While Lesotho's primary sector, which consists of agriculture, mining and quarrying, has been a marginal constibutor to GDP, the mining and quarrying subsector has displayed as exceptionally good performance of late, rising by an estimated 150 percent in 2004 following a 5.7% increase the preceding year. This is largely attributable to the re-opening of Letseng Diamonds mine, which has boosted the subsector immensly, helping to elevate its potential as a diversification channel away from traditional export-led growth through manufacturing.
While mining output is limited when compared to Lesotho's mineral rich neighbour, South Africa, the success of this sector is nevertheless important in ensuring sustained economic growth through employment creation, increased government revenue earnings and foreign investment, and an increase in foreign exchange earnings through exports.
Mineral exploration has in the past focused on diamonds, semi-precious stones, uranium, ceramic clays and sandstone, with identified deposits and reserves of coal and bituminous shale deposits in a number of areas. While Lesotho has no known reserves of gas or oil, the downstream oil industry is well established, and comprises a range of international oil companies.
According to Lesotho's Poverty Reduction Strategy, mining initiatives that generate employment are to be provided with access to credit and training. Over the next few years production is to be increased by the private sector in the areas of Ha Teko, Ha Motloheloa (clay), Kolo, Letseng and Kao (diamonds). Government is committed to creating an enabling environment for these activities by implementing the Mines and Minerals Act of 2005 and monitoring the use of resources to ensure safety, health and environmental concerns..
