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Storm Mountain Diamonds has requested urgent tax breaks from the government of Lesotho it says will allow it to procure the investment necessary to prevent the closure of the Kao mine.
A drop in diamond prices amid the global crisis in the industry has affected operations at Kao, the company, which operates the site, posted on Facebook. Prices have dropped as much as 50% from previous levels, it explained, with goods selling at rates similar to those seen during the Covid-19 pandemic. It has implemented various measures in an attempt to avoid closure and mass layoffs, including boosting operational efficiencies and decreasing costs.
The company has asked the local government for tax and royalty relief to help preserve the mine’s viability. The Lesotho government is a 25% stakeholder in the deposit, while Namakwa Diamonds holds the remaining 75%. Unfavorable tax conditions and expensive royalties are deterring investors, according to the miner, making it difficult to obtain funding to continue operations.
If the government doesn’t intervene, Storm “will not be able to source the investment the mine requires to fund the capital projects that are needed to extend the life of the mine, or eradicate the impediments to further investment, which would lead to the imminent closure of the mine and the loss of all jobs and local procurement,” it said.
Image: The Kao mine. (Storm Mountain Diamonds)
