Ministry Of Mining states that it plans to conclude some mining development agreements negotiations between three mining companies by June this year in order to resume major mining operations.
According to the Malawi Government Annual Economic Report 2022, the resumption of mining activities will create jobs and increase the sector’s contribution to the country’s gross domestic product (GDP), currently less than 1%.
Joseph Mkandawire, the Principal Secretary of the ministry, stated that the government is currently negotiating with three companies that have completed their exploration work.
Mkango Resources was identified by him as a dual-listed mineral exploration company that has been involved in the exploration of rare earths at Songwe Hills, Phalombe, Globe Metals Limited which will be mining Niobium in Mzimba, and Lotus Resources Limited which recently acquired Kayerekera Uranium Mine, Karonga.
Mkandawire stated that discussions regarding the agreements are in an advanced stage and would be completed soon.
He stated that the ministry looks at technical aspects. This includes how the mining will take place, waste disposal, the value of the minerals and the quality of the deposits.
“On the other hand, the Ministry of Justice must look at the legal issues to determine if the agreement is in Malawi’s favour. The Ministry of Finance, Reserve Bank of Malawi, and the Malawi Revenue Authority will need to examine fiscal issues.
Mkango Resources’ legal side was in order, Mkandawire stated, while Global Metals and Lotus Resources’ fiscal issues are prominent. All things being equal, it is expected that discussions will be completed by June.
According to records from the Department of Mines, there were 703 workers at Kayelekera in 2013, when it was at its peak. However, the number dropped to 300 when operations stopped in 2014.
After recent meetings with government officials Keith Bowes, managing director of Lotus Resources, stated in a statement, that there is strong support from the government and communities for Kayelekera’s resumption of production.
Bowes confirmed that discussions with government officials revolved around an updated agreement, which will establish the fiscal regime for the company and determine the operating requirements.
Paladin Energy Limited was the previous owner of the mine. They operated it between 2009 and 2014. The agreement was made in exchange for the transfer to the Government of 15% ownership.
According to the statement, Lotus seeks a similar set of conditions to that in the original agreement.
The government launched the Airborne Geophysical Survey in May 2013. There were indications that the mining industry was expected to contribute 20% to GDP and foreign reserves when it launched the Airborne Geophysical Survey.
Neville Haxham, Globe Metals and Mining’s country manager, stated earlier that once the Kanyika Niobium mine in Mzimba becomes fully operational, it would create more than 1200 jobs and improve the socioeconomic status of the residents.
After the closure of the Kayerekera Uranium Mine, the mining sector’s contribution was lowered from 8 percent in 2009 to just 0.8 percent in 2019.
Professor of Economics at the University of Malawi and ex-Secretary to Treasury Ronald Mangani warned of the “untimely opening of the mining sector in the country is the next curse” due to the lack of a critical mass of experts.
In his analysis, he stated that there is no public sector investment. Ownership is also challenged. We don’t have the resources to fund country research or asset holding because of resource constraints.
The sector is open to all, as investors can’t be monitored. This sector is characterized by a weak fiscal system to maximize State benefits and negotiate better deals.
Grain Malunga, the national coordinator of the Malawi Chamber of Mines and Energy, said that Malawi’s mining industry was developing because there are only five companies at an advanced stage of developing mining ventures.
The Malawi Government has designated the mining industry as a key economic sector that can contribute to economic growth, job creation, and employment.
