Struggling Petra Diamonds (LSE:PDL), which put itself up for sale in June, is facing allegations of human rights abuses by the security guards at its Williamson mine in Tanzania.
The South African company said that UK-based law firm Leigh Day had filed claims in the High Court of England on behalf of 32 anonymous individuals. The accusations against Petra and the mine operator Williamson Diamond Limited (WDL) include reports of personal injuries and deaths at the diamond mine, allegedly caused by security staff, it said.
The company has also received a letter from RAID, a UK-based NGO, regarding similar accusations from local residents and “others relating to actions by WDL, its security contractor and others linked to WDL.”
Petra said it took the allegations “extremely seriously” and is beginning an independent investigation through a specialist third party. WDL has already begun its own investigation, it noted.
The Africa-focused diamond producer said its Williamson mine has been the target of illegal artisanal miners “for some time” due to challenges in securing the large perimeter of the license area.
“This illegal mining activity is managed by WDL and the local government authorities on an ongoing basis,” it said.
Petra has dealt with the incursion of illegal miners at its operations before. Last year, it opened up some of its Koffiefontein mine’s tailings, in South Africa, to small scale miners. The move, aimed at tackling illegal activities, was seen as a solution to issues relating to artisanal miners at the asset.
It previously carried out a similar exercise at Kimberley, in Northern Cape, where small scale miners operated “the floors” of the property, an area previously worked by Kimberley’s founding miners.
That project, which began in 2017, wasn’t a complete success. Its then joint venture partner, Ekapa Mining, reported a year later it was still spending R3 million (about US$180,000) a month in security to keep individuals out of its operating boundaries. Petra sold its stake in the Ekapa partnership in 2018.
The diamond producer has been hit by a triple whammy of weak market conditions, local power outages, and the ongoing effects of Covid-19.
Petra tried to improve its fortunes to expand its flagship Cullinan mine in South Africa. The renowned mine, where the world’s largest-ever diamond was found in 1905, produces about a quarter of the world’s gem-quality diamonds. It is also the source of the vast majority of blue stones.
In May, the debt-laden company failed to make an interest payment on a US$650 million bond, but won some breathing room from creditors, who said they would not declare a default until August.
It also cancelled May and June tenders because of travel restrictions and low demand.
Petra shuttered Williamson in April. The mine is 75% owned by the company and 25% by the government of Tanzania.