Malawi Government has expressed fears that the recent suspension of Malawi’s biggest mining venture, the Kayelekera Uranium Mine (KUM) in Karonga may widen the gap between imports and exports in 2014.
Secretary for Industry and Trade Alex Gomani has, however, banked hopes on the continued implementation of the National Export Strategy (NES) which he said could offset the loss of uranium export revenue as the strategy is targeting to boost export earnings from other non-traditional exports.
“We hope this suspension is temporal so that it doesn’t disrupt the programmes that government has of diversifying our export base,” he said in an interview last week in Lilongwe.
Paladin Energy Limited, whose subsidiary Paladin Africa Limited, on February 7, announced the suspension of production at KUM by placing the operations on care and maintenance until the price of uranium recovers on the international market.
The decision, according to the company, will preserve the remaining ore body until a sustained price recovery occurs and Paladin hopes that production may be resumed on a profitable basis.
“We are hoping that commodity prices internationally in as far as the concerned commodity of uranium will pick after the [nuclear] disaster that happened. We are hoping that if prices start picking up, that should lead to the reversing of such a decision,” said Gomani.
The decline in the uranium price on the global market is significantly linked to the Fukushima earthquake and tsunami in Japan almost three years ago which continues to negatively impact that on the price of uranium oxide on the global market.
Gomani said currently, government is implementing the NES and stated that the ministry and other stakeholders are now strategising on areas that may need incentives in the various value-chains, particularly under the sugar and manufacturing clusters.
While admitting that the gap between imports and exports value is widening, he said the implementation of the NES should narrow such a gap in the medium to long term as exports surge.
Currently, Malawi’s exports are valued at around $1 billion against the import value of about $2.3 billion and as such trade experts contend that the NES could help the country, dogged by recurring trade deficits, generate enough foreign currency to finance for its critical imports.
The NES, which was launched in December 2012, seeks to double Malawi’s value of exports in the next five years.