Petra Diamonds Limited (LON:PDL) shares tanked after saying the Tanzania government has imposed a ban on the export of a large parcel of diamonds.
A parcel of 71,654.45 carats of diamonds from the Williamson mine in Tanzania has been blocked from being exported to Petra’s marketing office in Antwerp.
Key personnel from Williamson, which is 75% owned by Petra and 25% owned by the Tanzania government, are being questioned by authorities.
Petra said the reason for questioning and the export ban have not been formally made known to the company as yet but operations at Williamson have been temporarily halted until the issue has been resolved.
In reaction, shares dropped 10.27% to 80.72p in morning trading.
Petra co-opearting with government
The miner insisted that all operations at the mine are conducted in a transparent manner and in full compliance with legislation in Tanzania.
“Petra is committed to engagement with the government in order to resolve this matter and ensure that the correct information is available to all parties,” the group said in a statement.
Petra also pointed out that is not responsible for the provisional valuation of diamond parcels from Williamson before they are exported to Antwerp. Diamond valuation is carried out by the government's diamonds and gemstones valuation agency.
The provisional valuation is used to calculate the company's royalty payments to the government. However, adjustments to final royalty payments based on the actual sales proceeds for diamonds in Antwerp are made at the end of the tender process.
Tanzania tightening its reins on the mining sector
Tanzania has been cracking down on the mining industry with a set of new rules that require the government to own at least a 16% stake in mining projects, give them the power tear up and renegotiate contracts for natural resources, and remove the right to international arbitration.
Last week Acacia Mining PLC (LON:ACA) warned it would reduce operational activity at its Bulyanhulu mine in Tanzania to mitigate lost revenue associated with a government ban on the exports of gold and copper concentrates.
The Tanzania government imposed the ban in March on allegations that Acacia owes royalties on undeclared exports of gold and copper concentrates from the Bulyanhulu and Buzwagi mines.
READ: Acacia reduces operations at Bulyanhulu mine amid dispute with Tanzania government