Malawi mining sector slightly risky
Malawi’s mining sector has been described as a slightly risky investment destination due to its relative immaturity according to a guide produced for 20th Annual Investing in African Mining Indaba.
An Official Mining in Africa Country Investment Guide 2014 by the Global Business Reports, which was specifically produced for the African Mining meet that took place early February, splits Southern Africa into two groups: those that offer a low-risk environment with proven geological potential and those that offer higher risk yet with less exploited mineral resources.
While mining environment in Malawi and neighbouring Mozambique are described as slightly higher risk, they fall just on the line—between the two extremes.
According to the guide, South Africa, Botswana, Namibia and Zambia are described as offering low risk environment with proven geological potential. Zimbabwe is in the latter.
The guide however acknowledges Malawi’s growing production of uranium and other strategic minerals noting that the country’s emergence into the mining scene has been substantial.
However, in February, Paladin Africa Limited announced the suspension of production at its Kayelekera Mine in Karonga due to continuing depressed price for uranium and unsustainable cash demand to maintain the loss making mine. Malawi’s total uranium output was projected at K71 billion ($161.6 million) this year.
But regardless of the closure of Kayelekera, mining and quarrying are regarded as important to Malawi’s economy.
According to available statistics, in 2013, mining and quarrying activity was estimated to expand by 9.5 percent following a 14.9 percent growth rate in the preceding year while uranium output growth was projected at 19.4 percent despite falling global prices.
Last year, government launched the Mines and Minerals Policy in which government undertakes to encourage both foreign and local investors to invest in mining, provide adequate resources to promote and market the mining sector, and provide training in the sector.
The policy also adds that the government subscribes to regional initiatives such as the Kimberly Process, Multilateral Investment Guarantee Agency (Miga) and the Extractive Industries Transparency Initiative (EITI) among others that address mineral sector issues including practice, governance and other emerging realities.
According to the Ministry of Mining, Malawi has a variety of known mineral resources that include uranium, heavy mineral sands, strontianite, rare earth minerals, phosphate, bauxite, gypsum, vermiculite, precious and semi-precious stones, limestone, dimension stone, silica sand, sulphides and coal.
The ministry adds that there is also potential for discovery of other metallic minerals and high value minerals including gold, platinum group minerals, and diamonds.
