Malawi can earn K1TN from mining shares

Malawi can earn about $600 million (about K1.039 trillion) by offloading shares from listing of the large-scale mining firms to the investing public.

This is according to data compiled by the Minority Shareholders Association of Listed Companies presented to Ministry of Mining.

The earnings could come from listing rare earths project on Songwe Hills in Phalombe run by Mkango Resources Limited, niobium  project in Kanyika, Mzimba by Globe Metals and Mining, rutile and graphite project in Kasiya, Lilongwe by Sovereign Metal Limited and uranium at Kayelekera in Karonga by Lotus Resources Limited.

The firms, which are projected to generate a cumulative $27 billion (about K47 trillion) in the next 25 years as per their feasibility studies, with start-up costs of about $1.246 billion based on the current feasibility studies.

In an interview, the association’s general secretary Frank Harawa said the start-up costs could be funded by both equity and debt finance.

He said: “The Government of Malawi should invoke Section 260 [2] of the Mines and Minerals Act 2023 to acquire free shares based on frank and tough negotiations with the large-scale mining companies and not limit itself to 15 percent as was the case with Paladin (Africa) Limited, former owners of Kayelekera Mine.

“The minimum optimum shareholding would be 20 percent which would comply with listing on the Malawi Stock Exchange [MSE]. This would enable the Government of Malawi to earn not less than $600 million by simply offloading the shares to the local citizens through the Initial Public Offering.”

Harawa said the feasibility studies should be the basis for the determination of stated capital in line with Section 30 of the Malawi Companies Act 2013 so that large-scale mining firms  should not divert from the rosy projections to register meagre profits or losses and not declare appropriate dividends.

He said Malawi could also publish an exposure draft on how Malawians in diaspora could secure more shares in the large-scale mining firms and reduce expensive debt capital from the commercial lenders.

The Government of Malawi, in collaboration with stakeholders, is overseeing several mining projects for rare earths, graphite and uranium, which enjoy high global demand due to their application in emerging green technologies.

According to Treasury, extensive mineral reserve estimates indicate significant long-term production potential at medium and large-scale.

Feasibility studies are underway for some projects, while mining development agreements (MDAs) are being negotiated with investors.

Treasury confirms that through the Ministry of Mining, government has finalised and signed an MDA for niobium production with Globe Metals and Mining Limited, an Australian Stock Exchange-listed company incorporated in Malawi and expected to start production in 2025.

Among others, the agreement provides for 10 percent free equity (fully paid shares) for the Government of Malawi and an option to acquire another 10 percent by financing.

Lotus Resources has also negotiated a Community Development Agreement with the Kayerekera community and is in the process of finalising a revised MDA with the Government of Malawi.

Lotus Resources has undertaken technical work to facilitate the re-opening of the mine which was placed on care and maintenance in February 2014.

Exploration works at Kangankunde Hill in Balaka is showing potential for rare earth oxide, according to the ASX-listed Lindian Resources.

MSE chief executive officer John Kamanga said most mining firms come with an application of tax holiday, which is a foregone income to Malawians, as such as listing on MSE could be a big consolation.

Minister of Mining Monica Chang’anamuno earlier confirmed moves to have mining firms listed on MSE.