Process diamonds locally for bigger rewards: Thotanyana

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Silence Charumbira

OPPOSITION Basotho Action Party (BAP) secretary general, Lebohang Thotanyana, says the government must urgently ensure that Lesotho’s diamonds are locally processed to enable it to reap greater returns than when they are exported in their raw state.

The former mining minister said Lesotho would never fully benefit from its diamonds as long as value addition was done in other countries.

Processes like deep washing and polishing must therefore be done in Lesotho so that by the time a diamond is sold, it would have accrued immense value, he said.

“A diamond extracted in Lesotho a few years ago, the Lesotho Promise, which was 603 carats, was sold raw for US$12 million,” Mr Thotanyana said.

“That diamond is back in the market at US$75 million. When that diamond was sold, the government made between M60 million and M70 million. However, if it had been sold for US$75 million, it could have raked in over M1 billion. The government could have made way more in terms of royalties and duties. So, this is what we need to address now,” he added.

During his time as mining minister in the Pakalitha Mosisili-led coalition from 2015 to 2017, Mr Thotanyana spearheaded the crafting of the Mining and Minerals policy. Among others, the policy seeks to legalise small scale mining to enable locals to participate in the diamond industry. But Mr Thotanyana believes small scale miners can only participate if there is a viable local market for their gems.

“You’re not going to have a vibrant small-scale mining sector unless people have access to the market. The problem with Lesotho thus far is that we mine diamonds but we don’t have access to them. From the mines, the diamonds are airlifted to Antwerp, Belgium. This is something that we must be changing. We need to localise the market so that the big buyers that go to Antwerp to buy our stones can instead come to Lesotho and look at the stones from here.

“When they come here,  they will have an opportunity to buy even from the smaller guys. If we set that kind of platform, then we’ll be able to attract the people who are doing value adding services such as cutting, polishing and deep washing of the stones. But you cannot talk about that when you don’t have the diamonds. Even though we produce the diamonds, we actually don’t have the diamonds in Lesotho.”

Last year, Deputy Prime Minister Mathibeli Mokhothu urged the mining ministry to consider increasing government shareholding in local diamond mines to 51 percent. The resultant profits would aid the government’s developmental projects, Mr Mokhothu said.

But Mr Thotanyana disagrees. Although he wants to see greater local participation in mining and other sectors, he believes the government should not be increasing its shareholding in the mines which currently ranges from 25 to 30 percent. The majority shares in all the mines are held by big mining companies from various countries like Australia, the United Kingdom and South Africa.

Mr Thotanyana said Lesotho should learn from the example of Zimbabwe which failed dismally a decade ago after introducing laws compelling foreign investors to cede at least 51 percent shareholding in their companies to “indigenous” Zimbabweans.

Mr Thotanyana said the government must leave the investors to maintain a controlling stake in mines. This because the government is currently failing to run its own affairs. Therefore, it cannot be expected to efficiently run a complex business like a mine, he said.

“Nationalisation of mines will also be a disaster here if we follow that route. Where nationalisation has happened, in Venezuela or closer to home in Zimbabwe; it has not been successful.

“We should leave companies to run the mines. The government should only negotiate better compensation rates for communities affected by mining operations. It should negotiate for higher royalties and for the processing of diamonds to be done locally,” Mr Thotanyana said.

He said Lesotho had at least 405 kimberlite pipes but only five of these had been fully developed into viable mines.

If the government was so keen to participate more in the sector then it should consider developing another mine, he said. But then it was hamstrung by lack of resources and expertise, he added.

Hence mining was best left to investors who had the resources and know-how, he said.

 

 

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