Govt guards against exploitation in mining
Malawi Government says it is still reviewing mining development agreements (MDAs) for mining companies seeking to explore and mine minerals in the country purportedly because the investors were making exploitative demands.
This was learnt at Parliament Building in Lilongwe yesterday when the Attorney General (AG) and Ministry of Mines officials updated the Parliamentary Committee on Natural Resources and Climate Change on the status of the MDAs for Lotus Resources, Mkango Resources Limited and Globe Metals Limited.
AG Thabo Chakaka Nyirenda and Ministry of Mines Principal Secretary Joseph Mkandawire said the MDAs were still under review as the three companies were making demands which would allegedly exploit the country.
The AG said the demands by the companies contributed to delayed approval of the MDAs whose initial deadline was December 2022.
“We don’t want an investment just for the sake of adding figures. We want an investment that will bring benefits to the government,” Nyirenda said.
He said government’s position is that all exports proceeds should come to Malawi to enable the country benefit from the foreign exchange generated, but the companies wanted proceeds to be deposited in foreign bank accounts, among other things.
“You want an investor in the country so that they should help bring in forex. If the proceeds do not come in the country we will not benefit,” said Nyirenda.
The AG said Mkango Resources Limited in particular wanted changes to the law while Globe Metals wanted government to calculate its proceeds using fixed prices, but government challenged that.
“Mkango and Globe Metals have been able to understand government’s position. For Globe Metals, the review process is at 90 while Mkango Resources is at 70 percent,” he said.
Nyirenda said they still have issues with Lotus Resources Ltd which wants to adopt an MDA between Malawi Government and Paladin, a tax holiday of 20 years and that when government is calculating taxes, it should put into account the $350 million loss Paladin made.
He said government cannot tolerate that as Malawi lost a lot in the Paladin deal.
Mkandawire, on the other hand, said the country needs to protect its resources and ensure that government benefits.
He said the companies also want government to revise downwards their rate of royalties that companies pay.
The royalties reduced from five percent to two percent but, according to the PS, Lotus wants the loyalties for the first three to be at one percent and the rest of the mine life at two percent.
Said Mkandawire: “Any investor should align himself or herself to what is prevailing in a sovereign country and Malawi is a sovereign country.
“We need our laws to protect the interest of Malawians and that is what we are doing. We will not change laws just to suit a particular entity.”
Parliamentary Committee on Natural Resources and Climate Change chairperson Welani Chilenga commended government for not giving in to the demands of the investors.
Last October, the committee asked the Ministry of Mines to ensure that the MDAs are approved by December so that the companies start mining operations and the country benefits forex from mining exports.
Lotus Resources Limited wants to mine uranium at Kayelekera in Karonga while Mkango Resources wants to mine rare earth in Phalombe and Globe Metals is interested in mining niobium at Kanyika in Mzimba.
