Government has for three years been seeking to annul the contract of Nyala Mines Limited, an international mining consortium that exports gemstones, accusing the company of under-declaring its sales.
But the company challenged government’s decision by getting an injunction, which government is yet to vacate.
In 2013, then Principal Secretary for Mining Leonard Kalindekafe alerted the company of the cancellation after warning it in an earlier communication, about allegations of undervaluing its sales in declarations to government.
First, a letter dated March 10 2013 written by Kalindekafe, addressed to Nyala Mines Limited managing director Abdul Mahomed, warned the company that the ministry’s officials were no longer seeing merit in the agreement with the company.
Wrote Kalindekafe: “I refer to the above mentioned subject. I write to inform you that the mining operations by Nyala Mines Limited have been unsatisfactory since the company started operating the mine. These have included undervaluation and under declaration of ruby and corunclum gemstones mined on Chimwadzulu Hill during reduction and exports of the said minerals.
“This has resulted in loss of revenue by government which has not benefited from the mine despite production being underway. These violations of the Mines and Minerals Act have made it difficult for us to continue justifying your holding of the tenement.”
The letter added that during meetings then, the Mining Licensing Committee resolved that all non-performing licences be submitted and recommended to the Minister for cancellation of the contracts.
“This notice is being sent to you since the performance of Nyala Mines Limited under this licence has been unsatisfactory. This letter serves to notify you that a recommendation is going to be made to the minister to cancel your licence for the above stated violation of the Mines and Minerals Act and you are hereby given 30 days from the date of this letter to respond. Please acknowledge receipt of this letter,” he concluded.
Later, government thought it had pounced on the company when on June 10 that year, then Mining minister John Bande cancelled the contract, writing to the company, he was “convinced beyond reasonable doubt that it would be difficult for the ministry to justify your tenement of the licence at the expense of other investors.”
But Nyala Mines Limited obtained an injunction and the situation has dragged on with the company continuing to export from the sales of ruby.
Ministry of Justice spokesperson Apoche Itimu said government was now challenging the injunction in court, saying the State wants the contract terminated.
She said attempts to vacate the injunction were previously handicapped by disappearance of vital court records once filed at court and recently adjournments of open hearings.
“When it was scheduled to be heard last time, the applicants’ lawyer asked for an adjournment. We are waiting for another court date. We, initially, lodged the application around 2014, but the documents kept getting lost at court until this month when the court gave a date of hearing. But we had to adjourn because the lawyer on the other side said he would not be available,” said Itimu.
She said the State was challenging the legality of the validity of the injunction and also wants to be allowed to terminate the contract.
Nyala Mines Limited lawyer David Kanyenda said he could not discuss the specifics of the case and referred Nation on Sunday back to Ministry of Justice.
Nyala Mines Limited is public-partnership company, with a minority government stake and as recently revealed by Nation on Sunday, a scooping study by a joint government and civil society initiative on transparency known as Malawi Extractive Industry Transparency Initiative (Mweiti) accused the company of non-compliance on agreements and tax obligations.
The company, however, denied the allegations, saying it has always paid tax; hence, it queried Mweiti for not consulting it in its investigations.
The fight between Malawi government and Nyala Mines Limited has largely remained off the public domain due to a secrecy (non-disclosure) agreement between the two sides contained in their 2008 contract, a move faulted by the Mweiti report.
Several attempts to seek the company’s comment on the matter has proved futile as the company’s managing director Abdul Mahomed rejected Nation on Sunday’s requests for comment, and referred the matter to Company Secretary Chokani Mhango.
Mhango, on several occasions, for two weeks, indicated he was willing to take questions on the matter, but on several occasions kept on asking for the newspaper to revert to him on the matter as he was in one meeting after another.
When contacted for the initial reportage on the matter, Finance Minister Goodall Gondwe indicated he would investigate the operations of the company and later the Ministry’s spokesperson Nations Msowoya confirmed that government would soon be auditing the company for fact-finding.
On Wednesday, Msowoya confirmed that government had received fresh allegations against the company, but could not provide details as he was still waiting for information from other relevant government offices. n