Wednesday, January 8, 2025
16.2 C
Lesotho

Letšeng cut ties with Matekane

- Advertisement -
- Advertisement -

‘Mantšali Phakoana

Lesotho’s most lucrative mine, Letšeng Diamonds has cut ties with Prime Minister Sam Matekane’s Matekane Mining Investment Company (MMIC).

The two parties announced this week that they have agreed to a mutual separation to maintain ethical governance and resolve conflict-related concerns, with effect from December 1, 2023.

MMIC is part of Matekane Group of Companies (MGC), owned by its chairperson, Matekane, who is categorised by Letšeng as a Politically Exposed Person (PEP).

The premier’s company has been providing Letšeng Diamonds with loading, hauling, digging, drilling and haulage services since 2004.

Services between the two companies will discontinue almost 11 months ahead of the originally scheduled contractual end, November 2024.

Letšeng Diamonds announced in a press statement this week that it has cut ties with MGC because its director and chairperson (Matekane) is now active in politics.

The company said the move would assist it to independently continue with its mining activities.

“The transaction concludes a long-standing and successful business relationship between Letšeng and MMIC,” Letšeng said.

“Additionally, it resolves important issues relating to governance and conflicts and it creates opportunity for Letšeng to implement further operational changes to improve efficiencies and reduce costs by insourcing its mining activities,” it noted.

Contacted for comment, Letšeng Diamonds executive assistant Tebalo ‘Musi said they had decided to cut ties with Matekane in order to insource their mining activities.

She noted that the company also believes that the move can help it improve its operational efficiencies.

Other factors including low diamond prices, increasing cost of inputs and consumables, fuel and power costs had also influenced Letšeng’s decision to part ways with MMIC.

‘Musi noted that the diamond mining industry across the world is under financial pressure, and Letšeng is not an exception.

“It is therefore, in the normal course of business and good operational practice that Letšeng has to continually look for opportunities to reduce the operational costs and costs of staying in business, and to ensure that the operations remain viable,” she pointed out.

‘Musi further stated that Letšeng would not engage any other external company to replace MMIC, adding that the mine is committed to play its part in contributing positively to Lesotho’s economy.

“In time, insourcing our mining activities may provide the opportunity for further localisation and the supply of goods or provision of ancillary services by Basotho companies.

“This will enable Letšeng to further improve efficiencies. The insourcing of the mining activities also provides Letšeng with the flexibility to make quick decisions in the face of the current challenges,” she said.

Both Letšeng and MGC denied to disclose the value of equipment purchased by the mine from Matekane’s firm and the compensation paid for the premature termination of the contract.

“The agreement between Letšeng and MMIC is protected by confidentiality clauses as is normal business practice in such transactions and therefore, we are not in a position to disclose the terms of this agreement,” ‘Musi explained in written response to questions by theReporter.

Speaking at a press conference this week on behalf of Matekane, Chief Financial Officer MGC, Retšepile Elias noted the agreement was reached due to two significant reasons.

The first reason, from Letšeng’s perspective, he said was that the mine was trying to manage its operational costs by not hiring outside contractors.

Elias noted that Letšeng was doing this because it feels it is under a lot of financial pressure as a result of the drastic fall in global diamond prices.

Another reason was that being a London listed entity, Letšeng Diamonds was concerned about the perception on conflict of interest, as both companies have a common vision to maintain transparency, ethical governance and unwavering dedication to the welfare of the people of Lesotho, he added.

Elias further pointed out that over the last few years, Letšeng Diamond Mine requirements had led to consistent reduction in the size of its operations cost mainly by the significant complexity of the mine’s geology and drastic fall in diamond prices.

“Also, from Letšeng’s perspective, they are trying to take over all the operations that were done by outside contractors, not only MMIC, because they feel they are under a lot of financial pressure.

“Letšeng Diamonds, in its pursuit to re-strategise and manage operational expenses proficiently, views this separation as a positive step towards achieving sustainable economic viability of the mine, protection and sustenance of jobs.

“It is a fact that as we provide services to them. We of course charge something over and above what it costs us. Operationally, Letšeng needs to manage its financials better as they are facing a difficult market,” Elias said.

He indicated that both companies agreed that most of the 553 employees from MGC would be absorbed by Letšeng.

Matekane became prime minister following the October 7 2022 election.

Gem Diamonds owns 70 percent of Letšeng with the Lesotho government owning 30 percent.

- Advertisement -

Hot this week

Petroleum Fund announces new fuel price hikes

The Petroleum Fund Secretariat has announced a price adjustment...

Roads Directorate to host expo

The Roads Directorate will host its debut expo for...

Lesotho PostBank urges customers to claim funds

Lesotho PostBank has appealed to its customerswho have not...

Mukuru customers win big

Four lucky customers recently won groceries worth about M40,000...

Graduation ceremony for LDF Boot Camp recruits

The Lesotho Defence Force (LDF) will next month hold a...

Topics

Petroleum Fund announces new fuel price hikes

The Petroleum Fund Secretariat has announced a price adjustment...

Roads Directorate to host expo

The Roads Directorate will host its debut expo for...

Lesotho PostBank urges customers to claim funds

Lesotho PostBank has appealed to its customerswho have not...

Mukuru customers win big

Four lucky customers recently won groceries worth about M40,000...

Graduation ceremony for LDF Boot Camp recruits

The Lesotho Defence Force (LDF) will next month hold a...

11 babies delivered at QMMH on New Year’s Day

Queen ‘Mamohato Memorial Hospital (QMMH) delivered a total 11...

Mafeteng residents give govt ultimatum over water crisis

Mafeteng residents have given the government 14 days to...

Home Affairs to address service delays

The Home Affairs Department says it is working flat...
spot_imgspot_imgspot_imgspot_img

Related Articles

Popular Categories

spot_imgspot_imgspot_imgspot_img
0
Would love your thoughts, please comment.x
()
x