Workers of Storm Mountain Diamonds (SMD) are starring down the barrel of mass retrenchments and economic despair as the Kao-based mine teeters on the brink of closure.
As a result, the Independent Democratic Union of Lesotho (IDUL) has come out strongly, threatening possible industrial action and accusing the government of neglect and selective support that could lead to the destruction of one of the country’s key mining operations and, consequently, the livelihoods of nearly 800 Basotho workers.
SMD, jointly owned by Namakwa Diamonds Limited and the government, operates the Kao Mine, home to the largest kimberlite pipe in Lesotho and the fourth largest in Southern Africa. But this geological wealth now stands in stark contrast to the bleak reality faced by its workers.
In a recent statement, SMD warned that without urgent government intervention to address crippling tax and royalty issues, the company may be forced to shut down operations. The mine says it has been engaging with government since mid-2024, pleading for assistance on tax alignment and royalty relief to make its operations sustainable.
“The imposition of a flat royalty rate when the mine is already loss-making adds a cost layer that we simply cannot afford,” the company said.
It further accused the Revenue Services Lesotho (RSL) of disregarding binding mining agreements that guarantee predictable investment conditions.
The mine’s leadership insists they have done all they can to keep afloat, including cutting operational costs, improving efficiencies, and even initiating a retrenchment process. But without state support, the mine’s closure appears imminent.
The IDUL, representing mine workers at Kao, has warned that hundreds of families would be left without income because of government’s failure to help out.
The organisation’s secretary general, May Rathakane, says if the mine closes, the repercussions will be catastrophic, not just for the 800 workers, but for the local economy and surrounding communities that depend on the mine for survival.
The Kao Mine is one of Lesotho’s most significant private employers. Over 97 percent of its workforce are Basotho, and 34 percent hail from surrounding villages. The mine’s closure would send shockwaves through rural economies, collapsing small businesses that rely on mine workers’ spending power.
“For government to watch silently while so many livelihoods hang in the balance is a betrayal of the working class. Lesotho cannot claim to promote investment and industrialisation while suffocating its most productive sectors through bureaucracy and political bias,” noted Rathakane.
The mine implemented a care and maintenance plan last year, which was approved by the SMD Board in September 2024, in a bid to contain losses.
Board chair Robert Cowley informed employees then that continuing operations without government relief was financially impossible under market conditions at the time.
Diamond prices have plummeted globally by nearly 50 percent, reverting to levels seen during the COVID-19 pandemic. Mines like SMD, already burdened by heavy taxes and royalties, have little room to manoeuvre. The union argues that the government should be working to save such strategic assets, not pushing them toward collapse.
IDUL is demanding that the Ministry of Natural Resources and the Ministry of Trade, Industry and Business Development immediately engage with SMD to find solutions.
The union further called on RSL to respect existing mining agreements, saying unpredictable taxation discourages investors and destabilises jobs.
“Every mining agreement was signed in good faith. If the state violates those agreements, it sends a message to the world that Lesotho is not a safe place to invest,” said Rathakane.
The trade union movement argues that the country’s mining policy has failed to protect both workers and the national economy. Instead of fostering sustainable partnerships, unions say government agencies have become punitive and short-sighted, prioritising revenue collection over long-term job security.
IDUL is urging the government to adopt a worker-first approach to industrial policy, particularly in the extractive sector. The union wants immediate intervention to prevent mass retrenchments, and for the state to facilitate constructive dialogue between mine management, investors, and labour representatives.
“We are not asking for handouts. We are demanding fair treatment and a level playing field. If one mine receives state assistance, all should be entitled to the same opportunity to survive,” Rathakane noted.
The union has also hinted at possible industrial action should the government continue to ignore their demands. “If the mine closes, we will not stand by quietly. We will mobilise our members and hold those in power accountable for every job lost,” he warned.
Once hailed as a pillar of the national economy, Lesotho’s diamond sector is now showing deep fractures. The global downturn in diamond demand, coupled with domestic policy inconsistencies, has left mines struggling to stay afloat.
For IDUL and other worker bodies, this crisis exposes the fragility of a system overly dependent on foreign capital and erratic commodity markets.
“We cannot continue to rely on external investors while our own government fails to safeguard jobs. Workers are the backbone of this industry, and their welfare should be the first priority,” added Rathakane.
