Imported cheap coal from Moatize and Tete in Mozambique is threatening the survival of local coal mining firms, as most users prefer the chearper product from the neighbouring country.
On average, coal from Mozambique is sold at $60 (about K43 000) per tonne and each tonne attracts a further $60 as transport cost.
On the contrary, Malawi coal, especially from mines in the Northern Region, is sold at an average price of $70 (about K50 000) per tonne and attracts a further $95 (about K69 000) for transport.
This means that companies that use coal in Malawi spend an average of $120 (about K87 000) per tonne on coal from Mozambique and around $165 (K120 000) on locally mined coal.
Speaking on the sidelines of a tour by Minister of Natural Resources, Energy and Mining Bright Msaka on Tuesday to Mchenga Coal Mine in Rumphi, the mine’s manager Johnson Dandazi said they are doing all they can to win back customers.
He said: “For the past two years, our sales have been going down due to competition from coal imports. They have taken the market from us as most local companies prefer to source coal from Mozambique.
“Among other reasons is the distance. Buyers look at how much it will cost them to ferry coal from here to Blantyre and from Moatize to Blantyre. It is cheaper that side than here.”
Dandazi said their prices are higher because they do underneath mining which is expensive unlike in Mozambique where they do surface mining.
On his part, Msaka encouraged local companies to buy Malawi coal as part of the country’s Buy Malawi Strategy.
“This [mining] is one area where we must encourage companies that require coal to buy Malawian. They must buy from these companies because their coal is of better quality.
“We will help Mchenga Coal Mine, working work together with the Ministry of Industry, Trade and Tourism to ensure that Malawian companies buy Malawi coal,” he said.
Minister of Industry, Trade and Tourism Joseph Mwanamvekha in an interview said while government appreciates the concern, there is need to carefully scrutinise the matter.
“Our experts have to asses the issue and any remedy we take has to be in line with the World Trade Organisation [WTO] rules,” he said on Wednesday.
In Malawi, coal is mostly used by players in tobacco processing, poultry, beverage, textile and steel industries.