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.