Delayed mining pacts to cost Malawi $1bn

 The Malawi Chamber of Mines and Energy says the mining sector has the potential to generate about $1 billion (about K1.7 trillion) annually and urged Malawi Government to speed up conclusion of mining development agreements (MDAs).

In its published 2024 Malawi Country Report, the chamber observed that issues to do with fiscal interpretation and phraseology in the Mines and Minerals Act of 2018 seem to be delaying consensus on the way forward.

“There is also need to have a reference base in form of a mining investment incentive package in line with the government’s emphasis on promoting agriculture, tourism and mining [ATM] strategy.”

Data from the chamber stableshows that Globe Metals and Mining concluded an MDA with government in March 2023 while negotiations with Lotus Resources over Kayelekera Mine and Mkango Resources over Songwe rare earths deposit are at an advanced stage.

The Malawi Chamber of Mines and Energy says the mining sector has the potential to generate about $1 billion (about K1.7 trillion) annually and urged Malawi Government to speed up conclusion of mining development agreements (MDAs).

In its published 2024 Malawi Country Report, the chamber observed that issues to do with fiscal interpretation and phraseology in the Mines and Minerals Act of 2018 seem to be delaying consensus on the way forward.

“There is also need to have a reference base in form of a mining investment incentive package in line with the government’s emphasis on promoting agriculture, tourism and mining [ATM] strategy.”

Data from the chamber shows that Globe Metals and Mining concluded an MDA with government in March 2023 while negotiations with Lotus Resources over Kayelekera Mine and Mkango Resources over Songwe rare earths deposit are at an advanced stage.

“It is time to take advantage of the current critical minerals’ favourable prices to reap high financial and economic benefits both for the investor and the government,” reads the chamber’s report in part.

The chamber said an analysis of the mineral reserves confirms Malawi’s status as an exploration stage country, an indication that the minerals sector is still in infancy as most activities are at exploration stage and few small-scale mines exist.

The projects include Kangankunde Rare Earth Elements (REE) by Lindian Resources at resource upgrade, Songwe REE by Mkango Resources at mining negotiation, Kayelekera Uranium at mining negotiation, Malingunde Graphite at definitive feasibility study, Kasiya Rutile/Graphite Sovereign Metals at feasibility study and Malowa Limestone at mining development.

In an an interview on Tuesday, mining expert Grain Malunga observed that from exploration to mining, it can take up to 10 years, urging government to monitor and encourage firms to undertake speedy exploration.

Said Malunga, who is also former minister of Energy: “The Government of Malawi has given mineral permits to various companies to explore for minerals.

“Where companies are failing to raise exploration money, they should be helped to seek partnerships.”

Ironically, government hopes mining could end the country’s perennial foreign exchange challenges in six years if several mining projects take off and add to the exports basket.

Speaking when he opened the inaugural Mining Investment Forum in April in Lilongwe, President Lazarus Chakwera was optimistic on Malawi benefiting from the sector, saying government will ensure mining deals are fair to Malawians and that previous mining development agreements are reviewed to remove exploitative elements.

“We must refuse to sign mining development agreements that do not provide benefits to Malawians who are the owners of these mineral resources,” he said.

Last week, National Planning Commission communication specialist Thom Khanje, whose organisation is part of the negotiating team for MDAs, said there is need to be thorough to ensure that Malawi gets the best ouf of the mining deals.

Despite huge mineral deposits, some in world record quantities such as the Kasiya rutile in Lilongwe and rare earths in Phalombe, the mining sector is currently contributing less than one percent to the country’s economy, but government is seeking to raise that to at least 10 percent by 2030.

The Malawi Government earmarked the mining industry as a key sector of the economy with potential to contribute to economic growth and job creation