African Renaissance in action
2004-11-28 16:22
Johannesburg - South African investors have pumped R210m into the Mountain Kingdom of Lesotho to reopen the Letseng diamond mine, helping to put the glitter back in the country's mining sector.
Mining finance house JCI and its empowerment partner Matodzi Resources entered into a 76% and 24% partnership with the Lesotho government in a 25-year mining lease agreement.
"This is African Renaissance in action. African investors are putting their money in assets in other African countries," said Mafika Mkwanazi, chairperson of Letseng Diamonds and a director at Matodzi, which owns 38% of the mine.
He said Matodzi was looking at investing in other countries as well.
Brett Kebble, chief executive of JCI, said that they had found a partner who had a common goal in the form of the Lesotho government and would look at other investment opportunities in that country.
Letseng has low grades at two carats a 100 tons, but the quality and the size of the stones command a high dollar rate per carat, fetching an average of $1 007 (about R5 961) a carat.
At 3 000m above sea level in the Maluti mountains in the north-east of the country, Letseng is the highest mine in the world, and 63% of its production consists of the highly valued white diamonds.
"The quality of the stones will ensure that production will be sustainable," Kebble said, adding that the mine would contribute 20% of Lesotho's gross domestic product at full production.
Lesotho's prime minister, Pakalitha Mosisili, said Letseng had already paid 12.5 million maluti in royalties. The maluti and the rand have the same value.
Kebble said Letseng employed 463 people and would increase that to 600 after completing its expansion plan.
The new investors are taking over a mine which De Beers closed in 1982.
Some significant changes since the mine's closure include the current higher diamond prices and a more favourable exchange rate.
Lesotho's foreign affairs minister, Monyane Moleleki, said his government was close to concluding negotiations with British investors to mine a rich diamond pipe in Lesotho. He said the investment could be as much as one billion maluti.
Canadian investors are also looking at investing about 200 million maluti in another diamond mine.
Moleleki, who was the natural resources minister until November 19, said there was investment in sandstone cutting as orders from southern Africa countries come in. The Union Buildings was built with Lesotho sandstone.
Foreign investment in mining is welcome in the land-locked country, which is a leading textile player on the continent, but the textile industry has been squeezed by the maluti's strength against the dollar because the US and Canada are Lesotho's biggest textile-exporting destinations.