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Matekane’s M6.7b Letšeng Contracts Raise Alarm On Water Pollution

24 December 2022 by Pascalinah Kabi

Bertha Foundation Fellow

Letšeng Diamonds, Lesotho’s most lucrative mine, has awarded contracts worth M6.7 billion to MGC Mining, a company that is ultimately owned by Prime Minister Sam Matekane.

The value of the contracts was disclosed in a 16-page response by Letšeng to a number of reports by the MNN Centre for Investigative Journalism earlier this year.

The M6.7 billion contracts cover a ten year period from 2012 to 2021, the company confirmed. 

Matekane only became prime minister in October, but he remains a shareholder and director of Matekane Group of Companies (MGC), according to company records. Among MGC’s subsidiary companies is MGC Mining.

The size of MGC Mining contracts, as well as Matekane’s apparent retention of an interest in MGC after assuming power, will leave the mining community representatives and environmentalists alarmed.

They fear Lesotho’s newly elected prime minister may face a conflict of interests as communities attempt to ensure mining companies, the government and regulators take seriously their concerns over water pollution linked to the diamond extraction process. 

Survivors of Lesotho Dams, a pressure group that advocates for the rights of communities affected by the Lesotho Highlands Water Project, believes that the huge value of contracts flowing to  Matekane’s company could affect how his government addresses pollution concerns. 

“I think it is not easy for businesspersons to forgo business activities that they are involved in because they are administering the government,” the group’s coordinator, Mothusi Seqhee said. 

Seqhee says failure to fund an autonomous body to take punitive measures against polluting mines should be seen as “maintaining the status quo on pollution because they (Matekane and other Lesotho businesspersons-turned politicians) are benefiting.” 

We asked the Prime Minister:

  • whether he is still a majority shareholder of MGC;
  • If MGC still controls MGC Mining; and
  • How he responds to his potential conflict of interest when it comes to taking action against water pollution as a result of Lesotho Diamonds mining activities given his shareholding in MGC.

We received no answers prior to publication.

In prior correspondence, Matekane directed our questions about the size of contracts to MGC Mining and also the government’s policies to address water pollution to the Minister of Natural Resources, Mohlomi Moleko.

“We prioritise the needs of all our stakeholders in our approach to water management, and our water strategy is based on international best practice standards,” Moleko said in an email statement on 23 November. 

His response was strikingly similar to the statement released by the mine in May 2022.

Letšeng chief executive officer, Kelebone Leisanyane confirmed receipt of questions emailed to him but declined to respond. 

We asked both MGC and Letšeng Diamonds what contractual work was undertaken, but neither responded. But it is likely that MGC has performed drilling, blasting, loading and hauling services at Letšeng. It has been reported that MGC Mining currently has an earthmoving contract at the mine.

There are no suggestions that contracts were awarded to MGC Mining unfairly or that relevant procurement rules were not followed.  

MGC first became Letšeng Diamonds’ partner in 2004. The company has not said how much MGC received in contracts between 2004 and 2011. It means MGC may have benefited even more from work at the country’s most lucrative diamond mine. 

Matekane formed MGC in 1986 and has business interests in aviation, property development, hospitality, farming, as well as mining. 

Matekane’s company website acknowledges that it is a partner of Letšeng Diamonds Mine which it says “is famous for its large, top quality diamonds.”

Letšeng Diamonds has two shareholders: a UK stock market company, Gem Diamonds controls 70% of the mine with the Lesotho government owning 30%.

This story was produced by MNN Centre for Investigative Journalism with Finance Uncovered, a UK-based journalism organisation.

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