Mining revenue stalls

Despite offering prospects of increased economic activities, revenue generated by the Department of Mines in the last two years has stalled.

According to Treasury figures, between July 2017 to April 2018, the department generated K500 million from royalties, license processing and ground fees, just as the same period the previous year.

During the review period, export of minerals by different mine operators continued to be dominated by coal, ornamental/dimension stones and gemstones, with projection indicating a decline in export revenue for coal and gemstones.

For instance, gemstones revenue is projected to decline to K127.66 million in 2019 from K5 915.8 million the year before while coal is projected to fall to K15.87 million from K190.09 million the prior year.

Employment, on the other hand, is projected to increase considerably to 17 240 in 2019 from 16 592 in 2018.

Malawi has over 22 million tonnes of proven coal reserves in a number of coal fields across the country, with the mineral remaining one of the energy minerals most mined for industrial use in the country.

Gemstones, on the other hand, are best mined by small scale miners, but marketing of gemstones requires use of sophisticated marketing techniques.

Last month, Treasury said Malawi is currently fighting to establish gemstone marketing centres to ease the problem of lack of market access encountered by most of the artisanal and small-scale miners.

“Like many countries in the resource-rich East African Rift Valley, Malawi is endowed with abundant and diverse mineral resources most of which remain unexplored and unexploited to date. The deposits for these minerals are spread across the country,” said Treasury in the 2019 Malawi Economic Report.

Mining sector has registered slow growth in recent years, despite being touted as the country’s next big thing.

Before 2014, mining used to contribute about 10 percent to GDP when the Kayelekera Uranium Mine in Karonga District was operational. But since the mine was put on care and maintenance in February 2014 due to tumbling prices of uranium on the global market, the sector’s contribution to GDP has dropped to below one percent.

Last year, the mining sector grew by 2.3 percent from 1.6 percent in 2017 and 0.4 percent and 1.1 percent in 2016 and 2015, respectively. The sector is projected to grow by 3.6 percent this year.

In the 2019/20 National Budget statement that Finance Minister Joseph Mwanamvekha presented to Parliament last week, the government has allocated K40 billion to the energy and mining sectors, up from K21.7 billion the previous year.

Meanwhile, stakeholders in the sector are banking on the Malawi Mining Authority for sanity in the sector.

“We see the government trying to set standards in the mining sector which has over the years been marred by secrecy, vested interests, corruption issues because we lacked accountability. We believe the authority will be reporting to Parliament to foster national accountability in the mining sector,” said Natural Resources Justice Network (NRJN) chairperson Kossam Munthali. n