Government, miner upbeat on Kayelekera agreement

Malawi Government and Kayelekera Uranium Mine parent company, Lotus Resources Limited, are locked in discussions on how much tax the government has to impose before a mine development agreement is issued.

While Capital Hill states that these matters remain sticky, Lotus says they have already resolved most of the thorny issues.

The two issues, among others, will form part of the fiscal regime which the mining agreement has to set, in which the project will operate and is one of the inputs the company is seeking prior to making its final investment decision for Kayelekera to resume operations.

In an interview, Ministry of Mining Principal Secretary Joseph Mkandawire said discussions over mining agreement will be completed soon, but could not be specific on time-frames.

He said: “The negotiations have been ongoing. We are looking generally at the fiscal regime and we want some concessions.

“Currently, we are still negotiating and either party will have to agree on what should happen.”

Mkandawire said one thorny issue is the resource rent tax, which is a whirlwind tax charged when the company makes abnormal profits.

“So, we usually charge 15 percent when the internal rate of return has reached 20 percent. In the negotiations, we have been trying to see whether we can increase that threshold,” he said.

Another matter, according to Mkandawire, relates to the chemicals that will be used during production.

He said government has been demanding that Lotus Resources Limited provide a list of consumables that the government can provide concessions on.

But in an interview, Lotus Resources Limited managing director Keith Bowes said issues to do with the list of consumables have been resolved.

Resource governance advocate Kosamu Munthali has since commended government for pushing Lotus to source some consumables locally.

He said Malawi lost a lot of revenue during the first stint of production at Kayelekera and does not need to repeat the same.

Meanwhile, Bowes has said the current uranium price and the prices at which they believe Malawi can now sign uranium offtake contracts will ensure the economic viability of the project.

The company wants to start production in 2025. Uranium spot price increased during the December 2023 quarter from a low of $69 per pound to finish the quarter at S$91 per pound.

The company completed a positive restart study which demonstrated that Kayelekera, currently under maintenance since February 2014, can support a viable long-term operation and has the potential to be one of the first uranium projects to recommence production in the future.

Lotus owns an 85 percent interest in the mine.