The Lesotho Chamber of Mines is claiming that diamond mining companies have been simply held hostage by a local company Mohahlaula Airlines without any protection from the government.
The chamber has also lambasted the Director of Civil Aviation, Alice Sesinyi, accusing her of sabotaging the mines by illegally suspending the issuance of Temporary Air Space Permits (TASP).
It said the suspension of issuing of permits was counterproductive and an investment deterrent.
Newsday has seen a copy of a scathing letter Mohale Ralikariki, chairperson of the Lesotho Chamber of Mines, wrote to the Minister of Public Works and Transport, Neo Matjato Moteane, on December 17, 2022, last year.
This was less than two months after Moteane was appointed minister in November last year.
Ralikariki assured Moteane that the diamond mining companies were committed to assisting the government to revive the economy by attracting further investment into the country.
However, he warned that this could only be achieved by creating an enabling and conducive investment climate and a predictable legal framework.
“The recent actions of the Director of Civil Aviation of sabotaging the mines by suspending the issuance of Temporary Air Space Permits (TASP) are illegal, counterproductive, and an investment deterrent,” Ralikariki said.
“As reiterated in our previous letter, the suspension simply means that the mines cannot export the diamonds until such exports are mainly monopolised and conducted by Mohahlaula through a South African-based subcontracted company of its own choice,” he added.
He said what was “even more concerning” were statements made by the managers of Mohahlaula “in our meeting with you”, where they said that the TASPs were suspended under their influence as ammunition to force the mines to give in to their demands.
“To operate under an environment where one of the biggest contributors to the economy can simply be held hostage like this by a local company without any protection from the regulator is quite concerning,” he said.
He further emphasized that the ministry as the regulator, equally had an obligation to transparently serve and protect the diamond mining companies.
“The Director of Civil Aviation is illegally using his powers to drive the agenda of Mohahlaula, which actions amount to abuse of power and extortion,” Ralikariki further stated in the letter.
Lesotho’s diamond mining industry mainly comprises four largescale commercial operations, Kao Mine, Mothae Mine, Liqhobong Mine, and Letšeng Mine.
In March this year, a local aviation charter company – Bohlokoa Aviation – trading as Mohahlaula Airlines, sued the government in the High Court of Lesotho for damages of M10 million plus interest arguing that the mines in the country do not use its services to transport diamonds to South Africa by plane.
It claimed in court papers that the government was breaching the country’s mining laws which stipulate that local services should be used, if available, over similar services procured abroad.
It said the Mines and Minerals Act provides that the holder of a mineral right shall, “with due regard to the need to ensure safety, technical and economic efficiency”, use services available in Lesotho.
The Chamber of Mines’ letter to Moteane reveals why the mines were snubbing Mohahlaula.
Ralikariki stated in the letter that local participation was a policy issue that diamond mining companies fully support.
He said in the past three years, the four largest diamond mining companies spent M9.3 billion in the procurement of goods and services.
“The total local expenditure was M8.3 billion (89 percent) versus the foreign expenditure of M1 billion (11 percent) which was mostly on OEMs, and to maintain warranties and guarantees by manufacturers on original spare parts,” he said.
He also stated that the TASP was issued in line with the applicable legal requirements and alleged that the four diamond mining companies had been meeting the requirements and remained compliant.
He said the Director of Civil Aviation suspended the issuance of TASP to South Africa-based companies, “yet Mohahlaula does not own helicopters and is itself, using SA-based companies to provide these services”.
Ralikariki also charged that Mohahlaula used South African pilots living in South Africa along with all other resources from that country.
“As the service provider and all associated costs are really coming from SA, the question is: where is the local empowerment and capacity building under this arrangement?
“The cost that one of the couriers (Malca Amit) usually pays is M54,500 per trip. By comparison, the attached quote received from Mohahlaula is M112,000,” he said.
“Recently Mothae had an export and attempts to secure a TASP were futile. Their only option, considering the urgency of the export, was to engage Mohahlaula through their courier, Brinks, even though the cost was 95 percent above the normal cost for the same service (from the usual M62,900 to M122,000),” he added.
He further claimed Mohahlaula charged almost 100 percent extra for a service provided by a South African-based company, “while they are simply a middleman in the brokering of the TASP on behalf of the couriers”.
He warned that all four diamond mines had scheduled exports in the upcoming weeks and if TASPs remained suspended and exports did not take place, employees’ salaries would be affected.
According to a report published by the chamber earlier this year, Kao, Mothae, Liqhobong, and Letšeng mines had 2997 employees of whom 98 percent were Lesotho nationals and two percent expatriates at the end of 2022.
Ralikariki added that: “… suppliers and service providers shall not be paid, and effectively the operations will have to be stopped until this issue is resolved.”
“As discussed in our meeting where all four operating diamond mining companies were represented, none of them are able or willing to absorb any additional cost associated with the forced engagement of Mohahlaula.
“The compromised option of engaging Mohahlaula, shall not be accepted by any of these four operating diamond mining companies if the cost exceeds a surcharge of five percent – 10 percent of the normal cost,” he concluded.
The Chief Executive Officer (CEO) and founder of Mohahlaula Airlines, Phafane Nkotsi, held a press conference this week where he disclosed that his airline has opened a criminal case against Letšeng Diamond Mine, Storm Mountain Diamonds, Mothae Diamond Mine, Liqhobong Diamond Mine, and the Department of Civil Aviation for allegedly securing temporary permits through fraudulent means.
“The collective and unlawful acquisition of fraudulent Temporary Airspace Permits has led to the potential revenue loss of M10 million for Mohahlaula Airlines, and all this is between the periods of January 25, 2023, and March 28, 2023,” Nkotsi said.
He said his company identified a business opportunity in 2017 in the general aviation and aerial survey market and has since then attempted in vain to engage with the diamond mines and other potential clients to offer charter and aerial survey services.
He indicated that numerous meetings were held and facilitated by the Director of Civil Aviation and Commissioner of Mines.
“It is worth mentioning that meetings were held over a period of 18 months with mines and other stakeholders. Shocking comments by the Commissioner of Mines and one diamond mining company were made, which only started making sense in January 2023. In one of those meetings commissioner of mines said you (Mohahlaula Airlines) are dealing with giants, and they will not agree on compliance,” he said.
Nkotsi told the presser that despite proactive efforts, the diamond mines consistently ignored the airline’s approach resulting in a series of unfruitful meetings.
He said it took three years for Mohahlaula to have a formal meeting with the diamond mines, only after an intervention by the then Minister of Transport and the Air Transport Regulator, the Department of Civil Aviation.
“After the discussions failed to yield a positive result, he said, Mohahlaula Airlines requested the government to assist by using provisions in the Mining and Minerals Act 2005 and Civil Aviation Act 2008 to compel the mines to use Mohahlaula Airlines’ services as required by these pieces of legislation.
“Moreover, the local airline is capable of providing the mines with the services they require, so the continued issuance of Temporary Airspace Permits to foreign companies is in direct violation of the law.
“The government decided to side with the South African air operators as opposed to supporting the legal stance brought to its attention by the local air operator,” Nkotsi said.
He said following extensive consultations with different stakeholders, the Director of Civil Aviation stopped issuing temporary permits to foreign operators in 2021 but when a new government came in in November last year, the mining companies alleged that Sesinyi had unilaterally stopped issuing the permits.
“In November of 2022, the current Prime Minister (Sam Matekane) was asked to intervene in the matter by the Minister of Transport (Moteane). However, in January 2023, the Minister of Transport, the Principal Secretary (PS) in the Ministry of Transport, and the Director of Civil Aviation met with the Prime Minister and explained the governing legislation to him,” he said.
He alleged that it was then agreed that it was within the director’s purview to stop issuing the permits and the mines were instructed to comply.
This decision, he said, was duly communicated to the mines on January 25, 2023.
“However, through the assistance of the Minister of Transport, the mines have been able to secure temporary permits through fraudulent means,” he charged.