Mining sector contracts 7.8%
The mining sector has contracted by 7.8 percent in 2014 following the temporally closure of Kayelekera Uranium Mine (KUM) in Karonga.
The sector is forecast to grow at a snail’s pace in 2015, according to the 2014 Malawi Annual Economic Report, one of the five budget documents.
In February this year, Paladin Energy Limited, owners of KUM through its subsidiary Paladin (Africa) Limited, announced the suspension of production at the mine and placed the operation on care and maintenance until the price of uranium recovers on the international market.
“The growth of this sector was estimated at 7.6 percent in 2013 from 14.9 percent in 2012. This is mainly attributable to lower levels of uranium output in the second half of the year.
“Production at Kayelekera Uranium Mine slowed in the second half of the year due to maintenance work on the plant and low prices of uranium at the international market,” reads the economic report.
The report said in 2014 the mining and quarrying sector is expected to contract by 7.8 percent, attributed to the suspension of production at KUM.
Prior to Malawi’s first commercial mining venture at Kayelekera, mining sector contributed around three percent to gross domestic product (GDP) and the sector is heading for a slow growth with the report saying the sector will grow by 2.2 percent in 2015.
The moderate growth, the report said, will be because of the expected rise of traditional mineral outputs, including in rock quarry aggregate, agriculture lime, coal and gemstones.
“It is possible that the actual attained level may be considerably higher if Paladin resumes production of uranium at Kayelekera or if significant investments are made in the sector following the conclusion of the geo-physical airborne survey,” says the report.
Investment advisory firms Nico Asset Managers Limited and Alliance Capital Limited earlier in the year predicted that Malawi’s growth prospects for 2014 will likely be revised downwards following the suspension of production at the uranium mine.
“Mining contributes about 10 percent of the GDP and Kayelekera is a huge portion of mining industry in Malawi this means that all things being equal, the growth prospects of this country may be revised,” said Alliance Capital.
