Malawi pushes for best mining deals

Malawi is putting together a 20-member core team of experts who will ensure that the nation’s booming mineral extraction industry is mutually beneficial to citizens and foreign mining firms.

Natural Resources, Energy and Mining Minister Bright Msaka disclosed this in an interview on Monday after African Mineral Development Centre (AMDC) team leader Coumba Doucource-Ngalani had concluded a four-day visit to Malawi.

Doucource-Ngalani came to assess Malawi’s needs for capacity building in relation to contract negotiations and monitoring.

The AMCD lead legal consultant at AMDC was being hosted by the United Nations Economic Commission for Africa (Uneca), which is mandated by the heads of state of the African Union Commission (AUC), to oversee Africa’s contract negotiations in the extractive industry.

Msaka said the idea of having a well-trained core team of mining contract negotiators—which Doucource-Ngalani recommended to the government—would negate some public suspicion and rancour that the country was given a raw deal on how Kayelekera Uranium Mine (KUM) in Karonga was negotiated.

Kayelekera Mine is owned 100 percent by Paladin (Africa) Limited (PAL), which gave 15 percent equity to the Malawi Government in July, 2009.

Continued low uranium prices on the international market forced the company to announce the halting of processing at the mine in early 2014, with a resultant staff down-sizing. PAL expects that production at KUM will resume after uranium prices pick up reasonably and when the national grid power will be made available, in place of the present diesel generators with low-cost hydro-electricity.

The nation’s first major mine had brought high expectations among Malawians, who felt the venture would greatly boost the country’s foreign exchange reserves and create job opportunities. But the high expectations were whittled down by harsh trading and operational realities.

Stated Msaka: “This programme we have now started is very important because the issues, or the suspicions or the concerns people had about Kayelekera will not happen again.”

He said the government’s plan to train the core team members would not only bring transparency, but also competence in the mining contract negotiations.

“The next mining adventure we shall go into, we will do it only after our people have been trained and are qualified to negotiate in the interests of our country,” the minister stressed.

He announced that the core team—to comprise a multi-sectoral and multi-disciplined group of experts like geologists, miners, economists and administrators—will be ready by the time the AMDC will facilitate Malawi’s national launch of the programme in May this year.

The AMDC will later facilitate an Africa launch, aimed at promoting national and international collaboration in the extractive industry.

Before departing Malawi on Sunday—one of five countries she oversees, including Chad, Congo, Equitorial Guinea and Niger—Doucource-Ngalani stressed that Malawi needs to be ready to engage the many investors and donors in the mining industry, especially after a recent national mapping exercise that indicates areas with mineral resources across the country.

“We made recommendations to [Ministry of Energy] to have the core negotiation team. If you have the same core team involved in contract negotiations for the country all the time, the members will build up their capacity and they will pass on the knowledge to others.

“The other thing is that you [as a country] send the right message to the investors that you are consistent and are speaking with one voice. It’s not good when one ministry says this to an investor and the other ministry says something else,” Doucource-Ngalani said.

She pointed out that there needs to be openness about the contract negotiations and local communities have to also be involved from the onset to the latter stages of monitoring and evaluation.

Doucource-Ngalani said the mining officials should develop good communication that needs to also facilitate a win-win situation for the investors and the indigenous citizens, who may be resentful if they suspect that they, and their country, got raw deals in the mining sector.

But she cautioned against people drawing conclusions over the merits or demerits of mining contracts, which bear complex issues like tax regulations, social responsibility, environmental impacts and concessions, which may be as long as 30 years.

One way AMDC wants to assist countries is by developing a website on which will be posted key information, including best practices in contract negotiations.