Libya’s Qadhafi Assumes Control Of Sengamines

The world’s exclusive club of diamond miners has a new member: Libya’s strongman Col. Muammar Abu Minyar al-Qadhafi. As Libya hasn’t found diamonds yet, Qadhafi has resigned to the second best option and has been investing in - and has gradually assumed de-facto control of - the Sengamines diamond mining operation in the Democratic Republic of the Congo (DRC). About a year ago, Qadhafi, acting through the Libyan Arab African Investment Company (LAAICO), one of his country’s foreign investment arms, acquired shares in Oryx Natural Resources (ONR), the operator and principal shareholder of Sengamines. The Oryx company has been identified by the UN as a front for the Zimbabwean army. The first UN Panel report on the plundering of DRC resources notes that it ‘has obtained documentary evidence that Mr. Al-Shanfari's company, Oryx Natural Resources, is being used as a front for ZDF and its military company OSLEG.” The company has denied these UN claims, though the UN Panel has rejected the denials.

At the time the Libyan investment was made, Oryx’s executive chairman and managing director was Thamer Al Shanfari of Oman. Al Shanfari apparently once held the position of Oman’s Minister of Petroleum and Energy. (In any event, he is the son of former oil minister Saeed bin Ahmed al Shanfari.) Thamer Al Shanfari, who has close links to President Robert Mugabe, is a graduate of the Colorado School of Mining in the United States. He holds a wide range of directorships and represents the Oryx Group on many boards of public and private companies. The company’s deputy managing director is Geoffrey White.

Oryx is a private mining company incorporated in the Cayman Islands. ONR says “it acts as the financier and manager of Sengamines, which was granted the commercial rights to operate a diamond mining concession at Mbuji-Mayi in the Kasai Oriental Province of the DRC.” Oryx says it owns 49% in Sengamines and it lists as partners Mini?re de Bakwanga (MIBA) for 16%, the Government of the DRC for 33.8% and four individuals share the remaining 1.2%. Sengamines is an alluvial producer but it also holds two kimberlites in its concession area. Indeed, the late president Laurent Kabila transferred two of MIBA’s richest concessions, the Kimberlite deposits in Tshibua and alluvial deposits in the Senga Senga River to Al-Shanfari prior to the creation of Sengamines by Oryx and its Zimbabwean partners. The legal status of these concessions were concluded in a mining convention signed between Al Shanfari and the previous president, and was subsequently ratified by Joseph Kabila when he came to power in 2001.

Qadhafi’s entry into diamond mining went through Oryx Natural Resources, the holder of the operating rights of the Sengamines diamond mine. Though it hasn’t been publicized, Diamond Intelligence Briefs has now learned that in October 2002 Oryx sold 30 million of its 350,000,000 shares to the Libyan Arab African Investment Company (LAAICO) for US$1.00 per share. Mustafa T. Khattabi, who is the Chairman and General Manager of LAICO, authorised the share purchase.

According to intelligence information, LAAICO and Khattabi were introduced to Oryx by the former Libyan Minister for African Unity, Dr Ali Abdel Salam el-Treki and his son-in-law, Abdullah al-Baseer. LAAICO is owned by the Libyan Arab Foreign Investment Company (LAFICO), which acts as the Libyan foreign investment agency. Dr. Khaled El Zentuti is the Chairman and General Manager of LAFICO and reports directly to President Qadhafi; in this way Qadhafi remains very much involved and kept up-to-date on his foreign investments.

What initially appeared like a passive investment, quickly evolved into a much more hands-on affair for the Libyans. As part of the share purchase agreement between LAAICO and Oryx, LAAICO was able to appoint one director for every 10% of the aggregate issued share capital in Oryx held by LAACIO. In January 2003, an Oryx managerial reshuffle removed Thamer al-Shanfari as chairperson and introduced Dr. Issa al Kawari in his place. At the same time the representative of Qadhafi, Mustafa T. Khattabi, was brought into the Oryx management as a director. During the following months, the Libyans extended a number of loans to the company and the involvement deepened. Recently, they “closed the circle” by becoming the dominant influence on the DRC diamond mining company, when Khattabi replaced al Kawari as overall Oryx Chairman. Thus the present chairman of Oryx also holds the position of chairman and manager of the Libyan Arab Foreign Investment Company. Sources close to the diamond operations are whispering that there may well be some bartering transactions (diamonds for arms) in the making and that access to diamonds might also enable the paying off of foreign politicians with diamonds rather than cash, but Diamond Intelligence Briefs has not obtained any hard evidence that any of these talks have materialized and thus dismisses these rumors. Al-Shanfari, Al-Kawari and Khattabi can certainly take credit for having established the world’s first largely Arab-owned and controlled diamond mine.

Oryx says, “It has invested more than $100 million in the Sengamines project and is strongly committed to the Mbuji-Mayi region. The company has created more than 1,200 jobs. Many services as possible are outsourced to local businesses, such as transportation, customs clearing, and fabrication. The large number of personnel employed by the company boosts the local economy, making the mine a pillar of the Kasai economy.” The Oryx website claims that Sengamines will soon produce 10% (by volume) of the world’s diamond production. It isn’t there yet, but with the massive Libyan financial resources that have now become available, Sengamines certainly may realize all its aspirations – and beyond.