DiamondBuzz
Lesotho’s Largest Diamond Mine Faces Imminent Closure Without State Tax Relief
Government Refusal to Waive Taxes and Royalties Threatens 750 Jobs and 10% of National GDP Amid Diamond Price Collapse.
The Kao Diamond Mine, Lesotho’s largest diamond operation and a crucial contributor to the national economy, is facing imminent closure within weeks, according to operator Storm Mountain Diamonds (SMD). The company, which is 75% owned by Namakwa Diamonds Limited and 25% by the Government of Lesotho (GOL), has issued a dire warning, appealing for urgent financial relief to avoid shutdown.
The crisis is driven by a steep global decline in diamond prices and demand, coupled with a deepening dispute over tax and royalty obligations.
- Financial Strain: SMD’s revenue has plummeted, with 2024 sales hitting only $50 million from approximately 250,000 carats sold—less than half of its $105 million revenue in 2022.
- Urgent Need: The company requires approximately $13 million in new investment to maintain operations over the next year.
- Regulatory Deadlock: SMD claims the Lesotho Revenue Services (LRS) has breached binding original mining agreements by imposing higher tax rates, restricting deductions, and withholding VAT refunds. This lack of a stable regulatory environment is deterring potential investors.
- Sought Relief: SMD has formally requested the GOL to suspend tax assessments and waive royalty payments to secure the necessary investment and extend the mine’s lifespan.
Economic Fallout:
The potential closure poses a significant threat to Lesotho’s economy. The diamond mining sector accounts for around 10% of the country’s GDP and up to a quarter of its total exports by value. The shutdown would result in the loss of approximately 750 jobs and could severely undermine investor confidence in one of Southern Africa’s key mining industries.
The GOL faces a difficult decision: offering assistance to a company in which it is a direct shareholder while managing public perception and the demands of its tax authority. Industry analysts warn that a failure to reach an agreement swiftly could trigger a major economic and employment blow.
DiamondBuzz
De Beers Sale Could Take 18 Months To Clear Regulatory Hurdles: Duncan Wanblad
The strategic divestment of De Beers highlights the persistent friction between corporate portfolio optimization and multi-jurisdictional regulatory compliance.
The long-awaited sale of De Beers could easily take 18 months to clear regulatory hurdles, says Duncan Wanblad, CEO of parent company Anglo American, once a deal is finally agreed.
Wanblad has, however, insisted that the company is not exclusive with any consortium and that more than one group remains involved in the process.
The strategic divestment of De Beers by Anglo American highlights the persistent friction between corporate portfolio optimization and multi-jurisdictional regulatory compliance.
Initiated in May 2024 as part of a sweeping restructuring, Anglo’s decision to offload its loss-making diamond unit was designed to sharpen capital allocation around core, high-margin assets like copper and iron ore.
However, CEO Duncan Wanblad’s candid assessment underscores a critical transactional reality: securing a signed agreement is merely the precursor to a prolonged regulatory clearance phase.
While Anglo American maintains a target to agree on deal terms by the end of 2026, market expectations regarding transaction completion require re-calibration. Antitrust approvals across key diamond consumption and trading hubs—most notably the United States, China, and the European Union—could extend the execution window by up to 18 months post-signing.
Given De Beers’ historical market concentration and influence across global supply chains, international competition authorities will undoubtedly subject any structural change in ownership to intense scrutiny.
Although the Global Diamond Consortium, spearheaded by former De Beers managing director Gareth Penny, has positioned itself as a primary contender, Anglo American has deliberately avoided granting exclusivity. While maintaining multiple bidding tracks preserves commercial leverage, it delays the precise regulatory preparation required for closing. Formal filings cannot be finalized until the specific jurisdictional footprint and capital background of the acquiring consortium are locked in.
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