Storm Mountain Diamonds (SMD), the operator of the Kao diamond mine in Butha-Buthe, has warned that without urgent intervention from the Government of Lesotho, it may be forced to shut down operations, resulting in massive job losses and halted local procurement.
In a press release dated 13 October 2025, SMD revealed that the global diamond industry is in crisis, with prices having dropped by up to 50 percent from previous levels. The company said its current selling prices are now comparable to those reached during the Covid-19 period, a situation it described as “unsustainable for continued operation.”
SMD, jointly owned by Namakwa Diamonds Limited and the Government of Lesotho, with the latter holding a 25 percent stake, said it has been in discussions with government authorities since mid-2024 seeking relief on key financial pressures. The company specifically requested two urgent interventions — withdrawal of certain tax assessments and the introduction of a variable royalty rate that reflects the mine’s loss-making status.
The company noted that despite months of engagement, there has been no meaningful response from the government. “Without GOL assistance on these issues, SMD will not be able to source the investment that the mine requires to fund the capital projects needed to extend the life of the mine,” the statement reads.
SMD accused the Revenue Services Lesotho of disregarding the binding mining agreement signed with the government, describing this as a major deterrent to investor confidence in the country’s mining sector.
The diamond producer said it has implemented internal measures to survive the downturn, including operational cost reductions and efficiency drives. However, due to the continued price slump and lack of government intervention, SMD has started a process of possible retrenchments to reduce costs further.
“SMD hopes to restrict the number of job losses as far as possible,” the company said, but cautioned that without government action to resolve tax and royalty issues, the closure of the mine and the loss of all jobs and local business opportunities would be unavoidable.
The company reiterated its commitment to continued engagement with the Government of Lesotho to find solutions to the crisis, but warned that time is running out for one of Lesotho’s most significant diamond mines.
