Mohloai Mpesi
THE Public Accounts Committee (PAC) has ordered the termination of the proposed purchase deal between Lucapa Diamonds and Lephema Executive Transport, arguing that the transaction is not in the nation’s best interests.
The directive emerged during a committee session this week, wherein the Ministry of Natural Resources faced serious questions about the deal to transfer Mothae Diamond Mine from Lucapa to Lephema Executive Transport.
Lucapa has operated the Butha-Buthe mine since 2017, holding a 70 percent majority stake, with the remaining 30 percent is owned by the government.
Last month, Lucapa announced plans to sell its stake to Lephema Executive Transport, a move that generated significant controversy, especially because Lephema Executive Transport is owned by the Minister of Local Government, Chieftainship, Home Affairs, and Police, Lebona Lephema. Part of the deal is that Lephema Executive Transport would inherit Lucapa’s undisclosed debts.
The PAC had last week ordered the Natural Resources Ministry to return to it with a full disclosure of Lucapa’s debts to the government. This after the Auditor General, ‘Mathabo Makenete, noted in her report that M175 million was owed by Lucapa from their 2017 acquisition of Mothae to the government.
While the ministry argued Lucapa had paid the money, PAC was not convinced and demanded proof, hence they reappeared before it again this week.
A note from the Ministry of Natural Resources, submitted to the PAC, revealed that Lucapa owes the government M31.6 million in royalties and M2.4 million in surface rental fees. A new development which had not been revealed by the ministry before. However, they presented proof that Lucapa paid the M175 million.
The note stated, “Mothae has an outstanding amount of about M31,658,881.75 in royalties and M2,492,335.02 in surface rental. Currently, Lucapa has entered into a conditional binding sales and purchase agreement with Lephema Executive Transport for its 70 percent stake in Mothae.
For the Lucapa-Lephema deal to proceed, it must be approved by the Minister of Natural Resources, Mohlomi Moleko, following an appraisal by the Mining Board. The board’s review includes assessing the financial capacity of the applicant and the handling of existing liabilities.
“In such a case that any amount owing is not settled before the divestment, the treatment of such amounts shall have to be specified in the application for transfer of a mining lease from Lucapa to Executive (Lephema Executive Transport),” added the note.
Principal Secretary of Natural Resources, Relebohile Lebeta, stated that Lucapa remained in charge of Mothae but was preparing to exit. She explained that the proposed transaction would only succeed after a thorough review by the Mining Board, particularly concerning how Lephema Executive Transport plans to manage Lucapa’s liabilities.
“The mine is currently under Lucapa. Lucapa has entered into a conditional mining sales and purchase agreement with Lephema Executive Transport for 70 percent shareholding. We have documented these royalties and surface rentals because the committee directed us to detail all outstanding dues. This transaction will only be successful after passing through the Mining Board.
“These issues have not been finalised, they are still in a process and will be completed once they have passed all the stages,” Ms Lebeta said.
PAC chairperson, ‘Machabana Lemphane-Letsie, vehemently opposed the deal, citing Lucapa’s failure to pay the M31.6 million in royalties and M2.4 million in surface rentals over the past eight years. She argued that it would be unrealistic to expect Lephema Executive Transport to settle these debts within two and a half years and warned of parliamentary action if the deal proceeds.
“This thing that you (Lebeta) are secretly doing with Lephema Executive, we advise you to make it public so that it does not explode in your face.
“For eight years Lucapa did not pay these royalties. There is no magic that Lephema is going to perform to pay these royalties in two and half years. Don’t do that fraud, parliament is stopping you now.
“If Lucapa has failed, he must pack and go, you should seize his property, sell it and recover the money that he owes. Thereafter, you should advertise the mine so that Basotho who can meet the conditions to mine at Mothae can get the opportunity,” Ms Lempane-Letsie said.
Acting Commissioner of Mines, Mohato Moima, said Lucapa was gradually paying its debts but still owed significant amounts. He said any transfer of the mine must address these outstanding debts.
“This debt dates from January 2023. Lucapa is making incremental payments. If the divestment occurs, we have measures to ensure full payment of this debt. Lucapa must specify the handling of these liabilities in the transfer application,” Mr Moima stated.
Ms Lemphane-Letsie demanded documentation of the Ministry’s communications with Lucapa regarding the debts. Mr Moima assured the committee that Lucapa is expected to respond by 25 July 2024 (today).
“Lucapa has a 10-year lease, with two and a half years remaining. The transfer has not yet reached the Mining Board. The new company, if approved, could apply for an extension,” Mr Moima added.
Lithoteng legislator, Rethabile Letlailana, criticised the government’s handling of the mine’s sale. He called for an auction to secure a reasonable price to maximise national benefits. He cautioned against entering into questionable transactions that could result in significant financial losses.
“The question is whether we are being denied the opportunity to assess the mine’s value and auction it at a fair price. At the end of two years, how do we achieve the best value for Mothae Mine? We should avoid shady transactions that could cost the country over M150 million” Mr Letlailana asserted.
