Lesotho cuts diamond royalties for Letšeng mine
Government approves variable royalty rate of 3% to 6% for the country's sole operating diamond mine.
The Lesotho government has reduced royalties for the Letšeng Diamonds Mine from 10 percent to a variable rate between 3 percent and 6 percent. The decision, approved by the government, aims to support the mine amidst global diamond price slumps and rising fuel costs. Gem Diamonds Limited, which owns 70 percent of Letšeng, announced the change in its third-quarter trading update on November 4, 2026.
Letšeng, located in the Maluti Mountains, is the world's highest dollar-per-carat kimberlite diamond mine and is now the only one still operating in Lesotho. Minister of Energy and Mining, Lejone Mpotjoane, stated that the diamond industry is severely affected by the growing popularity of lab-grown diamonds. He also cited the Middle East conflict, which began on February 28, 2026, as a factor that has worsened the crisis by triggering a sharp rise in fuel prices.
The royalty remission, which temporarily waived payments until September 2026, had previously helped the company reduce costs. Gem Diamonds reported a modest first-half profit in 2026, supported by a 38 percent increase in Letšeng’s average rough diamond price to US$1395 per carat. The other three major diamond mines in Lesotho—Liqhobong, Kao, and Mothae—suspended operations earlier this year.
Why it mattersThe government has approved a variable royalty rate of between 3% and 6% for the Letšeng mine, effective for sales post October 1, 2026.