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Glimmer of revival

Investors have injected fresh momentum into Malawi’s mining sector—and thus the local economy—with an additional multi-million dollar off-take deal for Kayelekera Uranium Mine in Karonga, it has emerged.

Lotus Resources Limited—the miner with 85 percent stake in KUM—has also received financial backing from local bank First Capital of up to US$8.5 million (around K15 billion) to finance working capital as Kayelekera advances to return to its glory days from this October.

Workers at Kayelekera Uranium plant
in Karonga. | Lotus Resources

Lotus, listed on the Australian Stock Exchange, said in a recent statement that the agreement to supply additional uranium to North American utility PSEG Nuclear LLC—together with the other off-take announced last year—represents the sale of a minimum of 2.3 million pounds and up to 2.6 million pounds of uranium produced at Kayelekera from 2026 to the end of 2032.

Lotus Managing Director Greg Bittar said the arrangement is designed to leverage utilities’ continuing demand for contract pricing based on both fixed prices and the long-term uranium price.

PSEG Nuclear LLC is a subsidiary of Public Service Enterprise Group (PSEG), a publicly traded diversified energy company based in Newark, New Jersey, operating three nuclear generating units in Southern New Jersey.

Lotus also said it is advancing discussions relating to a “series of additional contracts with other North American nuclear power utilities as part of its initial off-take strategy”.

The resumption and potential expansion of mining at Kayelekera is set to boost Malawi’s economic growth as measured by gross domestic product (GDP)

When Kayelekera was operational—producing 11 million pounds of uranium between 2009 and 2014—the local mining sector used to contribute 10 percent to the economy, but that portion has dropped since 2014 when it was closed to preserve the project’s longevity amid a slump in uranium prices.

Last year, the sector contributed just one percent, according to the Malawi Government Annual Economic Report 2024.

The Malawi Chamber of Mines now projects that the mining sector’s contribution to the country’s GDP will hit 12 percent by 2027 boosted by three major mining projects, including Kayelekera, Kanyika Nioubium Mine in Mzimba and Kangankunde Rare Earth Project in Balaka as they rollout in the 2025-2026 period.

Mining, together with Agriculture and Tourism, is part of President Lazarus Chakwera’s ATM strategy around which he says he will rebuild the Malawi economy into a lower middle income nation by 2030 and upper middle economic status by 2063.

Last July, Lotus signed a 10-year Mining Development Agreement (MDA) with the Malawi Government, laying out fiscal terms, legal protections and non-fiscal government support for Kayelekera mine’ operation.

The MDA shows that the miner, Lotus Africa Limited, will be exempted from export duty, import duty, import excise and import value added tax (VAT) on imports and exports of capital goods.

The company will also be paying 30 percent corporate tax, a royalty of five percent of the gross revenue at Minegate, and spared of resource land rate.

In the deal, government retains its 15 percent stakes in the mining venture.

Besides the MDA, Lotus has also signed a community development agreement where, as per Section 164 of the Mines and Minerals Act (MMA 2023), it will be providing 0.45 percent of its annual gross sales to the community.

Among key projects that the fund will be used for are small-scale community businesses, infrastructure in education, health, roads and water, protection of natural resources and cultural heritage as well as apprentices and technical training.

In an interview yesterday, mining advocate Kosam Munthali, who is also former chairperson of Natural Resources Justice Network, urged government to make the agreements public for people to appreciate.

“On employment, let locals be given the opportunity not just mere rhetoric, so too with supply of goods and services.

Minister of Mines Ken Zikhale N’goma could not be reached for comment.

However, mining expert and former government geologist Ignatius Kamwanje described the Lotus MDA as fair compared with other mining deals signed in the past, especially that with Paladin Energy Limited, the first company to operate Kayelekera.

“Looking at the deals, it seems government learnt a lesson from the past agreements it reached with other companies,” he said.

Geologist Grain Malunga, a former minister of Energy, also described the deal as win-win, saying the government will collect over 50 percent of the revenue, which is the best it could get from a mining deal.

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