Do better on mining

The mining sector has great potential to contribute significantly to Malawi’s GDP to complement agriculture. Judging by the way government has handled the mining sector, there is little comfort that the mineral wealth will benefit Malawians.

Forget about government consultations with CSOs and other stakeholders to review the Mineral Act or the airborne geophysical survey which has revealed that Malawi has large deposits of different minerals.

For Malawi to start benefiting from its mineral wealth, government needs to get things right. One of the issues is to have a huge stake in the mining companies. Everyone agrees the Kayelekera agreement was a total flop. Those who negotiated the mining contract did a huge disservice to the nation.

In fact, they are not patriotic at all. Government should learn from such a mistake and ensure that it has reasonable shares in future mining deals with foreign investors. The best example is Botswana, where government has 51 percent shares with South African mining company, De Beers.

In Zimbabwe, President Mugabe decrees for a percentage stake in the mines. The government and the foreign investor should meet each other half way. In Europe, the Norwegian government has a stake in the mining sector.

Those who have been indoctrinated by the IMF and World Bank and neo-liberal economic policies argue that government should not actively participate in the economy, but leave it to the private sector. But different countries face different economic conditions, so we cannot have a one-size fits-all policy as it can be a recipe for disaster. At the stage of our economic development, we need active government participation in the economy, otherwise we are in trouble.

It is an equally flawed thinking to say foreign investors should have a huge stake because they bring machinery and have technical skills and should recoup their investment. Who said Malawi does not have top notch mining engineers in the diaspora? And why should we wait for them to recoup their investment when they are enjoying ridiculous tax holidays?

Furthermore, these mineral resources belong to Malawi and we should have a greater say. It is a chicken-egg situation. In fact, if government was serious with mining, it should have endeavoured to go it alone. It could have procured a productive loan, from say China, which does not have stringent loan conditions, and start its own mining operations.

Secondly, government should set up a company to enter into mining ventures with foreign mining companies. This will not only ensure that government and Malawians’ interests are taken care of, but also act as control of our mineral resources.

As of now, we do not know the quantity of minerals being exported. The ever alert Chief Kyungu in Karonga recently complained that although Kayelekera mine was shut down “the company was still transporting the yellow cake out of the country and that its plane that used to bring expatriates into the country was still coming to Karonga”.

Whether government has taken his remarks seriously is neither here nor there. But this illustrates how Malawi’s resources can be shipped out willy-nilly if you are not in control.

The other worrying trend is that government is very weak in monitoring companies that are given prospecting licences. Who monitors them? What is the duration of the prospecting licence? Does government verify the sample that is sent? There are reports that many of these companies have been sending mineral samples for years.

The question is: How often does a company send samples and in what quantities? And what conditions are attached to these samples? Does government limit the quantities?

There are so many issues in the mining sector that require answers. Suffice to say that some of these companies have been exporting our minerals illegally, selling them to western countries under the guise of samples, just because government is sleepy. It is even worse when Malawians are not in control of their own resources.

Reviewing the Minerals Act, which should reflect the aspirations of Malawians and not foreign investors, is just one such step. It is not a panacea to solve all mining issues. Much will depend on political will to see change in the sector. As of now, it is a total disaster.