Lack of independent diamond evaluators is costing the government potential huge revenue earnings, the mining principal secretary (PS), Tšokolo Maina, has said.
Advocate Maina added that the government could be losing the revenue to undervaluation by mining companies who manipulate the diamond prices for their own benefit.
The principal secretary said that an independent diamond evaluator would help ensure that Lesotho’s diamonds are sold at a fair market price and also bring about transparency within the mining of the precious mineral.
Lesotho’s diamond production volume was estimated at 1, 1 million carats in 2019.
Adv Maina said the government attempted to engage a diamond evaluator but the efforts were fruitless as it could not secure one.
“The government does not have an independent diamond evaluator. As a result, mining companies evaluate and price diamonds on their own independent of the government. This opens opportunities for them to manipulate diamond prices,” Adv Maina said.
He said that government representatives assigned at the mines do not have the skills to ascertain diamond value. He added that the ministry has already started the process of engaging an independent diamond appraiser.
“We have started the process of engaging an independent evaluator
We have already approached the Ministry of Development Planning in relation to this matter. We hope to issue the vacancy advertisement soon,” Adv Maina said.
He said that the maiden local diamond auction that was recently held, proves Lesotho’s the ability to sell its own diamonds as country.
He highlighted that some international diamond buyers who attended the auction had budgeted up to US$10 million following the good reputation Lesotho diamonds have on the global market.
“The auction confirms that we can successfully sell our diamonds locally, which is what we intend to do in the future. If we process and our diamonds before sell, it adds value to our diamonds before they are sold.”
He said that localising diamond sales will benefit Lesotho’s economy as it will lead to job creation through diamond cutting, sorting, polishing and jewelry making among others.
He added that Lesotho is not realising the benefits of diamonds fully because the mineral is being sold in a raw state.
“We are not getting the value of finished products because we are selling our diamonds as finished products. As a result, we are only getting about 10 percent of the diamond’s value through royalties.
“We want to change that and control the diamond auction. Diamonds will only be taken out of the country when we fail to secure a local buyer,” said Adv Maina
He said that the 30 May 2021 diamond auction sale fetched M54 864.55 from the amnesty diamonds that weighed 18.34 carats and M327 785.55 from the confiscated diamonds that weighed 209.57 carats.
He said that seven people shared the M54 864.55 raised from voluntarily handed over diamonds, and all have since been paid for their diamond proceeds.
Adv Maina said the diamonds on auction were so small that they had to group them into lots to aggregate their value. A total of 38 lots were prepared, with 24 lots for confiscated diamonds and 14 lots for voluntarily handed over diamonds.
He added that out of the 14 lots of the amnesty diamonds only eight were sold.
He said though not all the voluntarily handed over diamonds were sold, they performed well above the US$106, 20 reserve price per carat.
The confiscated diamonds were however all sold out but at prices below the US$114, 14 reserve price per carat.
He described the auction as a success highlighting that though it was the first in the country, it surpassed the M372 200, 95 target. The auction made M378 650, 52 in total.