Wednesday, May 22, 2024
24.2 C
Maseru

Mines face closure

Business

Matšeliso Sehloho

The Ministry of Mining says it is contemplating to revoke operational licences because of the mines’ failure to comply with operational guiding tools.

This follows failure by most mines to remit dividends unto government for a number of years, while others have never remitted anything since their inauguration. 

According to Acting Auditor-General, Monica Sebetsa’s report on the consolidated financial statements of the government of Lesotho for the year ended March 31, 2019, only one mine, Letšeng Diamonds was able to disburse M210 000 000 as dividends in 2018/19 financial year.

The Ministry’s Principal Secretary Tšokolo Maine explained to this publication that the ministry is going to terminate those mines which have not operated and those that are failing to pay their dividends.

Six of the diamond mines operating in the country failed to pay dividends to government citing what they had termed financial rough patch in the financial year 2018/19.

The government of Lesotho owns shares in all the seven mines currently operating in Lesotho, with different stakes in the different mines including; Letšeng Diamonds with a 30% stake, Kao Mining 25%, Liqhobong Mining Development 25%, Lemphane Diamonds 26.5%, Mothae Diamonds 30%, Gem Stone (Show ridge) 25% and Reskol Diamond 10% mine respectfully. Only Letšeng came out clean and paid their dues.

Maine explained that amongst the reasons provided by the mines to the government was that there were no profits made, thus the lack of presentation of declaration of profit.

“We have to understand that for a company to pay dividends it has to first declare its profits, and by that being made, all other costs that run a company have to be paid for first. Those include the salaries of the employees too,” Maina explained.

“The mines which are not operating are going to have their leases revoked by the government,” he said.

He continued that there are other mines that have not been operational since they have been registered and established such as Reskol Diamond Mine. He said the mines which have not been operating; will have their leases revoked as long as they fail to grant unto government what is due unto government which is dividends.

He further explained that dividends in any company can only be paid after all other running costs of the company have been paid, those including the loans from the bank, and the parent company.

“A parent company is a single company that has a controlling interest in another company, thus it is the owner of the other company; and with that information, it’s important to clarify that money is indeed going back to the coffers of the government retaining something for the nation,” he said.

“The money which should be used to pay back the government dividends is paid back to the owners of the company,” Maina explained.

He further noted that the Liqhobong Mining Development was impacted by the COVID-19 pandemic saga and has been shut down since the beginning of the first wave of the pandemic and awaits its reopening in July 2021.

“Because we have noticed that the major problem facing the mines in Lesotho is the lack of financing, and to aid in that, we have taken steps to make proper investigations for future mining companies when they apply for the lease,” Maina explained.

In the 2021 financial year, it is only Letšeng Mine that has declared its profit and paid the government dividends. Lesotho is known as the highest dollar per carat producer of diamonds in the world, most of the Lesotho’s high value diamond mines are located in the Maloti Mountains. Over and above, the mining sector of Lesotho makes up to 15.2% of the country’s GDP. This is according to a report released by the Central Bank of Lesotho in 2012, which indicated that the GDP increased from 0% in 2001 to 15.2 % in 2011.

- Advertisement -spot_img
- Advertisement -spot_img

Latest article

Send this to a friend