Paladin dupes Malawi govt: Disregards mines law

The Australian-registered Paladin Africa Limited has thrown to the dogs laws governing mining in Malawi to which they duly signed to respect, suspending mining operations at Kayelekela without notice, Weekend Nationhas established.

After retrenching 296 Malawians and 71 expatriates, management at Kayelekela this week told the remaining 40 percent of local staff that most of them will be retrenched come April.

Paladin mining contractor Mota-Engil has already started driving their machinery out of the mining site relocating to Neno where they are constructing a railway line for Vale Limited.

Further, documents we have seen indicate that Paladin Africa operational forecast for Kayelekela, ends on June 30, 2014.

The people of Karonga are mobilising themselves to halt any uranium truckloads from leaving the district until they make sense of the events.

Malawi laws disregarded

According to the Mines and Mineral Act Section 46, Paladin or any other mining licence holder, cannot suspend mining without a six-month prior notice to the Commissioner of Mines.

Further, the law says mining cannot be curtailed without a 12- month notice to government.

Reads Section 46 on cessation of production from mine:

(1) The holder of a mining licence shall give notice to the Commissioner—

(a) twelve months in advance, if he proposes to cease production from a mine in the mining area concerned;

(b) six months in advance, if he proposes to suspend production from any such mine; or

(c) three months in advance, if he proposes to curtail production from any such mine, and shall give in the notice the reason for the cessation, suspension or curtailment.

On the other hand, Section 47 empowers the Commissioner to turn down such application cessation.

Reads Section 47: “Where, pursuant to Section 46 (1) or (2), notice is given to him, or if he otherwise becomes aware, of any cessation, suspension or curtailment of production from a mine, the commissioner shall cause the matter concerned to be investigated and thereafter—

(a) he shall give his approval, conditionally or unconditionally, to the cessation, suspension or curtailment by notice to the holder of the mining licence; or

(b) he shall direct the holder of the mining licence by notice given to the holder to resume full production, or production at such level as is specified in the notice, by such date as is so specified, and the holder shall do so.

The Malawi Government only came aware of the suspension after February 7 and in an interview this week, principal secretary for Mining Ministry Leonard Kalindekafe argued that what Paladin did was illegal.

“The law was not followed and we are working with several lawyers to follow up on the issues,” he said.

Attorney General Anthony Kamanga also confirmed that “these issues are being followed up with the company”.

Meanwhile, sources also corroborated that government has since written Paladin to explain the suspension.

Country manager Greg Walker did not pick our calls for a good part of the day yesterday but a secretary at Paladin office in Lilongwe said he was at Kayelekera.

Patrick Conran’s – Paladin general manager responsible for operations – phone kept calling but the secretary said he was in South Africa.

The Catholic Commission for Justice and Peace (CCJP), one of the organisations calling for justice from Kayelekela mining, called on government to punish Paladin for their actions.

“This means they have breached the law of the land and as such Malawi Government is supposed to put in punitive measures. Moreover, mining at such large scale is just developing in Malawi and if we allow companies to be such arrogant, then it won’t work for this country and it won’t bring any real value why we embark on extracting our natural resources,” said CCJP national secretary Chris Chisoni.

The Development Agreement signed between the Malawi Government and Paladin also acknowledges that “the company’s right to suspend and curtail production is governed by Section 46 of the Mines Act and that in the event of any such suspension or curtailment, the Minister may exercise powers under Section 44 (2) of the Mines Act.”

Section 44 (2) states that the minister may, on application made to him by the holder of a mining licence, limit, reduce, vary or suspend any obligation arising either conditionally or unconditionally.

Key events

Paladin, formerly a darling of the Malawi Government during the late Bingu wa Mutharika days, fell out of favour when the Joyce Banda administration ended their honeymoon, announced a renegotiation of the mining contract.

There were strategic changes at Paladin Africa and Kayelekera Uranium Mine (KUM) in particular which led to destruction of a bond that existed between Paladin and influential leaders.

On 13th April, 2013, government denied Paladin prospective licence renewal and Paladin became frustrated and disbanded the exploration team.

On 7th February, 2014, Paladin announced suspension of operations at Kayelekera citing two reasons: ever-dropping uranium oxide prices globally and the unsustainable cash demand to maintain the loss-making operation at Kayelekera Mine.

Uranium prices and Paladin

While uranium prices have gone down on the world market, Weekend Nation has learnt of a long agreement Paladin signed with the world’s largest nuclear company Electricite de France in 2012. Electricite de France runs 58 power plants in France making it the largest in the world.

“The board of Paladin is pleased to have established a first long term relationship and working partnership with this major international utility,” wrote John Borshoff, Paladin Energy managing director on October 26, 2012.

Paladin has not announced suspension of this contract to supply yellow cake to the company between 2019 and 2024 with regard to the dropping uranium prices, neither has Paladin suspended operations at Langer Heinrich in Namibia.

Since 2007 when KUM opened, Paladin has been exporting yellow cake ostensibly at a loss.

Retrenchments

According to a February 7, 2014 letter to Emmanuel Makolo, chairperson of Local Staff Association at Kayelekela, Paladin suspended operations, among other reasons, because Paladin Energy Limited “is no longer able to sustain the considerable cash drain that has been required to support the continuing loss-making nature of PAL’s operations at KM.”

“Accordingly, the Directors of PAL met to consider the limited options available to the board in these circumstances which include producing at a reduced level, non-continous operation, placing KM on care and maintenance until operations can be profitably resumed and permanent mine closure and rehabilitation,” wrote Paladin Afrin General Manager Patrick Conran.

According to the Labour commissioner, Paladin had given the ministry notice of retrenchment.

Labour commissioner Nyangulu said in an interview: “so far we have not received any complaint but the reasons advanced for the retrenchment were valid because I looked at the package and it was way above what is prescribed in our laws.”