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06.06.2005 Business & Finance

Akwatia Diamond Mine Nearing Collapse

By Chronicle
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GHANA'S RICH diamond mine, Ghana Consolidated Diamonds (GCD) Ltd, located at Akwatia, in the Eastern Region, is nearing collapse.

The once largest mining company in the sub-region, GCD is gasping for surviving breath, because it has been hit by a devastating blow, following the failure of Messrs Sapper & Associates Ltd, the company that won the tender by the Divestiture Investment Committee (DIC), to inject $34 million into the mines and bring it to the 'Promised Land' as stated in the bidding documents.

Chronicle has learnt that despite the fact that the deadline for the payment for the take over of the mines ended last year, the escrow account of the DIC was still empty, awaiting $3.2 million from Sapper & Associates as the initial capital.

Sapper & Associates were one of the bidders in the previous tender held in 2003; the DIC later declared the whole exercise null and void and decided to re-advertise for the bidding.

Sapper & Associates, which placed second in the overall rating, had offered $20 million and later revised it to $25 million.

Sapper & Associates' new offer of $38 million for 90% of GCD was significantly better than the previous one and higher than that of any prospective investor to date. Further more, their proposal to operate a diamond cutting and polishing plant as well as a gold refinery factory, added value and attractiveness.

Equally, their intention to support the President's Special Initiative (PSI) in Agriculture, create jobs, and assist in developing sports was commendable, however they provided no details or plans as to how they would achieve these or fund them.

Further investigations revealed that this bad signal from Sapper & Associates, prompted the Acting Executive Secretary of DIC, Mr. J. K. Wiredu to inform The Castle that, 'not all that glitters is gold,' since it was thickly involved in the divestiture.

In a letter dated January 14, 2004, written by Mr. Wiredu to the President through the Chief of Staff, he said, “We have also observed a few inconsistencies in the various documents submitted by Sapper & Associates, which may be indicative. For example, the signature of Mr. Samuel E Sapper (sometimes described as President and at other times Managing Director) differs significantly from one correspondence to the other.

Also, the company does not appear to have printed stationery (specifically letterheads) and the computer-generated one they use differs from letter to letter.

Sapper& Associates was registered in Ghana in March 1992, although no evidence of trading activity has been sighted and supposedly in the USA. Whilst a copy of the Certificate of Incorporation in Ghana has been furnished, no such proof has been provided for the USA company.”

Following the letter sent to the Castle, the Chief of Staff, Mr. Kwadwo Mpiani advised that Sapper & Associates deposited an amount of $200,000, being part payment of a non- refundable commitment fee of $3.4million into an Escrow Account.

He continued that the balance of $3.2 million be paid within 14 days, commencing the date of the acceptance of the offer in March, last year.

The paper gathered that the company is now combing from one leading financial institution to another in both Europe and USA with the Offer Letter (OL) from DIC, looking for a loan for the payment of even the first installment of $3.2 million representing 10% of the total $34 million winning bid but to no avail.

Information gathered that there had been a serious in-house fighting among the directors of Sapper & Associates, over the payment of the non-refundable $200,000, since they had never expected any money before they entered the mines and bolted with the looted rich diamonds, as had been the case previously.

The Managing Director of GCD, Mr. Maxwell Kusi-Mensah, in the face of the compelling evidence, admitted to The Chronicle in an interview, that the GCD was on the verge of collapsing.

He noted that to move the mines forward, they would need a new plant and new mining machinery.

“Because we are not able to generate profit, we owe VRA, Social Security and National Investment Trust, we owe Internal Revenue Service.”

He noted that recently, he had to plead with the VRA to exercise patience since they had threatened to back out, due to the failure of GCD to pay the huge electricity bills that had accrued over the years.

“We started owing VRA from January 2002, then we went into some agreement with them through the Ministry of Mines, not to force us to pay because if really they were to cut us off, then GCD would collapse,” he stressed.

Chronicle gathered that should the mines, that was one of the companies the (P)NDC indiscriminately plundered collapse, the consequences would highly be felt by the inhabitants of Akwatia, since as part of the social responsibilities of the mines, it supplies electricity (it owns the transformer) and water to the whole town, including schools like St. Roses Secondary School.

Whiles huge debts are lingering around the neck of the single largest diamond mine in West Africa, the company is facing machinery problems.

Chronicle investigations have revealed that most of the machines were obsolete as they were brought to the mines 70 years ago, and as a result, could produce about only 10,000 carats of diamonds in a month though it used to have the capacity of producing 60,000 carats.

Further investigations indicated that though this year, diamonds have received the highest price on the world market, the mines had not been able to produce any appreciable quantities that would enable it to benefit from this favourable price.

This was because due to financial constraints, the company could afford only a small processing plant to replace the one commissioned in 1965.

The paper gathered that whiles the mines was collapsing, tributal miners are having a field day, having invaded GCD's concessions to mine the rich diamond, which had been the richest industrial diamond in West Africa.

To add more injury to the sore, the licensed tributer miners, though by virtue of mining regulations, were supposed to sell all their diamonds to GCD, had adopted the strategy of selling a bulk of their diamonds to the Precious Mineral Marketing Commission for better prices.

He added that the government was sourcing a loan facility, and was confident that if it became successful, they would raise GCD back to its feet since the raw materials for production were available.

“The geological data indicates that we would produce a minimum of 50,000 carats in a month but I know we can go up to 60,000, but I am taking the conservative view,” Mr. Kusi Mensah added.

He advised that the mines be not allowed to collapse because of the information given by some people that the concession was depleted.

Mr. Wiredu, in an interview, disclosed that very soon, DIC would re-advertise for fresh bidding of GCD.

Sapper & Associates, he said, could not meet the requirements for the divestiture, so could not take over the mines.

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