Lack of independent diamond evaluators is potentially costing the Lesotho government huge revenue, Mining principal secretary, Tšokolo Maina, has said.
Maina said the Lesotho government could be losing the revenue through undervaluation of gems by mining companies who allegedly manipulate the diamond prices for their own benefit.
An independent diamond evaluator would help ensure that Lesotho’s diamonds are sold at fair market prices bringing about transparency within the mining sector.
Efforts to engage an evaluator but the efforts were fruitless.
“The government does not have an independent diamond evaluator,” Maina said.
“As a result, mining companies evaluate and price diamonds on their own independent of the government. This opens opportunities for them to manipulate diamond prices.”
Government representatives assigned at the mines do not have the skills to ascertain diamond value, Maina said.
“We have started the process of engaging an independent evaluator. We have already approached the Ministry of Development Planning in relation to this matter. We hope to issue the vacancy advertisement soon,” Maina said.
Lesotho held its maiden local diamond auction in May this year and Maina said it proves that the kingdom has the capacity.
He said some international diamond buyers who attended the auction had budgeted up to US$10 million on the strength of the good reputation of local diamonds on the local market.
“The auction confirms that we can sell our diamonds locally, which we intend to do in the future.”
Localizing diamond auctions will benefit Lesotho’s economy through job creation in processes like diamond cutting, sorting, polishing and jewelry making among others, he said.
“We are not getting the value of finished products because we are selling our diamonds as finished products. As a result, we are only getting about 10 percent of the diamond’s value through royalties.
“We want to change that and control the diamond auction. Diamonds will only be taken out of the country when we fail to secure a local buyer,” Maina said.
In May, the debut local diamond auction fetched R54 864.55 from the 18.34 carats of amnesty diamonds. R327 785.55 was realised from the 209.57 carats of confiscated diamonds.
He said that seven people shared the R54 864.55 raised from voluntarily handed over diamonds, and all have since been paid for their inventory.
Maina said the auctioned diamonds were so small that they had to be grouped into lots to aggregate their value. A total of 38 lots were prepared, with 24 lots for confiscated diamonds and 14 lots for voluntarily handed over diamonds.
Out of the 14 lots of the amnesty diamonds only eight were sold.
Although not all the voluntarily handed in diamonds were sold, they performed well above the US$106.20 reserve price per carat.
The confiscated diamonds were however all sold out but at prices below the US$114.14 reserve price per carat.
He described the auction as a success which surpassed the R372 200.95 target. The auction made R378 650.52 in total.