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Home Business Business News

Miner sees power potential in Malawi

by Johnny Kasalika
12/05/2012
in Business News
3 min read
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kanyika | The Nation OnlineMalawi’s unreliable power supply is a big concern to investors. Australian Stock Exchange (ASX)-listed miner Globe Metals and Mining, which is exploring for niobium at Kanyika in the Northern Region district of Mzimba, said there is not enough grid power capacity in the country.

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“[Power] reliability is an issue, but as power alternatives are beginning to proliferate in the region, we see potential project upside as energy costs fall,” said the miner’s chief executive officer Mark Sumich in the Company Insight released this week.

But Sumich said, over the next five years, there will be development of power grid in southern Africa extending to Malawi using coal, hydro, natural gas and ethanol.

“Mozambique will be a huge net exporter of energy into southern Africa,” he said.

Globe touts itself as an African-focused resource company, specialising in rare metals such as niobium, tantalum and rare earths, as well as other commodities, including fluorite, uranium and zircon.

The company’s main focus is the Kanyika Niobium Project, which will produce ferro-niobium, a key additive in sophisticated steels.

It also has a number of other projects at an earlier stage of development, such as 80 percent interest in the Machinga Rare Earth Project and can earn up to a 90 percent interest in the Mount Muambe Rare Earth Element—fluorite project and the Memba Titanium—Iron Project, both in Mozambique.

Malawi’s power supply has been a thorn in the flesh of businesses due to its unreliability.

The sole power supplier, Electricity Supply Corporation of Malawi (Escom), has, times without number, given numerous reasons as to why Malawi is in this predicament.

The never-ending power outages have negatively affected Escom’s customers. For companies, the losses have been huge.

Figures from Escom show that the utility company has an installed capacity of 287 megawatts, but is currently generating about 266 megawatts of power against a suppressed demand of 310 megawatts or even more.

Sumich, who has commented on a number of issues, said most investors see the Definitive Feasibility Study (DFS) to be completed in December 2012 as an important price catalyst.

In April 2011, the miner entered into a strategic partnership with East China Mineral Exploration and Development Bureau (ECE), a Chinese state-owned enterprise with extensive mining operations in China and overseas.

ECE is now the largest shareholder in Globe with a 51 percent stake, and a key partner for the company’s growth ambitions in Africa.

Sumich said the company introduced ECE as their strategic partner in the short, medium and long-term.

“They have a real interest in developing specialty metals and we expect they will be able to introduce us to project finance, customers and project partners. Our ECE relationship gives us a tangible basis to advance good projects such as Kanyika through the true value-creation stages,” he said.

Overtime, said Sumich, the company will attract partners in the exploration and development stages of their projects though project and capital investments, off-take arrangements or other initiatives.

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