Mining sector feels the heat

Mining sector feels the heat

MASERU-LESOTHO’S mining industry has started feeling the impact of Covid-19 with major companies deciding to either retrench or cut salaries.
The Liqhobong Mining Development Company has announced plans to retrench, a move that could empty hundreds of people onto the streets and affect thousands.

In a memo to all workers on Monday, the company boss Paul Bosma said “the impact of the coronavirus outbreak on the global diamond market has been devastating”.
Bosma said the company is “considering retrenchments and would like to consult” the workers.

“I greatly regret this has to happen, but it is caused by factors beyond our control,” Bosma said in the memo.
“We envisage convening consultation sessions with employees in Maseru and at the mine. However, if the state of emergency is extended the consultation process may have to be adjusted to cater for that.”

Bosma said the coronavirus pandemic and the measures by the governments to save lives, have hit the business and global diamond industry.

He said there is no telling when the diamond market will recover “to the level where the company can operate sustainably (which includes fully servicing its project debt) especially given the possibility that the lockdowns may be extended”.

“The demand for rough diamonds has dried up as polished goods are not selling currently as a result of various country lockdowns around the world with accompanying travel bans,” Bosma said.

He said it is in the interests of all stakeholders to preserve resource value and limited cash resources by extending the current care and maintenance phase so the mine can resume when the diamond market recovers, he said.
He said Belgium, where the vast majority of rough diamonds in the world are sold, and in India, where the vast majority of diamonds are cut and polished, have locked down.

“The onset of the coronavirus has exacerbated this decline.”
Minopex Lesotho, which supplies services to Letšeng Diamonds, said it is “waiving all margins and profit during the lockdown period”.

Matt van Wyk, Minopex Lesotho’s director, told employees in a memo that the “lockdown has resulted in a complete shutdown of production at the Letšeng Diamond Mine resulting in the mine being placed on care and maintenance for this period”.
With no production taking place, Letšeng Diamonds along with all contractors have had to conserve cashflow and cut costs to ensure the survival of the mine and the associated businesses, including Minopex Lesotho.

Van Wyk said to improve the cash flow all suppliers were asked to extend credit terms to 60 days from the current arrangement of 30 days from statement.

He said Letšeng Diamonds has cancelled allowances and cut salaries.
“We are all in this together and will be sharing the same principles during these challenging times.”

He said to avoid any retrenchments or other drastic measures they had reduced the salary bill by cutting allowances and overtime for staff who are not on care and maintenance.

This means fixed overtime, subsistence allowance and shift allowance will be cut by 75 percent for the April 2020 payroll.
D-Band Employees’ have a 10 percent on their salaries while those on E-Band will take a 15 percent cut.

There will be no cuts to the salaries of junior employees.
“All Severance Payments are herewith suspended and will be held in trust by the company for a 12-month period if employees elect to resign within the next three months after lockdown”.

The Letšeng Diamond’s boss, Kelebone Leisanyane, wrote on April 3 that following the lockdown in several key countries “it is prudent for the company to review its cash flow and operational commitments which includes employment conditions across Letšeng”.

He said there will be no allowances for night shift, emergency overtime, car allowances, rescue team allowance and acting allowance.

Staff Reporter

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