Almost two months after government granted Chimwadzulu Corundum Mining licence to Mwalawanga Mining Limited, the two parties have not yet come up with a development agreement.
Government awarded the contract to Mwalawanga Mining Limited after rejecting an application for licence renewal by Nyala Mines Limited whose licence expired in October 2017.
Meanwhile, the new company is using the old development agreement that government signed with Nyala Mines Limited.
According to Department of Mines director Ackim Wona discussions are underway to come up with an agreement with the new company.
“Since Mwalawanga has just been granted a licence two months ago, we are yet to agree. We are still in discussion with them,” he said.
Nyala Mines Limited had taken government to court for not renewing the contract, a case which Wona said it lost.
He then referred the paper to the department’s chief mining engineer Cassius Chiwambo for more details.
Chiwambo said the two parties could not come up with the agreement because of the uncertainties that came with the court case.
“The court case came in while we were in the process of developing the agreement. And this affected the whole process as we were waiting for the court outcome. But we have not wasted much time to affect the new company’s plans,” he said.
During the handover meeting, Mwalawanga committed to inherit some of the things from the old development agreement and also bring in extra things to ensure that the projects benefit the local community, according to Chiwambo.
Nyala Mines Limited was granted a 10-year contract to mine rubies in the hill.
However, its application was rejected because the company wanted to renew its licence a few days before the expiry date. This is contrary to legal requirements which stipulate that a mining licence holder must apply for renewal at least a year before its expiry.
The company also failed to fulfil its corporate social responsibility (CSR) and pay royalties as expected, respectively.
The company only gave less than K150 million during the time it has been operational and claimed that it was operating on losses.
Nyala Mines signed a development agreement with the Malawi Government specifying that locals have 30 percent participation in the mine, 10 percent of the equity of Nyala is issued to government, and also government receives 10 percent royalty of the gross value of corundum exported.
The development agreement also provided that government receives an amount equivalent to the sales royalty once the corundum has been cut, polished and sold by Nyala’s Canadian partner Columbia Gem House Inc.
Under the agreement, Nyala was exempted from resource rent tax, value added tax on capital purchases, duty and tax for imported materials, equipment and consumables for use in mining and processing of minerals.