Govt. forecasts continued growth of minerals sector – Mining Review (November 2014)

The piece “Govt. forecasts continued growth of minerals sector” featured below was initially published in Malawi’s Mining Review Issue Number 18 2014 that was circulated in November 2014.

For the first time, the full edition can be read here: Mining Review No. 18 November 2014.

To learn more about this quarterly publication, edited by Marcel Chimwala, read the post about the “Voice of the mineral sector in Malawi”.

Front page of the Mining Review (Issue No. 18, November 2014, Marcel Chimwala)

Front page of the Mining Review (Issue No. 18, November 2014, Marcel Chimwala)

Govt. forecasts continued growth of minerals sector

  • Kayelekera may resume production
  • Off-take of new mining ventures expected

By Marcel Chimwala

The Malawi Government says the minerals sector is expected to continue growing despite suspension of production at Paladin Africa’s Kayelekera Uranium Mine in Karonga which is the country’s largest mining investment.

Australia’s Paladin suspended production at Kayelekera owing to prevailing low prices of uranium on the global market in the wake of the Fukushima nuclear disaster in Japan, which led to the closure of several nuclear plants in the Asian country in so doing eating on the global demand for the yellow cake.

Nonetheless, in his recent meeting with Minister of Natural Resources, Energy and Mining Honourable Atupele Muluzi, Paladin CEO Mr. John Borshoff said the company welcomed the new administration of His Excellency Professor Arthur Peter Mutharika’s open approach to foreign direct investment, and would reopen the mine currently on care and maintenance if uranium prices rise to US$75/lb for benchmark profitability.

Chief Mining Engineer at the Department of Mines in the Ministry of Natural Resources, Energy and Mining Mr. Burnett Msika told participants of a workshop to launch the Publish What You Pay (PWYP) campaign for the extractive industry in Lilongwe that besides the prospects of Kayelekera reopening, the country is destined to witness the off-take of other significant mining ventures in the near future which will propel further growth of the emerging sector.

He, among others, cited the Kanyika Niobium Mining Project, whose off-take is expected as soon as the developer Australia’s Globe Metals & Mining, completes on-going discussions for a development agreement with the Malawi Government.

We expect Malawi to witness the mining of more minerals other than uranium on a large scale since the mineral resource base is very diverse with very high untapped resource potential and from a geological framework of the region, major economic deposits remain to be discovered,

said Msika who made the presentation at the function on behalf of Director for Mines Department Mr. Charles Kaphwiyo.

Mining used to cater for a meagre 3% to Malawi’s Gross Domestic Product but the contribution leap-frogged to 10% of GDP when the Kayelekera Mine went on stream.

Msika said Government’s projection is that contribution of the sector to GDP will to rise to 20% when all the upcoming mining projects come into full operation.

Malawi’s other upcoming mining projects include the Kangankunde Rare Earth Project, which is estimated to be worthy over US$1-billion and a mining licence for the project located in the southern district of Balaka was granted to a local firm Rare Earths, which later transferred the permit to Australia’s Lynas Corporation.

However, the project is dragging due to legal wrangling pitting the Government of Malawi and the original owner of the Exclusive Prospecting Licence for the area, South Africa’s Rift Valley Resources which sued the Government after it decided not to renew its licence and in turn granted it to Rare Earths.

The other promising project is the Songwe Hill Rare Earth project located in Phalombe in Southern Malawi, which is owned by UK firm Mkango Resources.

The project carries a lot of hope for Malawi as Mkango Resources has just announced positive results for a pre-feasibility study that it undertook at the site.

The results have pegged the value of the deposit at US$293-million with a mining life of 18-years, and Mkango has planned to commence mine construction at the site in 2017.

The results are a major milestone for the country as they position Malawi as one of the few countries with results of a pre-feasibility study announced.

In addition to the suspended uranium mining, Malawi has large scale mines for coal and limestone for cement manufacturing while small-scale miners are mining a range of minerals including gemstones, iron ore, clay and sand.

The performance of the mining sector has generally been satisfactory with most of the major minerals mined and processed registering upward trends. The upward trend in production is a reflection of increased demand by the consuming industries, and the export market,

said Msika, whose audience at the function included the Anti-Corruption Bureau, members of the civil society, donor community and the media.

He, however, said the sector is encountering a number of challenges including outdated legislation, insufficient budgetary allocations to institutions responsible for fulfilling regulatory functions, lack of trained and skilled personnel in all mining aspects, and poor and inadequate support infrastructure.

The other challenges that the sector is facing include lack of participation by local companies, lack of mining culture among the local population and HIV/Aids.

Msika said the Government is putting in place a number of measures to address the challenges which includes the launch of the new Mines and Minerals Policy in April 2013.

The policy advocates a paradigm shift in the country’s economy from being agro-based to mineral-based,

he said.

The Government is also reviewing the Mines and Minerals Act 1981 and the Petroleum (Exploration and Production) Act.

Minister of Natural Resources, Energy and Mining Honourable Atupele Muluzi kickstarted the process to review the Mines and Minerals Act when he opened the symposium to review the Act in Lilongwe earlier this year.

In addition, the Government has introduced mining related courses at institutions of high learning,

he said Msika.

The Malawi Government is pursuing the reforms in the minerals sector under the auspices of the Mining Governance and Growth Support Project, which is being financed by the World Bank’s International Development Association and the European Union.

The activities under the project include institutional and governance strengthening, long and short term capacity building, updating of the geological data base,acquisition of high density airborne geophysical data, updating geological maps, modernising the mineral cadastre and setting up a geo-data centre for ease of data access.

The airborne geophysical survey that is carried out under the project will be followed up by a geological remapping project to be financed by the French Government.

The exercise to use modern technology as compared to previous country-wide mapping programmes will provide more understanding of Malawi’s mineral potential.

Malawi has also granted all its six blocks demarcated for oil exploration to expatriate firms with proven track record in working in environmentally sensitive environments with Block 1 granted to South Africa’s SacOil, Block 2 and 3 Hamra Oil, Block 4 and 5 RAKGAS, and Block 6 going to Pacific Oil & Gas.

 

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