There could be more than meets the eye in Letṥeng Diamond Mine’s recent decision not to renew its current contract with Minopex Lesotho beyond October 31, 2024, sources said this week.
The leading diamond mine says its decision not to renew the contract follows a lengthy, careful review and consideration as part of its drive to reduce costs with the aim to better position itself for longer term sustainability under the changing economic circumstances.
The services agreement between the two companies for plant maintenance, plant operations and plant procurement was signed in 2003.
The parties have now agreed to a one-month extension from 1 November to 30 November to provide sufficient time for completing the necessary management of the exit processes in preparation for its planned in-sourcing structure with effect from 1 December 2024.
Minopex employs 199 employees who will all be affected by the termination of the contract, and Letšeng said it will advertise positions and offer employment to successful applicants in line with its revised operational requirements.
“This will enable Letšeng to continue with its processing activities under an in-sourced structure with effect from 01 December 2024,” the mine announced in a statement on Wednesday this week.
But while statements by the two parties portray an amicable separation citing poor global market conditions which have seen diamond prices plummeting unabated, sources this week raised eyebrows over the termination of the contract.
They said the relationship between the two has not always been rosy and that an acrimonious ‘divorce’ was inevitable due to a number of sticky issues including Minopex’s constant failure to meet set deadlines.
Letṥeng also reportedly felt Minopex was milking it by overcharging for its services, hence its recent decision to terminate the contract, according to the sources.
Minopex prides itself as a leading outsourced mineral processing plant operator having earned an impressive track record across 14 countries within Africa and the Middle East.
This publication learnt that Minopex has also previously worked with some of Lesotho’s leading mines including Mothae, Kao, and Liqhobong.
Despite its initial success, Minopex has faced criticism for issues such as poor procurement practices, low production levels, and frequent breakdowns.
Additionally, there has reportedly been incidents of injuries involving employees.
A highly-placed source also accused Gideon Scheepers, the Director of Operations at Letseng Diamonds (PTY) Ltd, of allegedly playing a pivotal role in pushing Minopex out to make way for his cronies from South Africa to take lucrative supervisory positions at the mine.
“His decisions only seem motivated by a desire to increase profits at the expense of local workers. The mine has seen Minopex’s operations as costly due to inefficiencies and high expenditure on procurement and artisanal work,” the source noted.
He said Letṥeng’s decision to cut ties with Minopex, citing a sharp decline in diamond prices on the global market, is just a smokescreen.
He argued that the mine had faced serious challenges during the COVID-19 pandemic some years ago leading to reduced profit margins but it did not kick Minopex out.
Instead, it took measures to keep the company operational and to safeguard employees, despite the global crisis, he added.
He further maintained that with Minopex out of the picture, Letṥeng was likely to fail to run operations undertaken by Minopex owing to lack of internal skills and systems needed to effectively manage operations at the mine.
“The financial impact of downtime is significant. For instance, Letṥeng loses M180,000 per hour when the plant is not operational, which puts additional pressure on resolving operational inefficiencies quickly.
“It is also curious why Letṥeng did not advertise vacancies to find alternative companies to run operations, given the ongoing issues with Minopex.
“It is safe to say Minopex was charging high prices for its services but this was justified. The company upgraded systems at the mine from manual to more advanced, digital technologies. This is a costly exercise,” the source added.
No response to questions sent to Letṥeng had been received by the time of going to print last night.
For his part, former mines minister, Serialong Qoo, said procedurally Letṥeng was supposed to announce its intention to terminate the contract through advertisements in the media a year prior but this was not the case.
“Sufficient notice is supposed to be given, notwithstanding whatever reason is being cited for the termination of contract,” he told theReporter in an interview on Wednesday this week.
Qoo also said Letṥeng should have made it clear that it would absorb most of the Minopex employees.
He indicated that while insourcing was crucial to improve its operational efficiencies, the involved companies should be sensitive to the employees’ plight.
He cited the case of Matekane Mining Investment Company (MMIC), which agreed with Letṥeng after cutting ties in November last year, that most of its 553 employees would be absorbed by the mine.
Qoo added that he suspects that some senior government officials are eying to benefit from the termination of the contract between the two companies by providing services in the run up to the envisaged in-sourcing structure that is set to take place with effect from 01 December 2024 and possibly beyond.
In its statement, Letšeng said it will advertise positions and offer employment to successful applicants in line with its revised operational requirements.
This would enable the mine to continue with its processing activities under an in-sourced structure with effect from 01 December 2024, it noted.
Minopex management this week said they could not comment on the future of the affected workers as they were in back-to-back meetings with Letšeng.
But like in all cases where the grass suffers when two elephants fight, it is the 199 Minopex workers’ families who are facing an abruptly uncertain future.
On behalf of Minopex Lesotho, Tṥitso Mofokeng, said they have been busy in meetings and would issue out a joint media statement soon.
“Until we have reached the date and the content, I cannot have any feedback as of now,” he said.
This publication has learnt that there is a lot of uncertainty and anxiety among Minopex employees due to the termination of the Letšeng contract.
“There is significant stress among employees due to an unclear future, pressure to perform, and lack of communication about job security and selection criteria on how employees will be recruited to remain with the mine,” an employee said on condition of anonymity.
“We are anxious about whether we will be absorbed by Letṥeng or face layoffs,” he indicated.
