The number of mining firms conducting exploration activities in the country has dropped by about 67 percent from 15 four years ago to five in 2016, a mining expert has confirmed.
The expert, Charles Kaphwiyo, who is former director of mines in the Ministry of Natural Resources, Energy and Mining in an interview, said this is mainly due to falling prices of metals on the global market.
The Malawi Government has placed mining as one of the integral industries with potential for economic diversification and one of the few sectors that could contribute to sustainable economic growth.
Figures show that between 2005 and 2012, mining was contributing about seven percent to gross domestic product (GDP)—the broad measure of economic activity.
Bu the contribution fell markedly to below one percent due to the closure of Kayelekera Uranium Mine (KM) at Karonga.
The mine was put on care and maintenance in February 2014 due to falling global prices of uranium.
But despite the potential the sector has, Kaphwiyo said investors are taking a wait and see attitude because prices of global metal prices have slumped.
“We have seen that the number of companies interested to do exploration works has gone down. The main reason is that prices of metals globally have gone down. This is normal and we hope that after five years, prices will pick up and the investors will come back,” he said in Lilongwe when asked to forecast the prospect of the mining industry and challenges faced by investors in the sector.
The Malawi Government Annual Economic Report 2016 has also hinted on the reduction of investors doing exploration works in the sector.
Reads the report: “The mining sector in the country continues to experience reduced investment and production as a result of the slump in global minerals. The coal and cement sub-sectors suffered a lot of competition from cheap imports from neighbouring countries.
“Generally, 2016 experienced a decrease in exploration activities compared to 2015.”