With the country’s mining activities on the rise, government has committed to subscribe to the Extractive Industries Transparency Initiative (EITI) in the first quarter (Q1) of 2015 to ensure transparency and accountability in the multi-million dollar industry.
EITI is an international organisation which maintains standards and assessing the level of transparency around countries’ oil, gas and mineral resources. These standards are developed and overseen by a multi-stakeholder board, consisting of representatives from governments, extractive companies, civil society organisations, institutional investors and international organisations.
Since the start of uranium mining at Paladin (Africa) Limited-owned Kayelekera Uranium Mine (KUM) in Karonga in 2007, Malawians have been pushing for transparency and accountability in the proceeds accrued from there.
Most people want to know the benefits Malawi, as a country and residents of Karonga, in particular, have accrued or will accrue from the mining venture—the single most largest foreign direct investment (FDI) in recent times with investment totalling $600 million (K288 billion), which was contributing $35 million (K16.8 billion) annually to government coffers, according to government officials.
The urge for transparency has also been heightened following the expected exploration of oil and gas in Lake Malawi which has been divided into six blocks and contracts already awarded.
Minister of Natural Resources, Energy and Mining Atupele Muluzi told Business Review this week the Malawi Government is committed to the EITI to ensure that mining ventures are developed for the benefit of all Malawians.
“The EITI process, which we are committed to, will ensure that we improve public understanding of government activities in the sector and for the public to be confident that the sector is being well managed,” he said.
Muluzi said a comprehensive roadmap has been developed and is being implemented to ensure that by Q1 of next year, Malawi will be a part of EITI.
He said currently, a raft of reforms are being undertaken such as the review of the Energy Policy 2003 and the Petroleum Act to be ready for the process.
“This is to ensure that we have an up-to-date policy and regulatory framework to govern this new sector of oil and gas. Government is insistent, however, that a rigorous Environmental Impact Assessment ( EIA) be conducted before any activities are carried out,” he said.
Mining experts contend that Malawi is endowed with high value mineral resources, constituting an important source of wealth for development and foreign exchange for Malawi.
Despite a contraction of 7.8 percent in 2014, mining sector’s contribution to gross domestic product (GDP) has risen from three percent in 2009 to 10 percent currently, but experts argue there is potential to rise to 20 percent by 2016.
Citizens for Justice, a non-government organisation that advocates for issues in the mining sector, said being party to EITI will greatly help in profiling the amount of natural resources the country is endowed with and the revenue it is accruing from such resources.
He said with the subscription, communities will also understand how much money goes into government coffers.
Government, beginning 2011, awarded oil and gas exploration contracts to a number of companies in all the six blocks in the lake.
Block one was awarded to Sac Oil Holdings Limited of South Africa in December 2012, block two and three to British-based Surestream Petroleum in 2011 and as of 2013, Hamra Oil bought majority stake in Surestream. Blocks four and five were awarded to Rakgas of United Arab Emirates in July 2013.
A number of companies such as Globe Metals and Mining and Lynas from Australia, Mkango Resources Limited of Canada and others are exploring for various minerals in the country.
Meanwhile, the results of the geo-physical mapping, which will indicate the extent of mineral resources are yet to be released.