a press conference came almost a month after Willcroft Company Limited, which owns the 75 per cent shares at Mwadui announced it had sold its stake for $10 million to UK based Petra Diamonds Limited.  Willcroft held the shares at the famous Mwadui mine on behalf of Cheviot Holdings Limited that is the investing arm of De Beers.  But in an interesting twist, Mr Ngeleja told a packed press conference that the Government of Tanzanian, as a joint shareholder in the venture did not bless the sale of the shares.  He said the reported sale was illegal and insisted the Government was not allowed the right to buy the shares as stipulated in the 1994 agreement with De Deers when it first bought into the mine.  Ngeleja who was flanked with two officials from De Beers and Petra Limited at the press briefing insisted what had been sold to Petra was Willcroft and not the shares.  But talking to The Citizen soon after the press conference De Beers' representative Mr Tony Guthrie said they had decided to sell the shares owing to financial difficulties at the Mwadui mine.  "Following the financial problems Williamson Diamonds is facing we saw it important to look for another investor. What was needed for the sustainability of the company is intensive capital investment," said Mr Guthrie. He did not specify if the company will refund he money it indicated receiving from Petra for the shares nor did he want to speak on the statement issued by the minister.  The press conference yesterday was also witnessed by chief executive officer of Petra Diamonds.  Mr Ngeleja said he had decided to put the matter in the open since Petra Diamonds Company limited announced it had bought the mine from Willcroft Company while it is not true.  "De Beers has not followed and put into consideration the procedure put forward in an affiliated agreement reached on October 1994 between Government and Willcroft that the Government has to be advised before the sale of the share" said the minister for energy.  He explained that according to their agreement if the Willcroft company Limited wants to sale the shares they should consult the Government first to see if the Government was in a position to buy them or not.  "It was a must that the Government should be given the offer to buy the shares first," Mr Ngeleja insisted.  The minister added that the Government had no problem with sale of Willcroft Company to the Petra diamonds Limited so long as the shares were not interfered with.  "Willcroft is an international company, based abroad so we are not concerned with its sale but when it comes to the Mwadui mines they should follow regulations of our agreement," said the minister.  Speaking on the Government position in buying the shares, the minister for energy said that since the Government has its own ways of working they will have to communicate with treasury to know the position.  He said that at the moment the Government is in discussion with the two companies on the matter.  "We do not need to delay, before end of this year we expect to finish the discussion since we depend much on the Williamson Diamonds Limited," said Mr Ngeleja and added that, "We want this matter to go quickly but without destroying the regulations of our agreement.  Recently, Petra Diamonds an international diamond mining group has announced the acquirement of 75 per cent in Tanzania's Williamson Diamond Mines at $10million that raised a number of questions from different people.  Petra, which operates in various countries in Africa, has paid the $10million in cash to Cheviot Holdings, a unit of De Beers to acquire Tanzania's longest operating Diamond mine.  Petra's corporate communications manager, Ms Cathy Malins, was recently quoted in a local newspaper in Tanzania saying the company has planned to invest $28 billion (approximately Sh33 billion) to expand the Mwadui mine over the next two years.  The sale had raised queries among the public because the Government had not issued any statement on the move. Workers at the mine issued a statement challenging the Government to come out clean on the sale and assure them of their job security.