Year 2014 round up: Mining reforms steal limelight – Mining Review (December 2014)

The piece “Year 2014 round up: Mining reforms steal limelight” featured below was initially published in Malawi’s Mining Review Issue Number 20 2014 that was circulated in December 2014. This is the final edition for 2014

The full edition can be read here: Mining Review No. 20 December 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. 20, December  2014, Marcel Chimwala)

Front page of the Mining Review (Issue No. 20, December
2014, Marcel Chimwala) 

Year 2014 round up

Mining reforms steal limelight

By Marcel Chimwala

Mineral sector reforms have emerged as the major issue of the year 2014 which is coming to an end this month with the new administration of His Excellency Professor Arthur Peter Mutharika taking steps to review the existing mining legislation including the Mines and Minerals Act (1981) and the Petroleum (Exploration and Production) Act (1983).

Government is implementing the reforms under the auspices of the Mining Governance and Growth Support Project, which it is financing through loans and grants obtained from the World Bank and the European Union.

The reforms have also included institutional and governance strengthening, local and short term capacity building, the updating of geological data base through acquisition of high density airborne geophysical data, updating geological maps, modernizing the mineral cadastre and setting up of a geo-data centre for ease of data access,

says Director for the Department of Mines, Mr. Charles Kaphwiyo.

The process to review the Mines and Mines Act of 1981 saw the holding of a two day symposium from July 16-17 whose opening ceremony was presided over by Minister of Natural Resources, Energy and Mining Honourable Atupele Muluzi.

Kaphwiyo says the Act is being reviewed in order to ensure that the country is able to realize optimal benefits from the largely unexploited sector.

The symposium to review the Act attracted participants from the whole spectrum of stakeholders including Government, donors, exploration and mining firms, financial institutions, equipment suppliers, civil society and the media.

We need to review the Act to put in place a viable and transparent fiscal regime that attracts investors, effectively regulates transfer of foreign earnings, ensures that a substantial amount of revenue is retained in Malawi and promotes and protects local Malawians investing in the industry,

says Minister of Natural Resources, Energy and Mining Atupele Muluzi.

Muluzi says as part of the reforms, the Government is also pursuing plans to subscribe to the Extractive Industry Transparency Initiative (EITI) to promote transparency and accountability in the sector.

Mining Policies

The mining reforms also saw the launch of the New Mines and Minerals Policy last year which is aimed at attracting investment in the sector in order to transform the country from an agro-based to a mineral based economy.

In November, the Government also held a symposium for the formulation of the artisanal and small scale mining (ASM) policy. The policy will guide the government in unlocking opportunities for the artisanal and small scale mining subsector, which is crucial in the alleviation of poverty.

Mining and Exploration Projects

Kayelekera Uranium Mine

The year 2014 also saw mining suspended at the Kayelekera Uranium Mine, which is Malawi’s largest mining investment. The investor, Paladin Africa, attributed the suspension to failure of the mine to make profits due to low prices of uranium on the global market in response to the Fukushima Nuclear Disaster, which led to the closure of several nuclear power plants in Japan.

Paladin Africa has now put the mine on care and maintenance while waiting for prices to pick up to US$75/lb for benchmark profitability.

Shayona Cement Factory Expansion

Also in the year, Shayona Cement Corporation announced an expansion project at its Kasungu Factory in so doing increasing mined quantities for limestone at the company’s Livwezi and Chikowa deposits located close to the factory.

Shayona Cement is investing US$65-million in the project, which is being implemented in phases and will see production rising to 1200 tonnes per day using rotary kiln technology.

This has emerged as a model project for Malawi as it uses up to 80% locally sourced raw materials while its competitors continue to import clinker despite the availability of limestone (a major ingredient for clinker) in the country.

Pre-feasibility study results for Songwe Hill Rare Earth Project

In 2014, significant progress was recorded at the Songwe Hill Rare Earth Project in Phalombe as the owner of the project, Mkango Resources, completed a pre-feasibility study and announced positive results, which gives hope to the sector.

The results indicate that the deposit has a net present value of US$293-million with an 18-year mine life. The firm’s President Alexander Lemon says the results have positioned Malawi globally as a potential sustainable rare earth producer.

Mkango is intending to launch a definitive feasibility study for the project with mine construction scheduled to commence in 2017.

The rare earth elements expected to be mined at Songwe include lanthanum, cerium, praseodymium, neodymium, samarium, europium, gadolinium, terbium, dysprosium and yttrium.

Malcoal’s exploration results

The other interesting news in the year came from Malcoal Mining, which released results of the coal exploration at Nkhachira that pegged a combined total in situ coal resource for the project at 38.4-million tones comprising 10.1 million tones measured, 13.8-million tones indicated and 14.4 million tones inferred category coal.

Malcoal has an operating mine at the site and is seeking to expand production to supply its 120MW Pamodzi Power Project, which it is developing at Chipoka in Salima.

Oil Exploration

The year also saw oil exploration gathering momentum in all the six blocks awarded in the country’s chunk of the African Rift System.

In Block 1 located in Northern Malawi boardering Tanzania and Zambia, the prospector SacOil Holdings completed an environmental risk screening study of the area to pave way for exploration.

In Block 2 and 3 covering the Lake Malawi area in Karonga and Nkhata Bay, Hamra Oil Holdings launched initial exploration work that include an airborne gravity, magnetic and tensor gravity survey for the project after completing an environmental and social impact assessment study that involved extensive consultations with the community.

In Block 4 and 5 located further South in the Rift System covering the districts of Nkhotakota, Mangochi, Machinga, parts of Balaka, Blantyre and Mulanje, the prospector UAE firm RAKGAS also launched preliminary aerial surveys which are similar to the airborne geophysical survey being undertaken by the Government, and do not have any effect on the environment.

In Block 6, located in Chikwawa and Nsanje, Pacific Oil and Gas is also conducting similar preliminary exploration works.

Appointments

The key feature of the year was the election of Professor Arthur Peter Mutharika of the Democratic Progressive Party as President replacing Former President Joyce Banda of the People’s Party, and just as per tradition his election saw new faces taking up positions. The minerals sector received Honourable Atupele Muluzi as Minister of Natural Resources, Energy and Mining and Mr. Ben Botolo as the Principal Secretary.

Chamber of Mines off ground

During the year, private sector representatives from the minerals sector met in Lilongwe to map the way forward for the establishment of their representative body, the Malawi Chamber of Mines.

An interim committee was formulated to oversee the take off of the Chamber with Mr. Dean Lungu, a Director for Bwanje Cement Company as the Interim Chairperson.

The Vice Chairman for the committee is Country Director for Mkango Resources Burton Kachinjika while the Secretary is Dina Longwe. Other executive committee members include former Minister of Natural Resources, Energy and Mining Grain Malunga, Paladin Africa General Manager Greg Walker, Elton Jangale, Chrispine Ngwena, Bobby Singh and Paulo Rocha. Director of Mines Charles Kaphwiyo is an ex-officio member of the committee.

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