Mining firm rules out listing, refinery
Lindian Resources chief executive officer Alwyn Vorster, who expressed surprise on why Malawi does not have medium to large-scale mines in operations, said in an interview that as per the mining licence, the company as a medium-scale entity is not mandated to list on Malawi Stock Exchange (MSE).
Lindian Resources, which plans to invest $40 million (about K70 billion)in the rare earth mine in Balaka, opted for the default conditions as provided for in the law, therefore there was no discussion on the listing issue.
Vorster said there is no plan to invest in the refinery that would require investment within the range of $300 million (about K525 billion) that is so attractive to the investors in such project.
He cited some limiting factors that include inadequate incentives that can convince external financiers and shortage of skilled labour for downstream ventures, among others.
Vorster said the 30 to 35 percent tax rate, five percent royalty rate and the 10 to 15 percent resource rent make it unattractive for large-scale mining and refinery investments in the country.
“I think, the 35 percent tax and loyalty is quite reasonable, but when you add the 10 to 15 percent resource rent on top of that it becomes scary,” he said.
This is contrary to what the Ministry of Mining said earlier that all the mining companies that were given mining licences will be required to list on the MSE within three years.
In an inquiry with the ministry about the Lindian Resources position, public relations officer Tiwonge Kampondeni said there was no discussion with the company on listing locally since there were no negotiations for the mining development agreement (MDA) as was the case with the other three mining companies that obtained mining licences.
However, she said the ministry will discuss with the company on the issue and agree on the way forward.
The listing mandate, according to the ministry, is to ensure some level of local ownership of the mining ventures.
The ministry has also made pronouncements on beneficiation, encouraging the mining companies not to export raw minerals but to refine them minerals within the country.
Lindian Resources plans to start construction of the mine in the third quarter of 2024 and production in the first quarter of 2026.
The mine, with prospects to employ about 200 people during construction and over 100 during operations, is projected to rake in pre-tax net present value of $794 million within the license period and annual earnings before interest, taxes, depreciation and amortisation of $84 million (about K147 billion).
According to Vorster, Lindian intends to focus on upscaling the Kangankunde Mine from the currently proposed stage one level projected at over 15 300 metric tonnes per year with possibility to tripple volumes over the 45 year period of the licence.
