African Mining Indaba: Moleko tells Lesotho’s story
Mining continues to play a pivotal role in Lesotho’s economy, where Gross Domestic Product (GDP) contributed 30.8 percent from M3.9 billion in 2021 to M5.1 billion in 2022. Direct contribution to government fiscus through taxes and levies improved from M940 million in 2021 to M1.1 billion in 2022, according to the Lesotho Diamond Mining Industry Performance Report. But there has been a recent decline in various things, which has included layoffs and retrenchments that have been due to saturation and counterfeit diamonds in international markets. It is against such a backdrop that Minister of Mines and Natural Resources, MOHLOMI MOLEKO (MM), had a discussion with PUBLIC EYE’S (PE) MOTSAMAI MOKOTJO to unpack not only the dwindling of diamond sales but also other incidental matters affecting the sector. Below is an extract from the interview:
PE: You recently attended the African Mining Indaba in Cape Town, South Africa. Can you briefly explain what the event entailed?
MM: It’s a platform where mining companies, investors, governments, and other role players; African governments are urged to take advantage of and ease business between member states. There should be trade within the continent while also the issue of beneficiation is discussed.
Service providers are also given an opportunity to have dialogue and advertise their products to mining companies…Ministers (Keketso) Sello and (Lebohang) Thotanyana at some point also attended the Indaba when they held the same portfolio I am currently holding. For me, it’s the third time I attended.
PE: Looking at our country’s position, particularly looking at return on investment – what did Lesotho present as a strategy towards fully reaping the benefits of its mines?
MM: I was given an opportunity to make a keynote address. It gave me a chance to present our country’s natural resources. I told those gathered that of utmost importance are water, diamonds, and others that we have yet to explore, like lead, copper, uranium, shale gas, and oil.
The delegates showed huge interest in water and electricity; hence, they were asked how they contribute. The challenge is about availing access to information regarding what we as a country possess.
PE: While on the issue of benefiting, there has been an outcry from various stakeholders that your ministry contravenes the Mines and Minerals Act of 2005, specifically Section 11 (1) (c) (ii), which stands as a basis in promoting the interests of Basotho-owned businesses. Can you please speak to the issue…?
MM: We are saying Basotho should be given first priority; however, there are conditions. For instance, they should have required equipment that is of quality and reasonable financial rates. If an item is M10, then they sell it for M20; it doesn’t work like that. If they sell it for M10.50, then one should be given preferential treatment; that’s what we tell the mining companies.
We also check whether employees are Basotho; if not, we ask for reasons as to why they are not employing locals.
Most of the companies that employ internationals do so due to the fact that that locals don’t possess certain skills and equipment. For example, there are original equipment manufacturers, of which, of maintenance, it only gets fixed by certain companies. At Letšeng, one would say 95 percent of the jobs is undertaken by Basotho.
PE: One is also reminded of the Southern African Development Community (SADC) Protocol on Mining, specifically Article 2, which speaks of encouraging development and poverty alleviation; how far are we as a country in meeting the set targets?
MM: As a country, we have noticed that mining plays a key role in the economy. We have four mines operating, which contribute almost 8 percent towards the GDP (Gross Domestic Product). You can imagine if we were able to double them; our economy would grow enormously.
As the ministry, since diamond mining is currently facing problems, we are trying to focus on other mining endeavours.
As an example, last year we granted a prospecting license for coal mining in Mohale’s Hoek. Our expectation is that the company will soon start operations. We have also discovered that we have rare earth minerals in the same place, which need to be explored.
In Botha-Bothe, there’s oil and the possibility of shale gas. We went as far giving out prospecting licenses, of which we are expecting reports from the companies. The biggest challenge is finances.
We are in discussions with big firms to help us conduct surveys on the resources we have as a country. Then will ultimately invite prospective investors.
The studies we have from the Commissioner of Mines are not complete since they don’t cover the whole country; our geological maps are old and lack depth; thus, we need to use nuclear renaissance technology to study using satellites.
PE: There is also Article 7 of the SADC Protocol on Mining, which addresses small-scale mining; how far is your ministry in addressing and even giving Basotho an opportunity to participate in the area?
MM: Last year we had an event where we called on those with interest in artisanal mining, where we encouraged them to apply for licenses, and subsequently the Department of Mines is still reviewing the applications.
My expectation is that soon they will send that list to me so that people start working. We also need to learn about the challenges of the sector.
We have asked for help from other countries, such as Zimbabwe, where we will go have a chat with them about the modalities of small-scale mining.
PE: On the same issue, the National Assembly’s Public Accounts Committee Report, which focused on 2013-2016, called for the amendment of the Mines and Mineral Act, 2005, Section 60 (1), which allows for the minister to use his/her discretion in the payment of royalties – 10 percent. How will you attend to this matter, which was raised by parliament?
MM: The question is: if that section is scrapped, who should take responsibility for determining how much a mine should pay? That section is meant to address, say, in a dynamic environment, the minister should make a quick decision in a bid to help companies by reducing royalties when there’s a financial crisis.
All that is done after the minister has been advised by the Mining Board; it’s not a unilateral act. For I see the section as appropriate as long as the minister can explain why he took that decision, not this nonsense of just reducing royalties when it’s not necessary.
PE: In the midst of saturation of diamonds in international markets, which has affected Lesotho and led to retrenchments of staff in various mines, what avenues are you employing to resuscitate the sector?
MM: The mining industry fluctuates; however, our challenge is that there are synthetic diamonds made in laboratories. They almost outnumbered genuine ones in America, where they are used to make cheap wedding rings.
Our expectation is that this year, the market for original items will recover. Even if there are synthetic diamonds, a lot of people do not want to buy them since they do not possess quality.
For investors, they will continue to buy real diamonds as opposed to counterfeits. We are helping the mines with their plans; they are the ones who know what to do. Others have requested to be under care and maintenance; they said that rather than shutting down completely, they have reduced operations. If the situation changes, they will start operations swiftly; hence, we agreed on what they are currently doing.
Others have said they want to sell straight to buyers without taking them to auction so that they will be able to pay employees.
PE: There’s the Mines and Minerals Policy of 2015, which was crafted in collaboration with the United Nations Economic Commission for Africa (UNECA); its advocates argue that the Act (Mines and Minerals of 2005) doesn’t address the ever-changing dynamics in the sector. Why hasn’t there been progress on the legislative framework from your ministry?
MM: A policy informs an act… I am not convinced that the Act (Mines and Minerals) needs to be replaced, not unless someone motivates for its scrapping. Our legal department is currently reviewing many pieces of legislation if they would come to me and say, ‘There are challenges here and there.’ If it makes sense, I will table such amendments before Parliament.
PE: There’s the African Mineral Council, of which we as a country are a member. What benefits have we accrued from being part of the establishment?
MM: I would have to check with the Commissioner to Mines to ascertain such information.
PE: Looking forward, particularly economically, what can we expect to see in terms of a beneficiation strategy as a country towards contributing to the GDP?
MM: We need to start with small-scale mining, which will help after discovering diamonds; they need a market where they will sell their produce. We will inform them to bring them to the ministry.
We will hold auctions where local polishing and cutting experts will be able to buy from them. The volumes in which people can be able to buy diamonds are very low.
The stones produced by the mining companies are huge in size; thus, it is difficult for someone starting out to buy such expensive products. For example, it’s hard to find a person who can afford to buy a stone worth M50 million.
To be honest, beneficiation needs huge volumes of diamonds. If we had a lot of mines, we would legislate for 10 percent of diamonds to be sold in Lesotho; there’s no market in the country.
