An Interview with Lesotho Times On Upcoming Mining Reforms

 Author: Bereng Mpaki

The government has enlisted the services of the African Development Bank (AfDB) to help in reviewing its natural resource mining contracts with mining companies to ensure they best serve the country’s economic interests.

According to the Ministry of Mining’s Public Relations Officer, Rorisang Mahlo, the contracts review is in line with the ministry’s on-going review of existing mining legislation to ensure that they better respond to the country’s developmental needs.

Mr Mahlo said the review exercise is being done through the AfDB’s African Legal Sector Facility (ALSF), which supports African governments in the negotiation of complex commercial transactions. 

He said: “This exercise is done to ensure that as a country we are getting the best out of the agreements we have with international investors in mining our resources”. “The African Development Bank is partnering with the government in this exercise, which is not only limited to the mining but other sectors as well.”

The AfDB facility was established in 2010 to support African governments in their dealings with international investors who often took the upper hand in negotiations. The facility was established in response to a call by African ministers of finance for assistance in three key areas namely, commercial credit litigation, the negotiation of complex commercial transactions and capacity building.

It provides assistance to African countries to strengthen their legal expertise and negotiating capacity in debt management and litigation, natural resources and extractive industries management and contracting, investment agreements, and related commercial and business transactions.  The ALSF also grants and advances funds to African countries for legal advice from top legal practitioners in these areas to ensure fair and balanced negotiations. The government has in the past come under fire from the public for awarding mining rights to foreign mining companies to extract diamonds among other natural resources.

The public believes that the country does not adequately benefit from its natural resources since it awards majority shares in the mines to the mining companies while the government holds minimum shareholding.   

  

Lesotho has diamond mining leases with Gem Diamonds which holds 70 percent shares in Letšeng Mine; Firestone Diamonds with 75 percent shares in Liqhobong Mine (25 percent owned by the government); Namakwa Diamonds with 75 shares in Kao Mine (25 percent owned by the government); Lucapa Diamonds with 70 percent shares in Mothae Mine (30 percent owned by the government); and Reskol Diamonds for operating Kolo Mine with 75 percent while the government has 25 percent. 

Mr Mahlo added that the renewal of mining leases that are due may therefore be delayed as a result of the review. This comes amid delays in the renewal of Letšeng Diamond’s lease, which is due to expire in 2024, is currently being finalised.

Montoeli Masoetsa, former board member of  Letšeng Diamonds recently told the Lesotho Times that the mine’s parent company, Gem Diamonds was frustrated with the delays in the renewal of its licence.

He also suggested that as a result of the delay in renewing Gem Diamonds’ lease, Letšeng Mine could close shop in 2024. However, his claims that Letšeng Diamonds could shut down in 2024 after the expiry of Gem Diamonds’ lease were yesterday shot down by the Letšeng Diamonds’ Chief Executive Officer, Kelebone Leisanyane.

Mr Leisanyane said there were no plans to shut down and instead, Letšeng Diamonds was in “advanced talks with the government for the renewal of its mining lease upon its expiry in 2024”. He said he expected that an agreement would be reached very soon to enable the company to adequately plan for the future in good time.

However, Mr Mahlo said: “This is part of the reason why the Letšeng’s mining lease is yet to be finalised because this project starting during while the renewal was already underway. “Mining leases will be scrutinised by the AfDB experts to ensure that they do not have loopholes that will allow investors to benefit more than the country. This means that starting with the Letšeng Diamond’s mining lease, all other agreements will be reviewed going forward.”

He said the lease review process will however, have to wait for the enactment of the new mining laws which the ministry is currently working on. Mr Mahlo said the development of the new legislation is at an advanced stage although it is yet to be tabled in parliament.

“The development of the new Mines and Minerals Bill is at an advanced stage as the ministry has had to split it into two, with the other half focusing on establishing the Lesotho Mining Authority,” Mr Mahlo said.

SANDSTONE MINING BECOMES THE FIRST MINISTRY`S ACTIVITY IN 2019/20

          
      By Rorisang Mahlo

Mr. Makoko Addressing the Hon. Minister.

As the first activity of the year 2019/20, the Minister of Mining, Hon. Keketso Sello, compromised his normal routines of cabinet and office work to show some courtesy and support to the Mining sub-sector that is flooded mostly by indigenous Basotho investors.

The Hon. Minister paid a special visit to all Sandstone Mining Companies at Lekokoaneng and their neighbouring roadside Artisans on the 4^th of April 2019. The objective of this visit was a pure work inspection with an exclusive element of open interaction to share progress, achievements, challenges and creating the means of an open dialogue to iron out all deterrents hampering the business growth.   

In his address, Hon. Sello said one must think out of the box to put bread on the table and to alleviate poverty. He also commended most Basotho owned Sandstone Mining Company Directors for the effort they make other than those who are waiting for an employment opportunity to come their way.

Most importantly, Hon. Sello strongly emphasised that it is the government's desire to see Basotho prosper, hence his visit to address their challenges and map out a better way forward. Adding that, “in order for the country's economy to flourish, it requires people to use their minds, thereby inspiring those who were there to take that as an example,” said the Minister.

In embracing and acknowledging their efforts further, the Hon. Minister said “as a seasoned businessman, believe me, I am impressed that most of these mines are managed by Basotho, adding that they can only grow if they receive sufficient local support.”

However, on the contrary, most Mining Company Directors admitted before the Minister that every journey has its ups and downs.

The Rock-City Production Area

Speaking in an interview with the first company that welcomed the Minister, the Managing Director of Lekokoaneng Sandstone, Mr. Nephtaly Makoko, ironically reported a number of setbacks that they encounter generally as a sub-sector as thus:  “Lack of market for our products, competing with people operating without legitimate mining documentations (reference to Mining Leases) and least, the theft associated with electricity cables which is mostly a very costly and  unfortunate act, as it is done by other Basotho to their fellow countrymen trying to make ends meet.” 

In general, Mr. Makoko and his other Sandstone colleagues conceded that even though Basotho are trying to fight hunger on the Sandstone Mining, but they are all faced with a common challenge of negative stigma attached to building with a sandstone. “There is an old roving negative perception of Basotho, thinking that building with a sandstone is only meant for the rich,” said Mr. Makoko. He further added that, the same perception is the one that has disadvantaged them by expelling their local clients who resorted to building with expensive bricks, hence the lack of local market.

“We strongly like to nullify that perception and we are, therefore, pleading with Basotho to support our businesses, so that we too can grow”, emphasised Mr. Makoko.

At the same time, the roadside Artisans were also summoned together and had a chance to voice out their piece of mind to the Minister of Mining. On their behalf, Mr. Matobako Hlephole, expressed the Artisans mixed feelings caused by their past sad experience with the other Mining Ministers.

“First and foremost as a starving and unemployed Mosotho man, trying to struggle for means to live in our country, we feel very honoured to welcome you in our midst and in our village Hon. Minister, but on the business side, we are trampling with frustration whether you are here to chase us away or support us; please clarify your stance,” said Mr. Matobako.

The Minister had no chance but to allay their fears before anything else as they were adamant that they were not so free to say much if they were not sure of his intentions. After that brief ice-breaking talk, Mr. Matobako melted and shared with Hon. Minister that they have been abandoned and shamefully threatened by the past governments as if they were thieves stealing somebody's property.

The Roadside Artisans in Dialogue with the Hon. Minister

“We have been working under a severe threat of apprehension for displaying our Sandstone products along the road, with the Road Reserve Clause, hence you heard us asking if you are here to chase us away or not”, said Mr. Hlephole. He also told the Hon. Minister that “we felt so lost in our country, while we were not even troubling such governments to hire us collectively as Lekokoaneng Mining Artisans.”

Mr. Hlephole went on to say that all they wanted was support, provided that they are on the right track, and that government should have extended their hand through the existing Large Scale Mining Companies to equip them with a few resources that would boost the natural talent that seems to have so much potential of creating employment opportunities within Lekokoaneng area; “Not to be harassed with a bulldozer which we were threatened that it will be sent over to destroy our merchant here,” said Mr. Hlephole.

Finally, after the efforts of understanding each other and setting the record straight between the Minister and the Lekokoaneng Artisans, the interactive visit was concluded with an agreement that the Artisans will establish their association. The anticipated association is going to be the Ministry`s and everybody`s entry point when there is a need for further assistance or any form of dialogue that is aimed at improving their lives and the socio-economic status in their beloved area.          

2019 Mining Budget Press Statement

          By Rorisang Mahlo

“The Ministry of Mining is committed to develop, regulate and sustain a viable mining industry that promotes sustainable mineral resource exploration and exploitation through creation and provision of a conducive mining environment for the socio-economic advancement of the country.” This statement was quoted by Hon. Keketso Sello, the Minister of Mining while presenting the Ministry`s budget from the National Assembly of Lesotho on Tuesday, 26 March 2019.

In his budget presentation, Hon. Minister of Mining pleaded with the Honourable House to approve the total expenditure budget request of M42, 080,269.00 out of which:  M24,158,469.00 is for Recurrent Budget, while the sum of M17,921,398 is for Development Budget, and the Revenue Budget estimate is M627,916,575.00.

When reporting on the 2018/19 priorities, the Hon. Minister proudly reported before Parliament that his Ministry successfully managed to attain the following: 

  

Completed the 2015 Minerals and Mining Policy Implementation Plan and Ministry’s 2018-2022Strategic Plan, which was approved in November, 2018 and its Implementation Plan;

•     Ministry’s legal and legislation framework review in advanced stage;
•   With assistance from Ministry of Finance, the Ministry solicited support from the African Legal Support Facility (ALSF) to review the mining leases and legislative framework; 
•    In conjunction with the Lesotho Chamber of Mines, the Ministry held a successful “Mining Khotla” in November, 2018 where mining houses and business community interacted to explore opportunities that exist within the mining industry;
•   Two geochemical map sheets in addition to the existing 47 generated to update the mineral resources information, reaching a total of 49 out of 58 for the whole country;
•       Generated from target satellite image analysis for Ribaneng area on mineral analysis;
•       Fourteen prospecting licenses awarded;
•       Two new mining leases awarded;
•       One mining lease renewed.

  Forecasting for the 2019/20 financial year, Hon. Sello reported before the parliament that this year the Ministry is intending to ensure meticulous implementation of the following priorities: 

•    To complete the review of existing legal and regulatory framework for the mining sector and institutional arrangements to create an enabling environment for policy strategy that enhances competitiveness, transparency, predictability and consistency, as a catalyst for attracting more investment into the mining industry;
•       To intensify mineral exploration to determine potential mineral resources and reserves of the country through follow up exploration programmes on selected target areas;
•       To intensify and support mineral exploration in the country through, among other initiatives, construction of a fully-equipped Geoscience Laboratory facility for sample analysis;
•       To expand the mining industry by opening new mines and creating enabling environment for facilitating downstream activities;
•       To implement both the Minerals and Mining Policy Implementation Plan, and the Ministry’s 2018-22 Strategic Plan to improve the sector performance and optimise revenue collection;
•       To improve revenue collection from the mining sector by putting in place measures that help maximize revenue collection as per the new Policy Implementation Plan.

   To speed up the legal framework to accommodate revenue collection from the Artisanal and Small Scale Miners (ASMs) which is a preferential opportunity strictly meant for Basotho.

However, the Hon. Minister also conceded that “nobody said it will be a smooth ride throughout the year.” There were a number of challenges that hindered the Ministry from achieving an “A-star” financial performance; and to mention but, a few, the Minister reported as follows:

•   The Ministry had to no choice but depend on some of the resources of the mining companies’ such as “diamond valuation expertise” due to budgetary constraints; 
•       Insufficient budget for the Ministry to carry out its mandate, and implement the Minerals and Mining Policy Implementation Plan and the newly developed Strategic Plan.
•    Failure by some mining companies to declare dividends due to Government of Lesotho and to increase revenue collection;
•   Lack of infrastructural support and difficult terrain to mining areas, hence high startup capital costs for mining companies which discourage potential investors;
•       Lack of up-to-date information on the country’s mineral resources;
•    Delays in completion of architectural drawings for construction of Geosciences Laboratory, which  threatens allocation of funds in the future;
•   Inadequate human resources capabilities to monitor compliance and enforcement, and Ministry’s inability to retain skilled personnel;
•   The existing legal framework does not respond to the Minerals and Mining Policy aspirations, hence the current review process; and
•    Lack of diamond valuation skills which renders the Ministry to seek the services of a reputable Diamond Valuator despite the lack of the budget.

According to a Member of Parliament, Hon. Kimetso Mathaba, the Ministry of Mining is still challenged to assure the nation that the Mining companies report fairly on the proceeds from the diamonds that they sell abroad. “Currently the Ministry cannot assure this Honourable House of the true value of the diamonds produced in the country and the price that they fetch in the international market,” observed Hon. Mathaba.

In conclusion, the Chairman of the Natural Resource Portfolio Committee, Hon. Mpalipali Molefe also concurred that the House approve the requested amount by the Minister of Mining. However, Hon. Molefe stressed that it was high time that the Ministry made it easier for Basotho Artisanal Miners to benefit from their country`s mineral resources.  It was acknowledged, though, that considering the role that the Ministry is playing in terms of job creation and its contribution to the fiscus, the amount requested was still deemed very low.

All-in-all, the majority of the Members of Parliament present on the day, strongly recommended that the Ministry be allocated the budget that the Hon. Minister of Mining had presented before the House.

Botswana and De Beers Partnership Fascinates the Minister of Mining

        By Rorisang  Mahlo

“This is the glorious and the smartest partnership one has ever witnessed between Batswana and De Beers Group of Companies; and its best befitting description could be “a full mind-blowing and a unique economic revolution of its kind. Evidently, Batswana got it right the first time,” acknowledged Hon. Keketso Sello. 

Above all, “this portrays a picture of what the patriot has to learn and replicate for the benefit of the country- The Kingdom in the Sky.” This words were uttered by Hon. Minister of Mining in his analytical review at the end of a one day Diamond Conference held at Palm Hotel in Botswana, on 13^th of November 2018.

The Ministry of Mining in Lesotho was invited by their Botswana counterpart, Ministry of Mineral Resources, Green Technology, and Energy Security with the spirit of continuous engagement towards establishment of a multi-faceted bonds of assistance to each other for the socio economic benefit of the two diamond producing countries.

“What strikes me most is the fact that both Lesotho and Botswana got their independence in 1966 from Britain and the question is why did we not take the route that Batswana took while we were sharing so many things! Again both countries had a diamond prospecting interaction with the same company - De Beers, and why did we kill the goose that lays the golden egg by letting it go, “mofutsana ha ana laki maan,” said Hon. Sello shaking his head with disbelief. 

   

However, this year’s set theme was: “Leading Business for Social Capital” and the conference was discussing sustainable investment trends, consumer insights, strategic partnerships, building brand value, and the influence of diamonds and style, hence the involvement of fission sector, which was a unique and the stylish way of showcasing diamond in beneficiation with proper linkages to other sectors.   

The 2018 Botswana Diamond Conference was said to be on its fifth year with both  De Beers Group and Botswana’s Ministry of Mineral Resources, Green Energy and Energy Security teaming up to bring speakers from the world of government, industry, financial institutions, the media and fashion as part of the company’s partnership with the Government of the Republic of Botswana.

To mark the importance and the value attached to this event, the two Botswana partners opened this event with the high-profile speakers including a keynote address from His Excellency Mokgweetsi Masisi, The President of the Republic of Botswana. Also speaking at the conference was Honourable Eric Molale, Minister of Mineral Resources, Green Technology and Energy Security, as well as top executives from De Beers Group. The delegates from all over the world were roughly estimated at 600 people.

The De Beers Group Chief Executive Officer, Mr. Bruce Cleaver said, “Those in the private sector have an opportunity to build social capital not only through making investments in sustainable development, but also by sharing and communicating our insights. These include topics such as how to create stronger routes to market; how to build successful brands; how to foster competitive advantage; how to understand consumers; and how to communicate to the wider world.”

Furthermore, Mr. Cleaver went on to show that, meanwhile, their host countries and communities can support and accelerate it through activities such as creating a receptive and an enabling atmosphere; by matching skills development to meet the business sector requirements; and providing a secure and predictable environment in which enterprises can flourish to an extent of fully dominating in the process of job creation.

This event was closed by the top notch evening reception to celebrate the official launch of the first Forevermark Jewelry Store erected within the Sir Seretse Khama International Airport, by the guest of honour, Her Excellency, Mrs. Neo Masisi, the First Lady of the Republic of Botswana.

In general, the partnership between the government of Botswana and the De Beers Group of Companies comprises four companies, all operating from Botswana, and they are:

• De Beers Holdings Botswana- the exploration arm of De Beers in Botswana;
• Debswana- a 50/50 joint venture between the Government and De Beers, which is the primary producer of diamonds in Botswana;
• Diamond Trading Company Botswana (DTCB)- a 50/50 joint venture between the Government and De Beers, which sorts and values rough diamonds mined by Debswana; and lastly;
• De Beers Global Sightholder Sales (DBGSS), the rough diamond sales arm of De Beers, the company that is responsible for selling the bulk of De Beers’ global production to its rough diamond customers (called Sightholders).

According to the Online 2018 De Beers “Report to Society,” the 50 years old partnership seem to be paying dividends for the country and the Republic of Botswana is currently rapidly booming. “In every street and every corner of the main city and its outskirts, there are many new structural developments happening,” shows the report.

Finally, the Government of Lesotho, through the Ministry of Mining, is working very closely with the African Legal Support Facility (ALSF) and officials of the Ministry of Mineral Resources, Green Technology and Energy Security of the Republic of Botswana to exchange some thoughts on the new mining legislation for Lesotho. 

The Coincidence of Fancy Diamonds

By Rorisang David Mahlo

The Ministry of Mining is delighted to announce the recovery of two beautiful upmarket diamonds as thus: the 89.75 carats yellow diamond by LUCAPA Diamonds at Mothae, and the 29.59 carats Pink diamond by Storm Mountain Diamonds at Kao, named THE ROSE OF KAO, through the positively upcoming mining companies leased to commercially mine diamonds in the outskirt of Maluti Mountains of Lesotho.

These attractive diamonds which one of them (The Rose of Kao-Pink) is already exported to compete for the lucrative sales were recovered on different dates: The Rose of Kao (Pink) on the 12^th June, while the Yellow was on the 28^th June 2018. The remaining one (Yellow) is safely kept and awaiting the completion of the trial stage and LUCAPA`s approved sales and marketing contract by the Ministry of Mining.

No	Specs	Details	Pic by- SMD- Kao
1	Name	The Rose of Kao
	Weight	29.65 - Pre Boil: Post boil: 29.59 carats
	Colour	Pink
	Value	Pre - boil value of USD300 000/carats
No	Specs	Details	Pic by- LUCAPA- Mothae
2	Name	Not yet Named
	Weight	89.75 - Pre Boil
	Colour	Yellow
	Value	Not yet evaluated

Therefore, according to the statement released by Kao Mine Management, The Rose of Kao is estimated to be sold at value of $USDC 300 000 which could be estimated to the calculations of (8.88) Million US dollars, which is equivalent to M117 Million Maloti but with potential prospects to sell even much higher or less than the estimated value depending on the diamond market performance.

According to Gemological Institute of America (GIA) the quality of diamonds can be graded on four factors or 4Cs. These are the cut, clarity, color, and carat weight of the diamond. It is very important to note the characteristics of these precious stones while dealing with them. The degree of the color of these precious stones is tested over certain levels that generally range from colorless (D) to significantly colored (Z).

Therefore in this instance Lesotho is yet to rip the benefits of producing diamonds based on one of the four factors or 4Cs which is the “Colour.”

THE ROSE OF KAO as per the statement posted by SMD will go on tender at BONAS in Antwep, marketing company acting on behalf of SMD and KAO from the 17^th September. The Tender is expected to be closed on the 1^st of October 2018.

In nutshell, the marketing of the said Pink stone has already started and it is expected that it will attract a lot of attention from the serious buyers and highest renowned specialists of such stones.  

The Mining Directors Get Induction

           By Rorisang Mahlo

Mining Directors Round Table Discussion

In an attempt to introspect the efficiency and effectiveness in the regulation of the Mining Sector, the Ministry has identified a need to empower the Directors nominated to represent the Government in the Boards of various commercial mining companies. The Ministry, therefore, conducted an induction session for the Directors at the Ministry`s Boardroom on 29^th August, 2018 where they were equipped with necessary knowledge and tools to execute their duties and responsibilities as Members of the Boards.

When welcoming the Directors, the Principal Secretary, Mr. Ntahli Matete, strongly stressed his discomfort to discover that the Directors were operating in silos while they are expected to be singing one song with rhyming lyrics on their duties. “It is high time that we reconnect and try to standardise our mode of operation, such as our reporting frequency, and how we get feedback from your side on issues demanding our urgent attention,” said Mr. Matete.

Most importantly, “creating an internal communication strategy that will enable a simplified means of quicker communication among us without any hindrances can help quite a lot,” reiterates the Principal Secretary while opening the floor for everyone to share their views.

In his words of appreciation and on behalf of the rest of other Mining Directors one Director whose name is withheld due to security purposes acknowledged the Ministry`s gesture of bringing them on board as they might have experienced different challenges, and had to face them all by themselves. “We were feeling neglected and lost without our mother Ministry`s support,” said the Director. Adding that they cannot wait to hear where their jurisdiction starts and ends.

When getting to the core business of the day, the Chief Legal Officer, Ms. Mathealea Lerotholi, told them that, the terms of reference are prepared to assist the Government directors in clarifying responsibilities and ensuring effective communication between the Directors and Shareholder.

Adding that, in order to ensure that the Government is represented in the Mining companies’ Boards”, at least one director nominated by the Government shall be present for a quorum to be constituted said Ms. Lerotholi.

On top of all that, the Directors have responsibilities and duties which they are expected to perform, and amongst them, she highlighted the following in no particular order:

        I.            Participation in every board sitting;

      II.   Ensuring implementation of government’s interests,  integrity of the Company’s internal controls, and management information systems and that they are dealt in accordance with the law;

    III.  Ensuring compliance with mining leases, all major corporate policies and procedures that govern the Mining companies’ operations;

    IV.    Ensuring timely reporting of any other developments that have a significant and material effect on the companies Mining Lease agreements and the applicable laws.

Based on their clear mandate as presented, the Directors discovered that they need to up their game in order to perform to expectation. However, there were certain areas that appeared as matters concerned which they have deemed critical and worth shedding light with their Ministry leadership.

Amongst them were “If honestly we are vested with “Fiduciary Duty” as I consider this to be the core of our mandate, then this means we are carrying a responsibility that we also have to ensure accountability and transparency or else we will one day be cursed by grandchildren,” emphasised one Director whose name is withheld for their protection.

Also, another Director asked whether the Ministry was aware that as Directors, their powers are slightly limited, for instance, the Ministry is not represented in the process of marketing and selling of the diamonds at Antwerp in Belgium.

”The main reason why I say this is because I have realised that whatever the tender results that are being reported by the mining companies, it might not be the true picture of the reality as we are not privy to, and have no means to verify the information on the post-sale results of the diamonds”, said the Director.  

The Ministry was advised that, perhaps, it was high time that it acted swiftly to redeem this situation in order to realise the best sales returns, otherwise, the country will forever be cheated.

Finally, the Directors identified the need to involve Lesotho Revenue Authority (LRA) to ensure collection of all kinds of revenue. In this respect, the Deputy Principal Secretary (DPS), Mr. Lira Ralebese, assured them that, “We have just established a team of officials from both the Ministry of Mining and the LRA with clear terms of reference, aiming to achieve the objective of maximising tax collection” Mr. Ralebese reported.