Government has given nine mining firms 30-day notices expressing its intention to terminate their licences for non-payment of fees, ground rates and royalties amounting to K900 million and for general non-performance as stipulated in licences.
The strong stance follows a discovery made after installation of a new mining revenue management system, which showed that government lost about K900 million after various mining companies defaulted on the payments.
Acting director of Mining Akileni Wona confirmed in an interview with Nation on Sunday that most mining companies have not been remitting the money to government.
He said the Department of Mining is still reviewing the figures which could change amid an on-going accounts audit exercise to ascertain how various companies managed to default in payments.
Wona said government is now working on claiming the money that is enough to stock some major hospitals with medical drugs, adding that they will now take action, including cancelling some licences.
Though Wona could not immediately provide the period in which the figure has been accumulating, sources said the period under scrutiny is between 2009 and 2017.
According to Wona, government will cite non-performance as the reason for cancellation; hence, it will seek fresh investors amid fears that most companies are holding licences for commodity speculative purposes.
“The new system is notifying the mining companies automatically on the payments, but we have also written the companies that owe us. There is a list of companies and we are following up.
“Some of the licences will be cancelled and we have already sent notices to some nine companies for both non-payment of ground rates and also non-performance as stipulated in the licence.
“We are using a new system, known as Cadastral and at the click of the button it shows which mines have been inactive for a long period and we move in to give contract cancellation notices,” said Wona, who could not provide the list of the companies that have been notified.
Malawi has several sites where investors expressed interest to start mining operation, but they are yet to start.
According to officials at the Department of Mining, until government introduced the system –known as the mining cadastral system—in March this year, government was clueless about the extent of non-remittance.
A mining expert, Grain Malunga, commended government for the move, saying some investors got licences when they did not have enough expertise and capital.
“What government has done is good because sometimes investors get licences because of speculation. A serious investor does not take time to invest and the practice of buying sites with mineral value and even plots is rampant not only in Malawi but the world over. What is needed are strong measures to deter such practices,” said Malunga.
He argued that when government is revoking licences, it should not be seen as if it is chasing investors but it is looking at bringing sanity in any sector.
“Government cannot just move in and start revoking licences, there is a reason. If investors are complying with all set procedures there can never be fear of losing plots,” said Malunga.
In July, the country’s first ever Extractive Industry Transparency Initiative (Eiti) report indicated that a total of K800 million from the revenue declared by mining companies in 2014 cannot be reconciled in government accounting books.
This raised fears that the money could have been stolen or abused and the recent development will heighten fears of mismanagement in the mining sector.