Tšoloane Mohlomi takes a look at what Lesotho has to offer in terms of mining and delves into the process of obtaining a mining licence in the country
The Kingdom of Lesotho, located on the southern tip of Africa and surrounded entirely by the Republic of South Africa, has without a doubt contributed its fair share of notable moments to the global mining industry: this tiny African country has in the past and most importantly in later years gone on to prove itself as a big player in the global mining industry.
Although mining in Lesotho consists of an assortment of variables including sandstone mining, dolerite mining, and basalt mining, the country’s mining sector is solely concentrated on diamond mining.
This Southern African enclave with a total area of 30,355km2 is home to some of the world’s sought after gem diamonds.
Having produced some of the world’s biggest diamonds on record and also the highest in the world per US$ carat (credit to Letseng Mine), Lesotho is and continues to be a serious mining destination on the African continent and in the world.
With a handful of mines operated by various foreign mining conglomerates, the mining sector in Lesotho has proved to be both lucrative and beneficial to investors and the government alike.
All thanks to diamond mining, since 2004 the sector has made an increasing contribution to the GDP, which saw the mining and quarrying subsectors share in GDP rise from 0.9% in 2004 to around 4.5% in 2011. Diamonds have also played a huge role in increasing the country’s export earnings since large scale production began in the early 2000s, helping in developing the country’s foreign exchange reserves.
In 2011, diamonds alone accounted for 31% of the country’s total exports, in contrast to just 0.1% in 2002. Today, the sector contributes more than 10% of the country’s total GDP.
Currently, Lesotho has four operational diamond mines; the Letseng Diamond Mine located at Letseng la Terae in the eastern Mokhotlong district; Kao Storm Mountain Diamond Mine located in the northern district of Butha-Buthe; Liqhobong Diamond, also located in Butha-Buthe; and the Mothae Diamond Mine.
With the introduction of commercial mining in 1950 with the establishment of the Kao Diamond Mine, which was Lesotho’s first mine, the first diamonds were discovered in 1953. The Letseng pipe was discovered in 1957 and the Letseng Diamond Mine was subsequently developed into Lesotho’s flagship diamond mine.
Operated exclusively by Gem Diamonds, who hold a 70% stake in the mine, Letseng Diamond Mine is now currently considered Lesotho’s largest mine and also the world’s highest, sitting at an altitude of 3200m above sea level. It produces an array of coloured diamonds including rare pink and blue pieces, but is most popular for their Type II A White diamonds (the specifications indicating they have few or no impurities, a very rare trate) which are of the highest US$ per carat in the entire world.
Ownership structures of the other mines include:
- Mothae Diamond Mine: 70% stake for operator Lucara Diamond Corp and a 30% stake for the government of Lesotho
- Liqhobong Diamond Mine: 75% for operator Firestone Diamonds and 25% for the government of Lesotho.
- Kao Storm Mountain Diamonds, which has the largest kimberlite pipe in Lesotho: 30% for the government of Lesotho and 70% for operator Namakwa Diamonds.
The kingdom also has a number of diamond mines which are wholly owned by Basotho. These locally-owned mines are however still in their developmental phases and not yet widely commercially viable.
The locally-owned mines are Qaqa Mine in the Mokhotlong District, Motete Mine in Majoea-Liqhobo in Butha-Buthe, and Thaba-Telle mine, also located in the Mokhotlong district just adjacent to Letseng.
Speaking in an interview with the local Lesotho media, Natural Resources Minister Mohlomi Moleko said the mining industry in Lesotho played a huge role in contributing towards the country’s fiscus and was thus essential in the country’s overall development.
Speaking ahead of the annual mining Lekhotla Indaba held last year in Cape Town, South Africa, the minister said it would be befitting to hold such a conference in Lesotho since the sector appeared to be on an upward trajectory in the country and promising great returns for investors.
“It’s like we can also hold a session of that nature here in Lesotho whereby we can sit and talk with relevant people in the industry and share expertise as Lesotho has a lot to offer in terms mining.”
Echoing minister Moleko’s sentiments, Isaac Khalema, a geologist in Lesotho’s Geosciences’ Department, in sharing information on Lesotho’s geological map, indicated that there could possibly still be minerals harboured within Lesotho’s inner crater and that possibly yield some profitable returns if explored.
He said with data derived from recent geological research and exploration, it was evident that the diamond mining sector would still continue to blossom and benefit the country for years to come.
“Due to Lesotho’s mountains being primarily clad in lava as a result of previous volcanic activity, we believe that there could still be more minerals lurking beneath the lava surface. All that we need to do as a country is invest in exploration efforts in order to uncover any lucrative gains,” he said.
He added that it was good that the diamond industry was booming but said the country’s big problem was that it wasn’t investing in the exploration of other minerals, indicating that Lesotho showed deposits of other minerals which could be profitable. According to two major mineral surveys undertaken by the United Nations Development programme and the government of Lesotho between 1971 and 1981, deposits of oil were discovered in the Mahobong area but were never explored any further.
“Despite the oil deposits found in that survey our geological map also indicates traces of coal which I have physically seen. Also a large portion of our country is covered in Basalt which is currently being used to make reinforcements in the construction sector.”
In addition, Khalema indicated that clay deposits were also retrived in Phoqoane which could be widely used in the pottery industry.
Obtaining a mining licence in Lesotho
To obtain a mining licence in Lesotho, you first have to undertake the application process, but there are steps to follow before your initial application is completed through the Ministry of Mining. The steps are stipulated below:
Before you apply
- There is a requirement for a mandatory site visit (attach a stamped and signed “Entry Permit” together with the Signed and Stamped “Application for site visit Form”)
- Apply using only verified and stamped coordinates by the Department of Geological Survey.
The application
The Company Extract must include relevant mining activities and must reflect a clear, concise and sufficient reconnaissance of the area applied for. The work programme must contain “The Activity, cost and time interval allocated to each activity planned”. Proof of Availability of fund provided must reflect enough resources to finance or fund the work program. When assessing your application, please be aware that the Mining Board will match your submitted Work Programme and financial capacity to test their reasonableness given the start-up conditions of the site applied for. Acceptable proof of Financial Capacity is a Bank Guaranteed letter or latest Audited Financial statement of the funder.
In a case where Financial Statements from funder are used, a Memorandum of Understanding (MOU) between an applicant and a funder will be required indicating the amount of capital to be invested.
Other requirements can be obtained at the Ministry of Mining.
Factors to consider
Lesotho’s political landscape has proved to be volatile in recent times, with unstable governments being the order of the day. When investing it is important to analyse the current political climate in order to avoid losses.
Tsˇoloane Mohlomi
