Government has put its foot down on Kayelekera Uranium Mine and is demanding a better and an improved Mine Development Agreement (MDA) than the one it had with the mine’s previous investor Paladin Energy.
Mining Secretary Joseph Mkandawire said what Lotus is asking for is a “nonstarter” and while negotiations are ongoing, its proposal will not be accepted.
Lotus wants a similar MDA government had with Paladin Energy where its stakes in the project were 15 percent.
However, Mkandawire said government has been in bad books with the citizenry over its previous deal with Paladin and maintaining the same would simply imply that people at Capital Hill are non-responsive.
He said: “It’s a negotiation, but what they want is not what government wants.
“As you know, Paladin MDA was not in the best interest of the government and we cannot maintain it and in terms of the taxes, its 10 percent of State equity, but at that time, it was 15 percent. So, even if we maintain 15 percent or come down to 10 percent, it does not make much difference. In any case, even that is paid when the company is making profits.”
Government’s stand comes after the Natural Resources Justice Network (NRJN), Parliament and experts have warned Capital Hill against maintaining a similar MDA that will set a fiscal regime in which the company will operate.
The mine’s new owner, Lotus Resources Limited, said in a statement that its Australian- based executives flew into the country to negotiate with government for an updated MDA.
The statement reads: “The previous owners of the project, Paladin Energy, who operated the mine between 2009 and 2014, had an MDA with the Malawian government, which they negotiated in consideration for the transfer of 15 percent ownership of the project to the government.
Managing director Keith Bowes said the company is currently awaiting definitive feedback from the steering committee to confirm that the negotiations will be completed on schedule.
He said: “It is key that the defined fiscal regime can be incorporated into the definitive feasibility study which remains on track to be released by mid-2022.
“I was particularly happy to see the support from the local NGOs and the work they have been doing with the communities in formulating our Community Development Agreement that will be key to ensuring our activities support all local communities in a fair and transparent manner.”
NRJN chairperson Kosam Munthali argued that the proposal to maintain the same MDA might have come from unpatriotic Malawians for their own vested interest.
“Any wise Malawian will call this the biggest joke of the year for government to accept the proposal by Lotus. Malawians still have fresh memories of some very basic fundamental issues that government would have avoided but due to selfishness and greedy minds, they were never considered,” he said.
Munthali said Malawi needs to work on a model that will promote a win-win situation which should be in line with MW2063, since mining is the major catalyst for that dream.
Meanwhile, Natural Resources Committee of Parliament chairperson, Welani Chilenga, has pleaded with government to ensure that communities sign a memorandum of understanding with the miners, and that Capital Hill must follow the revised Mines and Minerals Act (2019) on royalties.
He said: “That Act spells out clearly how communities surrounding mining areas have to benefit. In this case, Kayelekera is a large-scale mining activity and it’s not just Livingstonia for them because they have also extended from Kayelekera to Nthalire, Chitipa. They have uranium all over there.
“For government, let them stick to what is contained in the Act on royalties. In the Act, the contract negotiating team is clear because there is a commission comprising so many stakeholders, so we don’t expect negotiations to go wrong, we have everybody in that committee.”
Mining governance expert Elyvin Chawinga said it is high time Malawi learnt from previous mistakes, indicating time has come to make things right.
She said: “First, the government needs to strengthen the relationship between the communities and the company. From the word go, they need to have a mutual understanding of the benefits that the mine will have.”
Lotus said its recent drilling programme has expanded the mineral resource estimate (MRE) for the Kayelekera project in Karonga by 23 percent, thereby increasing the mine’s lifespan.
The Australian mining firm said the increase in the MRE for Kayelekera to 46.3Mlbs at 500 parts per million (ppm) U3O8 will be incorporated in the new mine plan for the firm’s definitive feasibility study.
Last year, government renewed Lotus Resources Limited mining licence for 15 years.
Kayelekera Uranium Mine was placed on care and maintenance since February 2014 following the tumbling of global uranium prices following the Fukushima nuclear disaster in Japan, which forced the closure of nuclear power plants across the world.