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Letšeng defying demands for transparency

Business

Ntsoaki Motaung

Section 2, a local activist group has called for Letšeng Diamonds, a mining company entwined with government involvement, to unveil the financial intricacies surrounding its acquisition of assets from Matekane Mining Investment Company (MMIC), owned by Prime Minister Sam Matekane.

Section 2’s demand is articulated in a robust statement released yesterday which underscored the public’s unequivocal right to this information, citing its paramount importance in fostering accountability and nurturing trust in governance.

The activist group’s call extends further, urging Letšeng to openly disclose any sum designated as a “golden handshake” to MMIC due to the abrupt termination of their contract—concluded eleven months ahead of the stipulated schedule.

“This transparency is non-negotiable and crucial for fostering a culture of ethical business practices,” the statement read.

The group said it staunchly advocates for a society rooted in transparency, accountability, and unwavering ethical standards.

It emphasised Letšeng’s role as a torchbearer for these values, setting an exemplar for others to emulate.

However, Letšeng unequivocally rejected Section 2’s demand last night, stating” “The agreement between Letšeng and MMIC is protected by confidentiality clauses, as is customary in such transactions. Therefore, we are unable to disclose the terms of this agreement.”

The company also refused to divulge whether any sum was designated as a “golden handshake” to MMIC, reiterating: “The commercial aspects of this transaction between Letšeng and MMIC are protected by confidentiality clauses, in line with standard business practices, preventing us from disclosing the commercial terms of the agreement.”

The demand arrives hot on the heels of Letšeng’s recent proclamation, signaling the untethering of ties with MMIC—a move that heralds a seismic shift in the mine’s operational landscape.

This transformation signifies a parting of ways with MMIC’s integral load and haul services, a partnership integral since 2005.

The termination of the existing mining services contract, set to take effect on December 1, 2023, marks a definitive departure from their longstanding collaboration, terminating eleven months earlier than the contractual timeline.

 “This arrangement will enable Letšeng to continue seamlessly with the mining activities. The existing mining services contract will therefore terminate with effect from 1 December 2023, eleven (11) months ahead of its scheduled contractual end date,” the mine said in a statement on Wednesday.

It disclosed that MMIC had been the provider of load and haul services to the mine since 2005.

Highlighting the backdrop of this separation, Letšeng illuminated the intricate ties between MMIC and Matekane, currently adorning the hat of the Prime Minister and thereby a designated Politically Exposed Person, adding a touch of political glint to this corporate move.

Letšeng further explained that the transaction concluded a long-standing and successful business relationship between itself and MMIC.

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

In response, MMIC cited Letšeng’s evolving operational requirements, attributing the move to a consistent downsizing of operations due to complex mine geology and plummeting diamond prices in recent years.

Retšepile Elias, the company’s Chief Financial Officer (CFO), remarked: “Letseng Diamonds Pty Ltd, in its pursuit to re-strategise and manage operational expenses proficiently, views this separation as a positive step towards achieving sustainable economic viability of Letseng Diamonds Pty Ltd and protection and sustenance of jobs at Letseng”.

Elias said that the split, which he explained that emanated from mutual vision and unwavering dedication to Lesotho’s welfare, reflected both companies’ commitment to transparent governance.

He conveyed gratitude to Letšeng and stakeholders, wishing them success and vowing MMIC’s dedication to supporting Lesotho’s socio-economic growth.

“As we step into this new chapter, our commitment to the socio-economic development of Lesotho remains stronger than ever. We are resolute in our determination to support initiatives on projects that enhance the quality of life and create a brighter future for every citizen wherever the risk of conflict is absent,” he said.

Letšeng, holding a mining lease granted in 1999 by the Lesotho government, operates under the ownership of Gem Diamonds Limited (70 percent) and the Government of the Kingdom of Lesotho (30 percent).

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