In this third part of the mining series, EPHRAIM NYONDO looks at the draft Mines and Mineral Bill and sees what is new in it compared to the 1981 Mines and Mineral Act.
Voices against the 1981 Mines and Mineral Act, which currently regulates mining in Malawi, continue to soar.
There is an agreement that the Act, though not obsolete, fails to respond to emerging mining issues in the country, as a result, there is an urgent need for its review.
For years, Malawi has been reviewing this law. Government hired a consultant to develop a draft bill inspired by concerns that various stakeholders have been making over the years.
Last August, government—after years of consultations aimed at soliciting views of sharpening the bill—held the last multi-stakeholder consultative meeting in Lilongwe before the bill is taken to Parliament.
On the current status of the bill, Levi Undi—spokesperson for mining in the Ministry of Natural Resources, Energy and Mining—told Weekend Nation Investigates that the ministry completed all consultative processes — soliciting views from different stakeholders — and com piled the final draft of the bill which was submitted to the Ministry of Justice and Constitutional affairs in August 2015.
But what are some of the key features in the draft Mines and Mineral bill which is with the Ministry of Justice and Constitutional Affairs waiting to be taken to Parliament?
Taking it from the bill, proposed Mines and Minerals draft bill has been designed to regulate the development of mineral resources of Malawi through adherence to sustainable development principles.
Ownership of minerals
The bill states: “The entire property in minerals, in, under or upon any land or waters in Malawi are vested in the Republic; but without prejudice to the exercise of any right under or pursuant to this Act”.
This is in contrast with the 1981 Mines and Minerals Act, which states: “The entire property in, and control over, minerals in land in Malawi are vested in the President on behalf of the people of Malawi; but without prejudice to the exercise of any right under or pursuant to this Act.”
The Mineral Resources Committee (MRC)
The draft bill is making a proposal for the establishment of the Mineral Resources Committee. The committee’s major function will be to examine qualifications, experience and character of persons applying for exploration licences, retention licences, medium-scale mining licences and large-scale mining licences and determine their eligibility to be granted the type of licence applied for. Apart from recommending granting of exploration licences, retention licences, medium-scale mining licences and large-scale mining licences, the committee will advise the Minister on licensing matters relating to exploration and mining operations, including quarries and their operations.
However, the committee will not be involved in any negotiation of mining agreements if there will be any.
The draft also proposes that the Minister “shall not grant an exploration licence, retention licence, medium-scale mining licence or large-scale mining licence unless the Mineral Resources Committee has recommended the respective application, and any grant of a licence that contravenes this subsection is null and void.”
Community engagement plan
This is one of the new concepts the draft bill is proposing that the holder of an exploration and mining licence must develop a community engagement plan in collaboration with local government authorities, traditional leaders, communities, organisations, women and minority groups in the area in proximity to the tenement.
A community engagement plan shall not just include detailed strategies to conduct awareness programmes, community consultations and to disseminate information, but also grievance mechanisms to address concerns and issues relating to the licence holder’s operations and the process to be used in addressing these concerns and issues.
The holder of a medium-scale mining licence or large-scale mining licence shall not commence mine development on its tenement area until its community engagement plan has been registered by the registrar.
Community development agreements
The concept of community development agreement (CDA) has been taken on board in the proposed draft bill. This is in response to a call for making sure that communities derive visible benefits which they can easily refer to as development projects from a specific mine(s).
The draft bill is proposing that the holder of a large-scale mining licence shall assist in the development of qualified communities affected by its operations to promote sustainable development, enhance the general welfare and the quality of life of the inhabitants and shall recognise and respect the rights, customs and traditions of local communities that are consistent with constitutional principles.
The holder of a large-scale mining licence is required to have and implement a community development agreement with each community that meets the definition of a “qualified community” that is willing and able to enter into a community development agreement.
The Mineral Resources Committee shall approve any community development agreement that has been ratified and endorsed by a qualified community and the holder of a large-scale mining licence where all prescribed community development agreement mandatory content requirements are satisfied.
Additionally, the holder of a large-scale mining licence shall expend on community development no less than zero point four-five percent (0.45 percent) of its annual gross sales revenues on the agreed activities.
This draft bill is making a proposal of a government ownership in large scale mining projects. The draft bill proposes that government should have the right, but not the obligation, to acquire, directly or through a government nominee, without cost, a free equity ownership interest of up to 10 percent in any mining project that will be subject to a large-scale mining licence.
Fiscal transparency management
In the draft, it is being proposed that the Department of Mines will be responsible for the collection of ground fees, but the royalty from the mining sector will be collected by the Malawi Revenue Authority (MRA). The draft has also taken on board the concept of transparency in fiscal regime issues to align Malawi’s candidature to the Extractives Industries Transparency Initiative (EITI).
The commissioner—in consultation with departments and authorities of the government responsible for collecting taxes, royalties, duties and other imposts levied on mineral tenement holders, from time to time—may issue mandatory or voluntary guidelines with regard to the keeping of fiscal payment records, the submission of information relating to fiscal payments by mineral holders to any authority of the government and require any other information or reports that may be useful to provide fiscal related transparency for the extractive industries.