Malawi orders Mchenga Coal Mines to settle royalties

Malawi has ordered Mchenga Coal Mines (MCM) Limited to pay about K15 million (about $37 500) outstanding royalties by October this year or risk closure.

MCM pays five percent of its gross earnings to government as royalties. However, the company was reportedly not remitting the funds in full as per government’s demand for the past five years.

, who toured the mine on Tuesday to check if the company started adhering to several practices government ordered it to, said MCM has to pay the royalties by October.

Bande blamed officials under the ministry for failing to claim the money and do inspections properly, which led to the accumulation of royalties to over K15 million.

He said his ministry will now tighten loopholes for evading royalties to ensure that companies pay them.

“We have drilled our officers to do more inspections and there is also an increment for inspection funding.

“Companies were able to withhold royalties because there were no proper inspections and there was little funding for such exercises, but that will no longer be the case because we have been allocated more money,” said Bande.

Bande said the ministry will also consider pushing for review of loyalty percentage, arguing five percent was too low.

However, Bande commended MCM for improving working conditions of its employees.

MCM managing director Rafik Gaffar said the company will settle the loyalties in two weeks.

“Right now, our production is at 2 500 tonnes per month when our capacity is supposed to be 7 500 tones, but the cost of running remains the same. So you can see how much we are losing.

“Because of low production, we have been forced not to export coal this year, so we meet the local demand,” said Gaffar.