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Firm, govt negotiate Kangankunde mining deal

Negotiations for a mining deal of Kangankunde Rare Earths project in Balaka have started between the government and Lindian Resources with experts tipping authorities to bargain for the best.

Lindian Resources chief executive officer Alwyn Vorster disclosed this on Wednesday during an online investor presentation where he updated stakeholders on the project’s progress, in particular on funding and construction, among other aspects.

Vorster said the $794 million (K1.4 trillion) valued project, which would be generating annual revenue of $114 million (about K200 billion) for over 40 years, is on the right track having secured funding for phase one construction in readiness for extraction.

Vorster said: “The Mining Development Agreement (MDA) discussions commenced with the Malawi Government. The process plant–flow sheet optimisation was completed while fixed price contract award is planned for this month.”

Prior to the commencement of the MDA negotiations, Lindian Resources secured $50 million (K87.5 billion) funding after signing a non-binding terms sheet with United States global metals giant Gerald Group, according to Vorster.

Unlike big projects such as Mkango’s Songwe hill rare earths, Lotus Kayelekera uranium and Global Metals Kanyika niobium projects, which had signed their deals earlier, Lindian Resources, which registered Kangankunde as a medium-scale mine, was able to go ahead with the project prior to MDA.

In an interview, mining expert and former ministry of mines geologist Ignatius Kamwanje, described the Kangankunde project as very important saying although it is a medium scale its mineral is very valuable hence authorities should bargain for the best.

“If you look at Kangankunde, its minerals are very expensive on the global market so I believe the difference (of the MDA) should not be much from the ones signed by the large scale miners.

“This is where the government needs to be more careful because the other deals it signed before are to do with large scale projects but it should negotiate for the  in this category of medium scale,” Kamwanje said.

In a separate interview, Ministry of Mining Principal Secretary Joseph Mkandawire confirmed the status and expressed government’s readiness to bargain for the best saying the committee comprises capable technical officials.

“Our committee comprising the secretary to treasury, principal secretary for economic planning and development, attorney general, solicitor general, National Planning Commission director general, Reserve Bank governor, Malawi Revenue Authority commissioner general and myself are always ready.

“The legal framework including the Taxation Act schedule 16 and 17 provide the guidance,” Mkandawire said.

According to Lotus and Mkango resources MDAs, government acquired stakes of 15 and 10 percent, respectively, with the projects subjected to five percent royalty of gross revenue, 30 percent corporate tax rate, 10 years stability period, 10 years tax loss carry forward and community development expenditure allowable tax deduction, among others

Wh en oper a t i o n a l , Kangankunde Mine is projected to generate $114 million (about K200 billion) per year over a 40-year period, according to a feasibility study report the company released in 2024.

Output is also estimated to increase from the initial 15 000 metric tonnes (MT) to 50 000MT annually, the report said.

China dominates the rare earth’s industry, supplying 75 percent of global output at the mine level as the global rare earth industry is estimated at $7.4 billion, according to the feasibility study.

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