Lerala’s fate to be clear by Christmas
Mbongeni Mguni | Monday December 4, 2023 06:00
Lerala Mine, located in the Tswapong area, closed at the end of May 2017 after its Australian owner, Kimberly Diamonds, ran out of operational cash amidst weak sales. At least 130 workers lost their jobs, with a few others retained for care and maintenance activities.
Maroon Capital, a five-year-old firm majority-owned by Israeli investor, Gilad Shabtai, snapped up Lerala Mine in 2020 but is yet to restart production.
“The licence for the mine was ending in September 2021 and was extended for two years for them to go into the mine and see if there’s anything that can be produced,” Minerals and Energy minister, Lefoko Moagi told a presidential kgotla meeting in Lerala on Tuesday. “If there is, then we could talk about a new licence. “This is still ongoing and they have asked that a licence be given to them and we are still assessing that. “We expect that by Christmas, we will have given them that licence for them to start production.”
Originally opened in 2008 by Australian firm DiamonEx, Lerala battled cycles in the diamond market, being sold to United Kingdom junior, Mantle before passing to another Australian firm, Kimberly Diamonds in 2013.
Kimberly’s exit from Lerala was messy, with local liquidators suing the principal Australian director over a parcel of 53,000 carats in diamonds apparently spirited out of the mine the day before operations were closed. The liquidation process also revealed abysmal management at the Mine, while the principal director at one point faced a 20-year prison term in his home country of Australia on four counts of misleading investors. In 2018, a Sydney jury acquitted the director of two charges and was unable to decide on the other two.
Shabtai’s application for a mining licence and not a retention licence suggests Maroon Capital plans to restart production at Lerala. However, the global rough diamond industry is experiencing its worst operating conditions since 2019, with both retail demand and prices of the stones down by double digits.
The country’s biggest producer, Debswana, has opted to maintain its output targets for the year while the other diamond player, Lucara, has equally maintained its production guidance, suggesting the industry has opted to ride out the turbulence in the market and stockpile any unsold stones.
The latest developments around Lerala Mine come as the village and its leadership pile pressure on government to have operations restarted. During a Parliament session in March, area legislator, Setlhabelo Modukanele, queried the delays in restarting operations.
At the time, Moagi said Maroon Capital plans to restart operations by first mining Lerala’s tailings dump.
“They said they want to secure funds to start with processing the tailing dump and we will be watching them carefully with the Department of Mines,” he said. “If they are unable to start, we will take back our mine and give it to those who can move it forward so that Batswana can secure jobs.”