MGDS II reveals failed promise in mining
The country’s mining sector is constrained by technical capacity, governance and weak geological information, a development which affects prospects for the lucrative sector, according to the Malawi Growth and Development Strategy (MGDS II) review report.
During the MGDS II implementation period between 2011 and 2016, government planned to implement a number of strategies to promote mining, which include enforcing legislations on sustainable use and management of mineral resources, providing infrastructure that is supportive to mining development and promoting participation of both local and foreign investors in the sector.
The report shows that within the past four years, mining was hampered by lack of up-to-date geological information and has long relied on outdated geological information and weak capacity in modelling and negotiating mine development agreements.
In addition, the report says that currently, the growth of small-scale miners, especially women, is limited by lack of friendly credit facilities, limited access to good markets, lack of a regulated pricing regime, high royalties, short licence tenure and low use of production machinery.
The report, therefore, suggests that Malawi invests in facilitating reality checks on the ground, including production of a detailed geological map and establishment of a national mining investment company to hold interest on behalf of Malawians.
Reads the report in part: “There is need to incubate specialised expertise in modelling and mining agreement negotiation by developing a model mining development agreement and production sharing agreement and introduce efficiency in negotiations of mine development agreement by making fiscal regimes in mining predictable, non-negotiable and binding.”
A geologist, Grain Malunga, who once served as minister of Natural Resources, Energy and Mining in an interview noted that there is need to build local expertise.
“We have been cheated by the people who come in the name of investors due to our lack of capacity,” he said.
Malunga said government needs to institutionalise mining, adding that people in rural areas are selling precious stones at a cheap price because they are trading the stones illegally and not aware of the value of the stones.
At the peak of uranium mining at Kayelekera in Karonga between 2009 and 2014, mining and quarrying output grew from K7 billion to K59 billion, of which K47.75 billion was from Kayelekera Mine, making it the largest investment in the country’s mining sector as it demonstrated transformative potential in mining.
Experts believe the continued suspension of mining, which is under care and maintenance, is a heavy blow and is pinning down Malawi’s efforts to diversify its economic base.
In an earlier interview, Ministry of Natural Resources, Energy and Mining spokesperson Ayam Maeresa was upbeat the mining sector will bounce back on the back of reported nuclear reactors under construction in China, India and Russia.
“We see a promising future for uranium. We are hopeful that these nuclear reactors will push up the demand for uranium, and Kayelekera Uranium Mine will benefit from this,” he said, adding that due to the closure of the mine, government is no longer benefiting from revenue. n
