Lesotho - Mining

Lesotho has long been known as a source of diamonds, mostly from alluvial deposits, and was seeing a revival of its diamond mining industry. Geological surveys have revealed a limited variety of other exploitable mineral resources. Mineral production contributed 3% of GDP between 1995 and 2001. In 2001, 1,140 carats of diamond were produced, extracted mostly through rudimentary methods, down from 1,500 in 2000 and 9,660 in 1998. Artisanal miners also produced small amounts of fire clay, gravel, dimension stone, and crushed rock for domestic consumption. Construction was a top industry in 2002. Commercial interest in the mineral resources of Lesotho was limited to diamonds. The Lesotho Geological Survey has identified 33 kimberlite pipes and 140 dikes, of which 24 were diamondiferous.

MineGem Inc., a Canadian firm formerly known as Messina Diamond Corp., operated two locally incorporated companies involved in diamond exploration and development, and held licenses that covered two mineralized zones within the Liqhobong kimberlite area, in the northern highlands. A feasibility study completed in 2000 on Liqhobong's Satellite Pipe project showed an indicated resource of 1.4 million tons of ore at a grade of 69 carats per 100 tons; MineGem was negotiating to obtain financing for a mining operation that could yield 290,000 carats per year. Some alluvial diamonds have been found north of Mokhotlong, where individual and syndicate concession holders were prospecting. In 1977, De Beers Consolidated Mines Ltd. opened the Lets'eng-la-Terae diamond mine, in the Leribe District, which produced 53,714 carats in 1980 and 289,000 carats between 1977 and 1982, when the mine was closed. In 2000, the government, together with Letseng Diamonds (Pty.) Ltd. and its partner, New Mining Corporation of South Africa, a black empowerment group spun off during the unbundling of JCI Ltd., announced plans to reopen mining of the Lets'eng-la-Terae kimberlite pipes; remaining resources included 12 million tons at the satellite pit, 50 million tons of ore in the old main pipe, and 5 million tons of low-grade stockpiled ore left by De Beers. The mine was expected to produce 50,000 carats per year during its 20-year life, with 15% of the diamonds to be mined expected to be larger than 10 carats, and 1.5% larger than 100 carats. In 2002, Consolidated African Mines Limited announced its plans to merge with JCI Gold, and acquired a 40% interest in Letseng Investment Holdings, the holding company of Letseng Diamonds.

The economy of landlocked Lesotho was based on subsistence agriculture, livestock, and remittances from Basotho miners employed in South African gold mines. However, the restructuring of the South African mining industry and the decline in gold prices have decreased the number of Basotho miners in South Africa from 96,900 in 2001 to 59,900 in 1997, leading to a decline in remittances from $264.2 million to $149.5 million. The revival of the diamond industry in Lesotho showed hope for some new opportunities for Basotho mineworkers and for replacing related lost government revenues. Exploration for iron, coal, and uranium continued.

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