…as first 199 workers are laid off
Mathatisi Sebusi
LETSENG Diamonds mine’s plant operator, Minopex Lesotho (Pty) Ltd, will lay off all employees at the Mokhotlong based mine at the end of November this year.
This after Letšeng Diamonds decided not to renew Minopex’s contract, bringing an end to their 20-year partnership.
The Letšeng Chief Executive Officer, Motooane Thinyane, told the Lesotho Times yesterday that the decision to not renew the Services Agreement for Plant Maintenance, Plant Operations, and Plant Procurement with Minopex followed a careful review and thorough consideration of the mine’s operations.
The diamond mining sector is at a critical juncture. The global diamond market’s downturn had forced companies to reassess their operations and implement measures to ensure survival.
Minister of Natural Resources, Mohlomi Moleko, explained to this publication last week that the government and mines’ management teams were grappling with how to keep their operations afloat amid a plunge in demand for Lesotho’s diamonds. He said they were even considering suspending royalty payments from investors to the government, which holds a 30 percent stake in all diamond mines.
Therefore, the move to cut ties with Minopex is part of Letšeng’s strategy to improve efficiencies and reduce costs, aiming to better position itself for long-term sustainability in changing economic circumstances, he said.
Mr Thinyane explained that Minopex’s contract was due to expire on 31 October 2024, but by mutual agreement, the date has been extended to 30 November 2024.
“Minopex Lesotho currently employs around 199 employees for the execution of the Services Agreement. To the extent that this contract is coming to its natural expiry date, all employees of Minopex Lesotho affiliated with the company’s services to Letšeng are therefore affected,” Mr Thinyane said.
“Letšeng and Minopex have enjoyed a mutually beneficial contractual relationship since 2003. For a relationship to have subsisted for this period, it is a reflection that over the years, this has been a successful relationship.
“However, in the drive to improve efficiencies and reduce costs with the aim to better position itself for longer term sustainability under the changing economic circumstances, it is now necessary for Letšeng to review its business strategies and adjust accordingly.”
He said both Minopex and Letšeng were committed to ensuring that all affected employees were treated in compliance with Lesotho’s labour laws.
“This process requires the company contemplating retrenchments to explore all viable alternatives. Upon taking over operations, Letšeng will advertise available positions and offer employment to successful applicants in line with its revised operational requirements,” he said.
Last week, Minopex Lesotho issued a memorandum to its employees, informing them of Letšeng’s intention to terminate its contract. The memorandum, signed by Minopex Operations Manager Johan Coetzee, stated that the contract’s termination would likely lead to retrenchments.
“We regret to inform you that Minopex Lesotho has received official notice from Letšeng Diamond Mine of its intention not to renew its current contract beyond 31 October 2024. This will likely result in a complete termination of all services currently provided by Minopex Lesotho at Letšeng Diamond Mine. Accordingly, this memorandum serves to notify you that all Minopex positions will be affected during this process,” the memorandum read.
The memo further stated that Minopex would consult with affected employees in terms of the Lesotho Labour Code to mitigate the impact as much as possible. It also mentioned that Minopex Lesotho has no alternatives to retrenchments, as the contract with Letšeng Diamond Mine was its only contract in Lesotho.
Meanwhile, Storm Mountain Diamonds (SMD), operating the Kao Mine in Butha Buthe, also informed its employees on 1 September 2024, about the temporary closure of the mine, effective the same day. The memorandum, signed by SMD’s Board of Directors Chairperson, Robert Cowey, explained that the board was unable to put the mine into care and maintenance due to the inability to finalise a workable cost reduction plan aimed at mitigating the mine’s financial losses.
“Since the last communication, we have been working hard to keep operations going through this crisis. However, the crisis has not abated. The SMD Board of Directors had decided that the mine be put on care and maintenance, subject to the approval of a final care and maintenance plan. Unfortunately, we have not been able to finalise the cost reduction plan,” Mr Cowey’s memo stated.
He further noted that the contract with their mining contractor terminated on August 31, 2024, and without a viable cost reduction plan or agreement on the way forward with the mining contractor, they could not continue operations from September 1, 2024.
Mr Cowey said that the current crisis was due to the extremely poor diamond market and was not a consequence of any actions by SMD stakeholders. The board will soon meet to consider the duration of the mine’s closure, and while some employees may be asked to leave the site, others will remain depending on the tasks identified for execution during the stoppage.
The memo concluded by stating that no decisions on retrenchments or restructuring had been made by the Board at this stage, and all employees’ jobs, employment conditions, and remuneration remained unaffected.
Similarly, The Liqhobong Mining Development Company (LMDC) is facing significant challenges due to the ongoing downturn in the global diamond market. In a recent memorandum dated August 15, 2024, LMDC Managing Director, Rob De Pretto, issued a memorandum to employees, outlining the difficulties the company was grappling with and announcing a new operational plan aimed at sustaining the business.
He said the LMDC’s recent sales figures were disappointing, with the latest sale in July returning an average value of just USD$62.50 per carat, significantly below the 2022 USD$89 per carat.
This sharp decline in diamond prices, combined with operational costs, has put the company in a loss-making position. Without significant adjustments, LMDC risks depleting its cash reserves and potentially being forced to cease operations, resulting in the closure of the mine and the loss of all jobs, he said.
“In light of the current situation, the company is considering retrenchments, and we would like to consult with you on this matter. Our objective is to explore all possible alternatives and minimize job losses wherever possible.
“We assure you that we will conduct this process with open minds and urge all of you to cooperate and consult in good faith. This notice for consultation on the contemplated restructuring of the business is in accordance with the Lesotho Labour Act 2024, and Labour Code Good Practices of no 4 of 2003.
“We deeply regret that this situation, which is caused by factors well beyond our control, has arisen. We cannot change the diamond market – Liqhobong accounts for much less than 1 percent of global diamond production.
“We can only respond in a way that is most positive for all our stakeholders, including trying to preserve as many jobs as possible and maintaining a future for Liqhobong. If we are to be successful, we will need your support to achieve this, to keep the mine open and maintain a future where, if and when the diamond market recovers, we can revert to full production and employment,” Mr De Pretto said
