What is govt’s stake in niobium, coal mines?

According to 2012 media reports, Global Metals and Mining Company will start production of Niobium at Kanyika in Mzimba this year. This will be the second major mining company from Kayelekera Uranium Mine in Karonga. Minister of Mines John Bande was recently quoted in the media as saying government is processing a coal-mining licence for an Australian company, Intra Energy Corporation.

These developments sound good, but they equally raise several important questions: how much stake does government have or will have in these companies? What should government really be doing in the mining sector? Will they remain passive and leave everything to foreign companies or the private sector? Is their role just to issue licenses and not actively participate in the extraction of minerals? The role of government in the mining sector has so far been vague.

Minerals are a national asset and government should ensure they benefit Malawians and not a few individuals. They should negotiate mining deals to benefit Malawians. This entails that government should be extremely careful in the way they handle mining issues. They should avoid the mistake they made in the Kayelekera mine in which they got a raw deal of a paltry 15 percent stake. In fact, once the current agreement expires, government should negotiate for 50 percent or 51 percent stake in mine.

If government can get it right on mining, which so far they have not, there will be no need to borrow funds from IMF or development partners. This will also be a huge leap on the path to move away from donor dependence. Profits generated from the mines will be reinvested or allocated to boost other sectors such as agriculture, tourism, garment manufacturing, food production etc. However, the remarks by Minister of Mines do not give much hope that Malawi will benefit anything from the mines. He was quoted in the media as saying: “We have resolved to be very careful. As government, we shall protect investors and also the communities where these mines will be located.” Fair enough. But how will the interests of Malawians as a whole be protected?

Botswana is a good model on the Africa continent on how to handle the mining sector. The government entered into Private-Public-Partnership (PPP) with the private sector some decades ago. The government formed the Debswana Diamond Mining Company, formerly De Beers Botswana Mining Company, in which the government owns 50 percent while De Beers of South Africa owns 50 percent. The mine contributes over 70 percent of Botswana export earnings, 30 percent of gross domestic product (GDP) and 50 percent of government revenue.

One major missing link in Malawi is the absence of a government mining company which should have been entering into a PPP on behalf of the government. This is long overdue. As a matter of urgency, government should set up a mining state-owned enterprise to take charge of the mining sector. It is unacceptable that foreign companies are setting up mine companies in the country or licenses are being awarded to foreign and local companies while government is just watching. How will government protect its own interests?

It is equally unfortunate that we have some Malawian sell outs that are protecting and serving the interests of foreign companies. They advance the notion that foreign companies should have high stake in the mines (and also be given many concessions) because they have to recoup their initial investment because Malawi does not have the capacity.

The fact that the minerals are on our soil is enough reason to demand a fair share. It is a chicken-egg situation: one cannot do without the other. Furthermore, Malawi has a lot of mining engineers in the Sadc region and diaspora (some of them are university lecturers) who can work in the mines. It is just that government has not taken the initiative to lure them back home. These professionals can make a valuable contribution to the mining sector.

All government should do is to advertise in foreign media. But government should negotiate for senior positions with foreign companies. Additionally, there are a lot of skilled Malawians who worked in the mines in Botswana, South Africa, Zambia and Zimbabwe who can be absorbed in the mines. So the issue of capacity should not really be raised.—To be continued.