Qoo defends Letšeng’s new lease

Qoo defends Letšeng’s new lease

MASERU-MINING Minister Serialong Qoo on Monday fiercely defended the government’s controversial decision to extend a mining lease for Letšeng Diamond.

Responding to a question from Movement for Economic Change (MEC) deputy leader, Tšepang Tšita-Mosena, in Parliament, Qoo said Basotho will benefit significantly under the new arrangement.
Tšita-Mosena had asked Qoo to “shed light on the significant modifications that have been made on the new contract as opposed to the previous (one)”.
She wanted Qoo to tell Parliament if there were any additional benefits that were to be derived from the new contract.

Qoo said royalties have been increased from eight to 10 percent.
He said ground rent had been increased from US$87 000 (about M1.5 million) to US$140 000 (about M2.5 million) per annum.
“There is additional spending on development projects in Lesotho on every special stone recovered,” Qoo said.

“The mine will now provide a rehabilitation guarantee as opposed to the rehabilitation provision in the previous agreement.”
Qoo said corporate social investment has now been pegged at M5 million or one percent of dividends, whichever is greater.

“This was not there in the previous agreement,” he said.
He said procurement has been revised to favour Basotho with the redefinition of what constitutes locally registered companies.
A locally registered company is a company that has 60 percent of its shares being owned by Basotho.

He said the mine will be audited by the government every three years.
He said there is an anti-bribery and anti-corruption clause in the new agreement.
He said on June 3 Basotho were awarded an opportunity to bid for diamonds.

“By right after the diamonds are released by mines Basotho will see them and buy them first,” he said.
Qoo said the ministry shall also be involved in the tendering for contracts in excess of M100 million and M10 million for the affiliate.
“This is meant to ensure participation of Basotho in the industry going forward,” he said.

He said their ministry was not given enough money even though it generates M270 million upwards.
He said the chance to bid for the new contract was open to everyone and tendering was done.

Qoo said the Letšeng Diamonds license was renewed from 2019 and will run until October 2029.
Qoo’s response comes eight months after thepost broke the story that Letšeng Diamonds had allegedly put political pressure on the government to renew its lease five years before it expired.
An investigation by thepost revealed how Gem Diamonds (Gem), the company controlling Letšeng Diamonds, tried to arm-twist the then

Minister of Mines Keketso Sello to sign the new lease even though its current lease was still valid until 2024.
Sello signed the new lease on the day he was shuffled to the newly established Ministry of Transport.
Gem’s chief executive, Clifford Elphick, then announced that the ten-year lease was with “immediate effect” and Letšeng was entitled to additional ten-years, meaning the company would be mining diamonds in Lesotho until 2040.
Sello confirmed to thepost that he came under “immense pressure” to sign the lease after Letšeng reported him to the then Prime Minister Thomas Thabane.

“They reported me to the Prime Minister and said I was refusing to sign the lease,” said Sello, adding that he was “relieved to have been moved from the Ministry of Mines”.
He also confirmed Gem’s attempt to stampede him to sign the lease at a Commonwealth Summit.

Sello said he stood his ground and “only signed the lease after being convinced that all processes had been followed”.
Sello said he would have wanted to wring more concessions from Letšeng but he believes that Lesotho got a good deal under the new lease.
Letšeng was desperate to fast-track the renewal because it is shifting to underground mining which requires huge capital injection.

The company was concerned that potential lenders were not willing to provide financial support on a lease that had only six years left.
Letšeng’s initial lease was signed in May 1999 under the Mining Rights Act of 1967 while the renewal was under the Mines and Minerals Act of 2005.

Under the 1967 law the initial ten-year lease can be renewed for three consecutive five-year terms. This is what happened with the Letšeng lease.
The 2005 law has a note that allows any mining agreement under the 1967 law to co-exist under the 2005 Act.
In its statement, Gem Diamonds said the lease was renewed under the 2005 Act.

Nkheli Liphoto

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