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Debt-ridden mine accused of abusing workers

By Billy Ntaote and Itumeleng Koleile

Former employees of Liqhobong Mining Development Company, a subsidiary of the London Stock Exchange-listed Firestone Diamonds Plc, have accused the mining company of reneging on a re-employment promise after it allegedly demanded they withdraw their unfair dismissal lawsuit in exchange for their jobs.

Liqhobong, a diamond mine nestled in the northern district of Botha Bothe, is 75 percent owned by Firestone Diamonds with the government holding the balance.

The company closed its operations, placed the mine on care and maintenance, and retrenched workers when Covid-19 mitigation lockdowns were imposed in 2020.

However, the retrenched workers believe the company has and continues to use COVID as a ruse to restructure the mine, which they say was struggling long before the pandemic hit. The workers say they have become collateral damage in this process.

In a communication to its shareholders published in Investor News on 30 June 2020, Firestone Diamonds noted that it had promised to re-employ former employees at Liqhobong once it reopened.

“…preference of employment will be given to all previous employees as well as those employed as part of the care and maintenance team when the mine restarts,” said the communication.

However, recorded phone conversations between Liqhobong Human Resources Manager Khabane Sekike and the retrenched employees, which MNN Centre for Investigative Journalism has listened to, reveal that the mine wants the employees to withdraw a court case of unlawful dismissal they have lodged as a precondition for their re-employment.

When they were retrenched, the mine’s 34 employees through their union—Lesotho Union of Metal and Allied (LUMA)—dragged Liqhobong before the Directorate of Dispute Prevention and Resolution, but the parties failed to reach a settlement at the conciliation stage and the dispute was referred to Labour Court on September 4.

The workers claimed unfair dismissal and demanded to be “reinstated and paid all owed wages” while the court suspended recruitment into their posts pending finalization of their case.

In the recorded conversations, Sekike told the former workers that he was conducting a survey on their availability for re-employment when the mine resumed operations but he instructed them to withdraw their lawsuit as a condition.

He told workers that if their withdrawal letters were not sent to him by the end of August they would not be re-employed. Upon receipt of the letters, he said he would take them to the Labour Court to withdraw the case in time for the mine to restart its operations in October., Sekike also told the workers that his attempts to communicate with Mosesanyane Masoebe, Secretary-General of LUMA had been unsuccessful as he was unavailable hence his direct communication with them.

Approached to comment, Sekike told MNN that “both your WhatsApp and email correspondence shall be addressed,” however he never responded directly.

MNN’s questions to the mine’s Chief Executive Officer Paul Bosma were forwarded to Liqhobong Site Manager Ntsane Makhetha who was delegated to respond.

Makhetha, in an email responding to questions, said Liqhobong is aligning itself with the provisions of the Labour Code of Good Practice, Notice of 2003 that deals with preference in re-hiring.

He said former employees who are available and interested in re-joining Liqhobong mine will be offered employment in accordance with internal recruitment processes and organizational structure.

On the withdrawal of the unfair dismissal case solicited by Sekike, Makhetha said “this is factually incorrect. The purpose of the exercise is for the company to determine the actual number of former employees still interested and available for re-employment as part of the Operational Readiness Phase as the mine moves out of the care and maintenance phase”.

Mine’s Pre covid-19 lockdown woes

MNN has learned from Firestone’s Investor News communication that Liqhobong had long been under financial strain due to the mine’s failure to meet anticipated production. This preceded the March 25, 2020 lockdown.

Last year, Liqhobong fired Basil Read —a company that was contracted to carry out open-pit mining operations—for failure to meet targets.

In a Shareholder Circular and Notice of General Meeting dated February 2020, Firestone told shareholders “…it became clear during 2017 that the anticipated average value of US$107 per carat was not being achieved…” and Liqhobong “would be unable to service its scheduled debt repayments to ABSA Bank Limited in respect of its US$82.4 million (around M1.2 billion) project debt finance facility”.

Firestone told its shareholders this culminated in a US$25.0 million (around M360 million) fundraising and “debt restructuring announced during December 2017 that entailed an 18-month standstill on the ABSA Bank debt during which only interest was serviced”.

MNN understands that Liqhobong’s loan standstill period ended mid-2019 and debt repayment resumed from June 2019, but due to the deteriorating diamond market ABSA granted another debt repayment standstill.

Firestone said it continues to work with ABSA Bank and its Bondholders on a longer-term restructure of its outstanding debt of US$63.9 million (around M922 million) and its Series A and B Eurobond debt of US$38.4 million (around M554 million).

The company also told its shareholders that prior to Covid-19 lockdown it had embarked on various cost-saving initiatives. With the Covid-19 lockdown further compounding Liqhobong’s financial woes, workers were retrenched and the mine was placed under care and maintenance.

Unfair dismissal case

Following their retrenchments, 34 employees of Liqhobong, represented by the LUMA Secretary-General Masoebe, filed an application before the Labour Court pleading for their reinstatement based on unfair dismissal.

In their application, the employees demanded the court to “order their reinstatement plus payment of wages owed out of employment or forty-eight months (48) compensation”. They also want the court to order Liqhobong to suspend recruitment into their positions pending the finalization of the case before the court.

The 34 employees also told the court that Liqhobong was not complying with labor laws when dealing with their retrenchment and was using the Covid-19 outbreak as an excuse.

In answering papers before court, Liqhobong argued that consultations were held with the 34 workers and others and representations of ideas were exchanged amongst all who were involved.

“It has always been a case of the 1st respondent [Liqhobong] that the temporary suspension of operations at Liqhobong mine has been caused by the dramatic fall in rough diamonds prices as a result of the Covid-19 pandemic, and the temporary closure of major diamond trading center around the world, specifically in Belgium,” read part of the mines answering papers before court.

Masoebe told MNN that the workers were in utter dismay upon learning that they have to re-apply for their respective posts when the mine resumes in exchange for withdrawing their case.

Makhetha told MNN that Liqhobong had aligned itself with provisions of the Labour Codes of Good Practice of Notice 2003 on preference in re-hiring and that quid-pro-quo allegations by the workers of dropping their case in exchange for their jobs were nonsensical.

“This is a nonsensical and baseless allegation. We would also remind you that various other marginal diamond mines around the world were placed on care and maintenance during this period as well, including the Renard and Ekati mines in Canada, the Williamson mine in Tanzania, and Mothae in our country,” he said.

Makhetha said allegations against Sekike were false as he was making telephonic calls to various former employees to conduct a survey of who is still available for re-employment.

“The company aligned itself to Section 21 (1) (a) (b) of the Codes of Good Practice, notice 2003 that deals with preference in re-hiring. At the time of retrenchments, it was not possible to know for certain what the future company operating model would look like if and when the mine restarts, but the company committed those employees would be given preference when the operation.

The Labour court is set to hear the 34 workers’ application workers application on October 19.


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