Malawi mining, quarrying revenue to fall by 68 percent
Revenue from mining and quarrying, one of the country’s important sectors is expected to drop by about 68 percent to K16.5 billion this year from about K52 billion in 2013.The drop in revenue could hamper GDP growth prospects.
Government, in this year’s annual economic report, has shown that total revenue in the sectors including coal, cement, agricultural lime, uranium concentrates, phosphate, rock aggregate and gemstones, will generally drop in all types. The major decline will occur in uranium concentrates by about 71 percent according to the report.
Revenue from uranium concentrates is projected to drop from K49 billion last year to about K13.8 billion this year, while output will fall by about 63 percent to 500 tonnes.
Available data indicates that mineral exports between July 2013 to February 2014 amounted to K1.13 billion through royalties, licence processing and ground fees while exports this year will be dominated by coal, ornamental stones, gemstones and uranium.
However, total export earnings are projected to slightly drop by about five percent to K30 billion this year from K31.5 billion last year, with the largest drop occurring in uranium concentrate exports.
Paladin Africa Limited on February 7 this year announced the suspension of production at its Kayelekera Uranium Mine (KUM) in Karonga due to continuing depressed price for uranium and unsustainable cash demand to maintain the loss making mine, according to the company.
But recently Paladin Energy Limited said it is optimistic that the spot uranium price on the global market will recover during the course of the year raising hopes that the Australian-based company might resume uranium production at the mine.
According to its quarterly activities report for the period ending March, 2014, the company said it banks hopes on the uranium contracting market which it says has begun to show activity, as a large US nuclear utility has requested offers for deliveries spanning 2016 up to year 2022.
The economic report has indicated that KUM, which was commissioned in 2009, still remains one of the largest mining investments in the country and has withstood economic slowdown with its production continuously growing. According to authorities, this year the company was projected to produce 1 065 tonnes of uranium concentrates valued at K449 billion.
Local analysts have, however, pointed out that the shutdown of the Kayelekera mine may drag growth down as the exports contribute towards GDP growth.
According to Nico Asset Managers, a local investment and business advisory firm forecast real GDP growth is 5.5 percent in 2014 following a pickup in growth in 2013.
