DAR ES SALAAM, TANZANIA - All is not well following a decision made by the government of Tanzania to sanction a diamond mining giant De Beers to enter into a contract of selling its shares in Williamson Diamonds Ltd (WDL) to Petra Diamonds Limited (Petra).

According to the contract, De Beers Societe Anonyme (De Beers) was to sell its entire 75 percent equity shareholding and all its claims over Williamson Diamonds Limited (WDL) to Petra through the sale of 100 percent of Willcroft Company Ltd at $10 million, a price at which the transaction would also transfer rehabilitation liability.

However, the Member of Parliament for Karatu (CHADEMA) Dr Wilbrod Slaa has told EABW that he is surprised to hear such changes and fears foul play.

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.

"But now we have entered into another mining contract before conducting the review as the Bomani Committee recommended," he said.

According to statement of re-allocation presented in the parliament the committee spent Tsh 1.6 billion on the matter.

Dr Slaa says since 2004 Williamson Diamond Ltd (WDL) has never paid anything to the government under the pretext that it was making losses.

And according to the mining audit firm, Stewart, the mining sector in Tanzania caused a loss of Tsh 1.3 trillion because of under-declaration. Dr Slaa says there is worry that the 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 says.

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 the 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 in the continued sustainable development of mining operations at the Williamson diamond mine and the communities the mine supports.

The Minister of Energy and Minerals, William Ngeleja had since said, "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."

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.

Petra's CEO, Johan Dinppaar, said "his acquisition also marks Petra's entry into Tanzania, further diversifying the Group's geographical spread across Africa."

Gareth Penny, Managing Director of the De Beers Group explained that the sale of its shareholding in Williamson Diamonds is part of De Beers ongoing drive to position it for long term growth by reviewing our portfolio of mining assets and focusing on those with the best strategic fit. "As we build the De Beers of the future we are also creating new opportunities for other players in an increasingly diversified and competitive global diamond industry," he said.