Over the past two years, Lesotho Tribune – has conducted a deep investigation into a complex web of corruption, negligence, and environmental degradation within Lesotho’s most valuable industry—diamond mining.
In an explosive five-part investigative series, we reveal how the government of Lesotho has been missing out on over a billion Maloti annually, resulting in a devastating loss of national wealth.
At the heart of this issue is the illegal renewal of Letšeng Diamonds’ lease. This maneuver not only bypasses regulatory frameworks but has also caused significant harm to the Moloraneng stream and the surrounding environment.
Our investigation goes further, exposing how successive Ministers of Mines have blatantly violated the Mines and Minerals Act, disregarding legislation intended to protect Lesotho’s natural resources. Additionally, we uncover how diamond miningcorporations have exploited depreciation laws that do not exist, costing the country billions in lost tax revenue.
This series delves into the tangled relationship between power, policy, and profit, bringing to light stories that have remained hidden—until now.
The Chain of Ultra Vires Actions in the Renewal of the LetšengMining Lease: A Betrayal of the Basotho Nation
The actions of the Minister of Natural Resources and the Registrar of Deeds in the issuance and registration of the Letšeng Mining Lease in 1999, as well as its premature renewal in 2019, represent an unambiguous breach of legal and constitutional obligations. The law was cast aside, replaced by actions that served the interests of foreign private entities over those of the Basotho Nation.
The story surrounding the renewal of the 1999 Letšeng Mining Lease is marked by a pattern of ultra vires actions—actions that fall beyond the legal authority of those involved—committed by both the Minister of Mines and the Registrar of Deeds. This narrative reveals how the improper actions taken by these officials have compounded each other, leading to the unlawful renewal of a lease that should have been managed solely under the provisions of the Mining Rights Act of 1967 (MRA). By exploring each transgression in detail, the extent of the breach of fiduciary duty to the Basotho people becomes evident.
The 1999 Letšeng Mining Lease: Governed by the Mining Rights Act of 1967 (MRA)
The Letšeng Mining Lease, issued in 1999, was established under the Mining Rights Act of 1967 (MRA). When the Mines and Minerals Act of 2005 (MMA) came into effect, it included a savings clause that allowed for the continuation of leases previously issued under the MRA. Specifically, Section 77(2) of the MMA states:
“Nothing in this Act shall affect the continued validity of any title to, interest in, or any existing right over, any minerals of whatsoevernature, subsisting immediately before the coming into operation of this Act.”
This means the 1999 Letšeng Mining Lease remained governed by the MRA until the natural end of its 25-year term in May 2024.
The original Letšeng Mining Lease, issued on May 28, 1999, explicitly states that the lease is granted for a period to “continue until a date not more than twenty-five (25) years subsequent to the signature date of this lease.” The lease also stipulates that the lessee, Letšeng Diamonds, must comply with all terms, conditions, and relevant laws, including the MRA, throughout the lease period. Any failure to comply with these terms would result in the automatic cancellation of the lease. Furthermore, the lease makes it clear that it will terminate immediately upon expiration, termination, or surrender of the agreement. Section 15(2) of the MRAunderscores the fact that the lease was valid for a defined period only by stating “The holder of a mining lease shall be entitled during its currency to prospect and mine …upon the land to which it relates.”
Despite these clear provisions, the Minister of Mines took steps to renew this lease in 2019—an action which not only violated the terms of both the MRA and MMA but also directly undermined the sovereignty of the Basotho Nation over its natural resources.
Minister of Mines’ Ultra Vires Actions in Premature Renewal
The premature renewal of the 1999 lease by the Minister of Mines in 2019 was a blatant overreach of authority and legally indefensible under the MMA. Section 36(2) of the MMA stipulates that:
“The holder of a mining lease may apply to the board for the renewal of his lease any time not later than one year before the expiry of such lease.”
Given that the 1999 lease was set to expire in May 2024, the earliest LetšengDiamonds could have lawfully applied for a renewal, if the mining lease was subject to the MMA, was May 2023. The renewal executed in 2019, four and a half years before the lease’s expiry, was therefore premature and beyond the Minister’s legal powers—an ultra vires action that directly contradicted the statutory requirements.
Furthermore, Section 68 of the MMA permits the Minister to cancel a mining lease only under specific conditions—such as death of the lessee, breach of the lease terms, or contravention of mining laws. In the absence of any such conditions being met, the 1999 lease could not have been legally cancelled to make way for a new lease. The Minister’s actions in 2019, therefore, lacked any legal basis and amounted to a grave violation of statutory requirements.
Letšeng’s Response
When quizzed about the rehabilitation funds, which according to the law, should be paid into the consolidated fund before renewal of any lease, Letšeng Diamonds CEO, Mr. Motooane Thinyane had this to say, “The mining agreement requires that upon being granted the mining lease, the company shall within 12 months of the effective date,prepare and submit what is called a Closure Plan for approval by the
commissioner. The requirement is also to update the closure plan annually. The closure plan was submitted for approval.”
Thinyane added, “the closure plan is a document prepared by a mining company, which
describes how, after closure, the mine production area and the infrastructure areas shall be made safe and environmentally
acceptable.”
“When the closure plan is approved, the company is required to provide what is called a Mine Closure Guarantee, and submit proof
thereof. The Mine Closure Guarantee is calculated such that, if the mine
should close and fail to implement its Closure Plan, then the guarantee can be called upon and be used to implement the closure plan
and cover the costs of implementing the closure plan, as well as the rehabilitation of any Post-Closure impacts…” Thinyane said.
“It is to be understood that the guarantee for the Closure Pan should not be construed as compensation to the State (Government) as
the question (2) suggests. It is a provision, that may be used by the State, only after the mine closure, to implement the approved Closure
Plan and any rehabilitation at the mine area, in the event that the mining company does not adequately do so,” Thinyane added.
When asked whether a new deed was issued in 2019 after the issuing of new lease, Thinyane confirmed that the deed was issued by the Registrar of Lands.
Letšeng Conflating Issues
Sources who spoke to Lesotho Tribune on condition of anonymity given the sensitivity of their employment laughed off Letšeng’sresponse as an intentional misdirection, solely aimed at diverting from the core of the dispute.
“The regulations are clear that no renewal and/or a new lease will not be issued until the environmental compensation is paid to the consolidated fund, and in this case Letšeng is a intentionally misdirecting itself by conflating the MRA and MMA…they’re trying to avoid the liability as spelt out in the MRA by bringing in MMA, which unfortunately, still requires environmental impact assessment to be done, before approval of “new” lease and the application should be done 12 months before the expiry of the lease agreement,” our source said.
Our sources added that Letšeng is being disingenuous by making reference to the Mining Closure Guarantee, our sources said, “the laws of Lesotho don’t recognise the guarantee under the current regulatory environment…and it is not surprising, a provision in the books of Gem Diamonds is worth nothing since Gem Diamonds has one cash generating asset, which is Letšeng…and when LetšengDiamonds closes operations Gem will not have funds to pay compensation for environmental rehabilitation.”
The Registrar of Deeds: Failure in Fiduciary Duty and Gatekeeping
The Registrar of Deeds’ role is crucial in ensuring that all deeds registered within the national registry comply with the law. However, the Registrar not only failed in this duty but actively compounded the ultra vires actions of the Minister of Mines by registering the unlawful 2019 lease.
Registrar’s Legal Obligations Under the Deeds Registry Act Section 6(a) of the Deeds Registry Act grants the Registrar the power to require “the production of proof upon affidavit or otherwise of any fact necessary to be established in connection with any matter… sought to be performed or effected in the Deeds Registry.” Our sources highlighted that the Registrar had the necessary legislative tools to ensure that the Letšeng Mining Lease and Agreement strictly complied with the prevailing laws. The Registrar had a clear legal duty to reject any deed that did not include all required statutory provisions.
The Registrar’s responsibilities are clearly delineated under the Deeds Registry Act of 1967:
Section 7(1): “No registered deed of grant… shall be cancelled by the registrar except upon an order of court.”
Section 7(2): “Upon the cancellation of any deed… the registrar shall cancel the relevant endorsement thereon evidencing the registration of the cancelled deed.”
These provisions stipulate that the Registrar could not legally cancel the 1999 lease without a court order. Moreover, Section 12(1)(a) requires that “transfers of immovable property… shall follow the sequence of the successive transactions in pursuance of which they are made.” By prematurely registering the 2019 lease, the Registrar disrupted this legally mandated sequence, registering a new lease before the original lease had either expired or been lawfully cancelled.
The premature renewal of the lease by the Minister in 2019, without waiting for the expiry or legal cancellation of the original lease, constitutes an ultra vires action under both statutes. Furthermore, this action violated Section 42(8) of the Deeds Registry Act, which mandates that no new mining grant can be registered over the same land area until the previous grant has either expired or been cancelled:
“Where… a mining grant has been duly registered in the deeds registry, no further mining grant or grants shall be registered in respect of the same area of land and in respect of the same mineral or minerals until such time as the duly registered mining grant has lapsed by effluxion of time or has been cancelled in terms of section forty-three.”
Despite this clear statutory prohibition, the Registrar of Deeds registered the 2019 lease, thereby facilitating the ultra vires actions of the Minister and compounding the legal violations.
The Registrar’s actions also contravened Section 5(b) of the Deeds Registry Act, which mandates:
“The registrar shall… examine all deeds or other documents submitted… and after examination reject any such deed or other document the execution or registration of which is not permitted by this Act or by any other law…”
The Registrar’s duty was to act as a gatekeeper, rejecting any deeds that did not comply with statutory requirements. The 2019 Letšengrenewal was illegal under the MRA, illegal under the MMA, and illegal under the Deeds Registry Act. By failing to reject the unlawful renewal, the Registrar facilitated an illegal transaction, thus compounding the initial ultra vires actions of the Minister.
Failure to Enforce Environmental Compensation Requirements
Our sources went further that the very same Mining Rights Act of 1967 which allowed Letšeng to mine for diamonds and reap the rewards from Lesotho’s diamond wealth also imposed obligations on Letšeng to pay compensation for environmental damage.
Section 19(5) of the MRA states:
(a): “The following provisions shall apply to the holder of a mineral title who is mining under that title, and who ceases to mine under that title.”
(b): “Upon cessation of mining under that title, the holder of the mineral title shall pay compensation for any damage caused to the surface of the land by his mining activities.”
(c): “The compensation shall be payable to the Consolidated Fund.”
The Registrar had an obligation under Section 48(1) of the Deeds Registry Act to ensure that “no deed of grant or transfer of immovable property shall be registered unless accompanied by a receipt or certificate… that all other taxes, duties or fees… have been paid.” The Registrar’s failure to verify that all environmental compensation obligations had been fulfilled before registering the new lease constituted yet another breach of fiduciary duty.
Below are some images from Google Earth starting in 1985 and ending in 2021. We have provided the images to show the extent of the environmental harm done by Letšeng’s mining operations.
Above is a recent aerial view of the Letšeng Main and Satellite pipes that produce the world’s most valuable diamonds. The pits which are currently about 810m long by 803m (main) and 762m (satellite) wide are currently just over 250m deep, have a total footprint of 110ha or 1,1 square km [each] and have a planned final depth of 450m placing them among the deepest pits in the world.
The Minister of Mines on 4 October 2019 agreed to a 20-year extension to the original mining lease entered between the Government and Letšeng on 28 May 1999, the Letšeng mining lease is envisaged to run for a continuous period of forty years four months and four days. At this point, the diamonds from Letšeng will either be finished or uneconomical to mine.
The estimated diamond reserves amounting to 5 000 000 carats of diamonds contained in the Letšeng diamond mine, which can be mined before the year 2036, are worth US$10 500 000 000 (ten billion, five hundred million US dollars). At a conservative exchange rate of M15 to US$1, this would amount to M157 500 000 000 (one hundred and fifty-seven billion, five hundred million Lesotho Loti). Given that the 2019 extension of the Letšeng mining lease by the Minister of Mines ends in 2039, the total value of the Basotho nation’s natural wealth in excess of one hundred and eighty-five billion Maloti has been exclusively assigned for the benefit of Letšeng and its foreign parent company Gem Diamonds.
Environmental Damage Caused by Letšeng Mining Operations
The red area in Figure 1 through figure 9 shows the extent to which the waste tailings dumps have expanded in size from 1985 to 2021. Currently, thirty-four million tonnes of ore and waste is mined annually from the two ever-expanding pits and after the economically viable diamonds have been recovered from the ore, 34 million tonnes of waste are dumped onto the mountainous tailing dumps.
Figure 1 – Letšeng diamond mine in 1985 – De Beers mined Letšeng from 1975 to 1982 after which no further large-scale mining activity took place until 1999 when Letšeng Diamonds acquired the mining rights for a 25-year period.
Figure 2 – Letšeng diamond mine in 2004 – Letšeng Diamonds had already started mining operations. The Main pit is the one on the right and the Satellite pipe is to its left.
Figure 3 – Letšeng diamond mine in 2010.
Figure 4 – Letšeng diamond mine in 2013
Figure 5 – Letšeng diamond mine in 2015
Figure 6 – Letšeng diamond mine in 2017
Figure 7 – Letšeng diamond mine in 2019
Figure 8 – Letšeng diamond mine in Mid 2020
Figure 9 – Letšeng diamond mine in September 2021
Figure 10 – September 2021 – a different view of the Letšeng mining operations where the tailings are being dumped into the adjacent valley.
Figure 11 – this is the same photo as in Figure 10 above taken in September 2021 – the following pictures provide a perspective of how vast the Letšeng tailings dumps are. The yellow arrow is pointing to a Caterpillar 777 dump truck returning from having unloaded 50 tonnes of waste stone on the tailings dump.
Figure 12 – September 2021 – a closer look at the same truck
Figure 13 – this is the size of the Caterpillar 777 dump truck shown in the above photos.
Figure 14 – May 2004 – Letšeng mining operations from an eye altitude of 6,08km
B
A
Figure 15 – September 2021 – 17 years later – Letšeng mining operations from the same eye altitude of 6,08km. From the Senqu River bridge (A) at an elevation of 3080 meters above sea level down the valley over a distance of 2,8 kilometres (A to B) to the leading edge of the tailings dump (B) there is a drop in the terrain of 170 meters and at this point, the valley is approximately 1,2 kilometres wide.
Figure 16 – The Letšeng tailings side view showing the height.
Shocking Environmental damage by Letšeng: Avoids over M3 billion compensation payout
Our sources pointed out that by managing to get its lease renewed over four years ahead of prescribed time, Letšeng Diamonds and by extension, Gem Diamonds avoided to pay over M3 billion in environmental compensation as stipulated in the MRA of 1967.
Lesotho Tribune combined some images from Google Earth starting in 1985 and ending in 2021. The images show the extent of the environmental harm done by Letšeng’s mining operations.
Deviation from Mandatory Profit-Sharing Requirements
Our sources said one of the most egregious violations in the 1999 Letšeng Mining Lease involved the omission of the mandatory profit-sharing clause required under the MRA. Section 17(4)(c)(iii) of the MRA explicitly mandates that mining leases must include provisions for:
“The payment by the lessee to the State, in addition to taxation, of a share (defined in the lease) of the profits derived from the working of the lease area.”
This provision was intended to ensure that the Basotho Nation would directly benefit from the wealth generated by its mineral resources.
However, the 1999 lease instead included a clause that allowed the government to purchase shares in Letšeng Diamonds, effectively reducing the State’s share to that of a minority, non-controlling shareholder. This shareholder arrangement is fundamentally different from a profit-sharing mechanism. Unlike a defined share of profits, which guarantees a direct return from mining activities, an equity-based position is subject to the whims of the majority shareholder and can diminish the government’s control and returns.
The Lesotho National Development Corporation (LNDC) Exemption
The deviation from the profit-sharing requirement was not just a statutory oversight—it was a deliberate violation. The Lesotho National Development Corporation (LNDC) Act No. 16 of 1968provided an exemption from the profit-sharing requirement specifically for the LNDC, a government entity:
• Section 5(2): “The conditions incorporated in a mining lease granted to the Corporation need not include any provisions in terms of items (iii) and (iv) of paragraph (c) of that subsection (17).”
This exemption was exclusively for the LNDC, recognizing its role in operating in the national interest. No such exemption existed for private entities like Letšeng Diamonds, making the omission of the profit-sharing clause in the 1999 lease an unlawful act. By approving this lease without the mandatory profit-sharing condition, the Minister acted beyond his legal authority, and the Registrar’s subsequent registration of this lease further entrenched the violation.
Violation of the Basotho Nation’s Rights Through the Early Renewal of the Letšeng Mining Lease: Offending the Principles of Natural Justice
The NDPC final report presented on 23 Oct 2019 titled; “Economic and Financial Reforms” articulated, that arising from stakeholder consultations there was a need to review government shareholding in mining as it was viewed as inadequate and that contracts with mining companies should be revisited. It further stated, the Ministry of Mines should review the mining lease and licensing policy to give government majority shareholding at least 51% ownership in all minerals.
Due to the early “renewal” of the Letšeng mining lease on 2 October 2019 by the Ministry of Mines, LNDC has been denied the right to apply for the Letšeng mining lease upon its expiry in May 2024.
The early renewal of the Letšeng mining lease, executed four and a half years before the original lease was set to expire in May 2024, represents a profound breach of the legal and fiduciary duties entrusted to the Minister of Mines and the Mining Board. This action not only contravened the provisions of the Deeds Registry Act and the original Mining Agreement but also directly compromised the rights and interests of the Basotho Nation, thereby offending the principles of natural justice. The ramifications of this premature renewal extend to the undermining of national sovereignty over Lesotho’s natural resources and the denial of opportunities that could have been realized through the Lesotho National Development Corporation (LNDC).
Lesotho National Development Corporation (LNDC) and Its Role in National Resource Management
The Lesotho National Development Corporation (LNDC) Act provides a critical legal framework that empowers the LNDC, a state-owned entity, to apply for and hold mining leases on behalf of the Basotho Nation. The LNDC’s mandate is to ensure that the Kingdom of Lesotho’s natural wealth is utilized for national development and the wellbeing of the Basotho people.
Key Provisions of the LNDC Act:
1. Section 4(1) of the LNDC Act states that the purpose of the Corporation is to initiate, promote, and facilitate the development of industries, including mining, in a manner that raises income and employment levels in Lesotho. The LNDC has the authority to engage in prospecting or mining or permit any other person to exercise its rights under a mineral title.
2. Section 5(1)(a) grants the LNDC the duty and power to investigate, formulate, and carry out projects that exploit, develop, or utilize natural resources to develop Lesotho economically.
3. Section 5(1)(s) explicitly authorizes the LNDC to apply for and acquire mineral titles, prospect or mine under those titles, and grant others permission to exercise the Corporation’s rights under such titles.
4. Section 5(2) clarifies that if the LNDC can perform a function, so can other government bodies, and the Government may decide whether such functions should be performed by the LNDC, a Ministry, or jointly.
5. Section 5(4) mandates that any permission granted by the LNDC to another entity to exercise its mining rights must be formalized in a written contract.
This legislative framework is designed to ensure that Lesotho’s natural resources, including its diamond wealth, are managed in a way that maximizes benefits for the nation. By granting the LNDC the authority to hold and manage mining leases, the Government of Lesotho has a powerful tool at its disposal to increase state participation in the mining sector, potentially avoiding the pitfalls of nationalization while securing substantial economic returns for the nation.
Compromise of Basotho Nation’s Rights and the Offense to Natural Justice
The premature renewal of the Letšeng mining lease by the Minister of Mines and the Mining Board effectively circumvented the legal and strategic opportunities provided by the LNDC Act. Had the lease not been renewed prematurely, the LNDC could have applied for the Letšeng mining lease upon its natural expiration in May 2024. Such an action would have allowed the Basotho Nation, through the LNDC, to take ownership of the nation’s diamond wealth, ensuring that the exploitation of these resources directly benefited the people of Lesotho.
The early renewal, however, denied the LNDC—and by extension, the Basotho Nation—the opportunity to assert control over the Letšeng mine. This action was not only a breach of the LNDC’s statutory rights but also a failure to uphold the fiduciary duties and legal obligations of the Minister of Mines and the Mining Board.
Key Legal Violations:
1. Violation of the Fiduciary Duty: The Mines and Minerals Act of 2005, particularly Section 3 read with Section 107 of the Constitution of Lesotho, vests all rights of ownership in minerals in the Basotho Nation. Section 3(2) of the Act directs the Minister to ensure that mineral resources are investigated and exploited in the most efficient, beneficial, and timely manner. The early renewal of the lease violated this directive by bypassing a process that could have secured greater national benefits through LNDC’s potential ownership of the lease.
2. Offense to the Principles of Natural Justice: The principles of natural justice demand that decisions affecting the rights and interests of individuals or entities must be made fairly and transparently. By renewing the lease prematurely, the Minister and the Mining Board effectively barred other potential applicants, including the LNDC, from competing for the lease under fair and open conditions. This action compromised the reasonable expectations of the Basotho Nation to have its natural resources managed in a manner that prioritizes national interests.
3. Denial of Sovereign Rights: The early renewal of the lease, without broader consultation or competitive bidding, undermined the sovereign rights of the Basotho Nation to control its natural resources. The LNDC, as a state-owned entity, is positioned to manage these resources on behalf of the nation, ensuring that the benefits are maximized for national development. The premature renewal deprived the nation of this opportunity, effectively transferring the control of a significant portion of the country’s diamond wealth to private interests for an additional 20 years.
Registrar’s Accountability Under Sections 56 and 57 of the Deeds Registry Act
The actions of the Registrar of Deeds were not merely procedural missteps; they constituted a breach of fiduciary duty with significant consequences for the Basotho Nation. Section 56 of the Deeds Registry Act provides that no act or omission of the Registrar shall render the Government liable for damages, except where the act or omission was mala fide or executed without reasonable care and diligence. The Registrar’s failure to reject non-compliant deeds and the unlawful registration of the 2019 renewal demonstrate a lack of reasonable care and a disregard for statutory obligations, potentially exposing both the Registrar and the Government to liability.
Section 57 further states that no registration in the deeds registry shall be invalidated by a formal defect unless substantial injustice has occurred. In this case, the injustice is substantial and evident—the Basotho Nation was deprived of its rightful economic participation in the Letšeng mine. The omissions and failures by the Registrar directly facilitated this deprivation, contributing to the erosion of the nation’s sovereign rights over its natural wealth.
Consequences and Call for Judicial Intervention
The cumulative effect of these ultra vires actions has caused significant harm to the Basotho Nation. The Minister of Mines and the Registrar of Deeds have both acted beyond their legal authority, undermining the nation’s sovereignty over its natural resources and depriving the Basotho people of their rightful economic benefits.
The premature renewal of the Letšeng lease, compounded by the failure to enforce environmental compensation requirements and the unlawful omission of a profit-sharing clause, represents a gross breach of fiduciary duty. The Registrar of Deeds, instead of acting as the gatekeeper of legality, facilitated these breaches by registering unlawful deeds, thereby compounding the harm to the nation.
Judicial intervention is now imperative to annul the unlawful leases, hold those responsible accountable, and restore the rule of law. The Basotho Nation deserves transparency, adherence to statutory requirements, and the full economic benefits of its natural wealth—benefits that have been unlawfully diverted by those entrusted with the nation’s resources.
