Mining’s biggest question

What, specifically, is the draft mining bill proposing on protecting local communities? Are the proposals really exhaustive of people’s concerns and expectations?
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Communities in Karonga and Paladin Africa Limited (PAL), an Australian company mining uranium at Kayelekera in the district, are caught up in a cat-and-mouse relationship—defined by mistrust.
It is a relationship that has not started today. It dates back to 2011. By then, PAL was in its third year of mining uranium at Kayelekera. However, when the mine was commissioned in 2009 by former president the late Bingu wa Mutharika, communities in Karonga had great expectations regarding development in their district.
The coming of Malawi’s largest mining company in their vicinity gave them hope for development. Of course, in the first three years—the construction phase— the mine was indeed a blessing.
It employed thousands of unskilled locals. Small-scale businesspeople found easy markets for their agricultural produce. School blocks were being rehabilitated. Construction projects, especially the water pumping project, were being seen.
By 2011, the general feeling in Karonga was of a district on the rise. Construction was booming. Commercial banks opened branches there. People bought vehicles.
However, the end of the construction phase changed the fortunes of many in Karonga. As the mining went more technical, most unskilled labourers were laid off. This had a ripple effect on small-scale businesses.
Frustration against Paladin and government began to emerge. Locals in Karonga began to argue that Paladin was giving them a raw deal. Their voices went national when some parliamentarians and activists started to demand the renegotiation of the Development Agreement Malawi signed with Paladin in 2007.
They argued that Paladin was not committing to the social corporate responsibility (SCR) it promised in the agreement. Paladin, on the other hand, responded that it was committing to what it promised.

What Malawians have witnessed, since 2011, has been continued tussling between government and Paladin on one hand and communities and activists on the other. This relationship has given birth to deep mistrust between the two groups.
But are mining companies really giving communities a raw deal? Is it, perhaps, that communities are just demanding too much? Or these conflicts are just a part of bigger questions in the country’s mining sector?
In an interview with Weekend Nation in 2013, Chancellor College associate professor of law Mwiza Nkhata argued that these conflicts point to a larger problem with mining legislation in the country.
He argued that the current mining law [the 1981 Mines and Mineral Act] does not have a section on how to manage SCR.
“The silence,” he added, “means if a mining company decides to do SCR, it will be solely at its mercy as they are not legally mandated to.”
Nkhata’s argument is in agreement with perceptions of Mwabi Shaba, a mining activist with Karonga Catholic Commission for Justice and Peace (CCJP).
In 2013, Shaba is on record as having said unless SCR is legislated broadly, these conflicts will not cease.
Fortunately, the Draft Mines and Minerals Bill, currently at a consultative stage, has provisions that specifically address SCR issues.
The bill provides that a holder of a large-scale mining licence “shall assist in the development of ‘qualified communities’ affected by its operations to promote sustainable development, enhance the general welfare and the quality of life of the inhabitants and shall recognise and respect the rights, customs and traditions of local communities”.
To cement that, the bill says the holder of a large-scale mining licence is required to have and implement community development agreements with all communities that meet the definition of ‘qualified community’.
In fact, the bill underlines that no mine development commercial production may commence on a large-scale mining area until the mining licence holder has any community developments agreement ratified, approved and endorsed by the Mineral Resources Committee.
However, though appreciating the bill’s attempt to have SCR issues addressed, mining activists and experts still feel there is a lot that needs to done to make SCR sound and comprehensive.

Activist Rafiq Hajat says he wants the bill to specify guidelines for Community Development Agreements being advanced. In the first place, Hajat faults the context of the phrase a ‘qualified community’ as used in the bill.
The bill defined a ‘qualified community’ as those within a 20 kilometre (km) radius from the mine.
Hajat notes that, in times of environmental damage, the effects of mining go much further. Thus, he advances that the radius should be increased to, at least, 50 km.
Hajat also faults the provision in the bill which says: “Where a community that meets the requirements to be a qualified community is unwilling or unable to ratify a community development agreement pursuant to the prescribed procedures, the respective large-scale mining licence owner is relieved of its obligation to enter into a community development agreement with that community.”
He advances that the bill does not provide for a next step in a case where the investor is relieved of the obligation to enter into community development due to unwillingness of the community.
Generally, Hajat, on CSR, notes that rent sharing does not mean that only one community will benefit. He, therefore, proposes that only a fraction of the royalty [20 percent of the total received] should go to the local community, while the lion’s share goes into the national coffers and thus benefits all Malawians.
“Proceeds from rent shares to local community should be channelled through community development trusts set up specifically for the purpose with strict rules of corporate governance, transparency and accountability. The trust can then tackle local issues with pertinence,” he says.
On compensation, which also borders on community welfare, Elvin Nkhonjera Chawinga, mining project coordinator for Action Aid, says the current bill proposes that the compensation of people living in mining communities should be done by the two parties involved—for instance, the company and the persons being displaced.
However, she adds that the majority of the Malawians, especially rural folks, have low literacy levels.
“As such, their chances of undervaluing their property when negotiating with a mining company, whose first target is to make profit, are quite high. As such, we will still have more people complaining of being poorly compensated,” she says.
She proposes that the bill should provide for the need of an independent evaluator who should value the property together with local communities and then they negotiate with the company.