Shares in a mining firm listed in London fell by 24% during trading on Monday after Tanzania officials did not allow it to export diamonds from the country, located in east Africa.
Petra Diamonds announced in a prepared statement that a parcel it had of 71,600 carats of diamonds from one of its mines in Tanzania was seized by government authorities. It apparently was seized over a dispute related to the value of the diamonds.
The company had been planning to ship the diamonds to offices it has in the Belgian city of Antwerp, which is the center of the world’s diamond trade.
The slump in the stock market erased close to $160 million from the value of the business. Shares did recover some of the earlier losses and were trading about 10% down during midmorning in London.
Petra said that the diamonds had a value of $14.7 million. Tanzania Broadcasting Corp, which is state run, reported on Saturday that government officials accused the diamond mind of undervaluing its diamonds. It said officials in the Tanzania government had planned to nationalize them.
The government of the east Africa nation was not available to make a comment about this report.
In a filing with regulators in the London Stock Exchange, Petra said it was not told formally why the government of Tanzania had blocked the exporting of its shipment, and that it had complied with all the relevant legislation.
It added that the provisional value of the diamonds from the mine was carried out by an agency of the government. Based upon that valuation, Petra pays a provisional royalty, which can be adjusting thereafter depending upon the final price they are sold for once sold in Antwerp.
Petra said certain key personnel at its mine had been questioned by government officials, and it was therefore forced to suspend its operations on a temporarily basis for the safety, health, and security reasons.
Petra is the owner of 75% of the diamond mine, with the remaining 25% owned by the government of Tanzania.
Petra isn’t the first mining business to experience trouble with Tanzania authorities. The President of Tanzania John Magufuli has attempted make the firm pay higher taxes.
During July, the government passed new laws that required that mining companies pay more royalty fees and it imposed a new fee for clearing exports. In March, the government banned the export of gold and copper ore that was partially processed.