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Lesotho has been badly affected by diamond market decline which has intensified the impact and stress of unemployment that the country is currently experiencing.
Lesotho’s unemployment rate is over 30 percent.
According to a local Economist, Mr. Thabo Qhesi, although the mining sector was not the biggest employer in the country, the loss of interest in the diamond industry has had a significant impact, especially on the Gross Domestic Product (GDP), tax and dividends into the consolidated fund.
Qhesi said Lesotho’s diamond sector has been hit particularly hard by this global downturn, citing that two of Lesotho’s four diamond operations are on care and maintenance, with others operating on thin margins, and producers are requesting royalty payment exemptions to stay afloat.
He noted that Gem Diamonds shortened the life of its Letšeng mine by four years following cost-cutting initiatives, planning to continue operating only through 2035 rather than 2039, and laid off 240 employees. Between 250 and 300 permanent and contracted workers at Letšeng faced retrenchment due to slumping global diamond prices, a weakening US dollar, and uncertainty over US trade tariffs.
Qhesi also mentioned that Kao Mine, one of Lesotho’s largest diamond producers, employing over 750 workers, is on the verge of shutting down, threatening more than R1 billion in local economic activity.