Storm Mountain Diamonds (SMD), operator of the Kao Mine, has warned employees that the company is being forced into painful cost-cutting measures as the global diamond market shows no sign of recovery. In a memo dated 8 September 2025, the Chairman of the Board, Robert Cowley, said low diamond prices now appear to be permanent and the company must adapt.
Cowley confirmed that although the company had completed its high-pressure grinding roll (HPGR) expansion project to improve efficiency, SMD could not continue without additional capital injections. To extend the life of the mine, SMD requires capital projects such as waste stripping estimated at M150 million per year. Without these investments, the mine is likely to run out of ore.
The board has already engaged the Government of Lesotho for possible financial relief. Despite extensive consultations, no firm commitments have been secured.
Mine Closure Considered
SMD’s board admitted that closure of the mine had been actively considered due to the dire outlook. However, it has resolved to keep operations running while pursuing aggressive cost reductions. One of the most immediate measures is a 20 percent reduction in overall costs across the business.
The board has also instructed management to cut employment costs by 30 percent. This could trigger large-scale dismissals for operational reasons. Employees will receive formal notices, and dismissals will follow Lesotho’s Labour Code of 1992, as well as international best practice.
Operations Continue Under Pressure
While the cuts are rolled out, mining and production will continue. SMD is renegotiating contracts with its mining contractor and other suppliers to reduce costs further. Cowley urged employees to remain focused and to continue working safely, noting that the company’s survival depends on a collective effort.
The memo underscores the scale of the challenge facing Lesotho’s mining sector. The diamond industry has been a key source of revenue and jobs, but with global demand weak and prices subdued, even established players such as SMD are struggling to remain afloat.
