The piece “Malawi tables mining prospects to investors” featured below was initially published in Malawi’s Mining Review Issue Number 28 2015 that is circulating this August 2015.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Editorial: Malawi must protect its local industry
In the recent post on Eland Coal Mine, you will notice that the local coal industry is feeling the pinch of imports choking the market for coal to the effect that Company Executives are pleading with the government to find a way of dealing with the situation.
It is said in Tanzania where there was a similar situation; the country’s government has banned coal imports to protect the local industry.
The Tanzanian situation is worse still having a knock on effect on the revenue of Malawian companies which used to export to Tanzania such as Eland Coal Mines.
First to express worry over the situation in one of our previous editions was Intra Energy which owns the Nkhachira Coal Mine in the same Northern Region. Its Country Manager Mr. Eugene Khoriyo urged Malawi Government to introduce limitations on coal imports in order to save the local coal industry.
Now it is Managing Director for Eland Coal Mines Mr. Biswick Kaswaswa repeating the same story, which shows that there is indeed a problem here for the government to look at.
We understand that Malawi is a free market and is a signatory to a number of free market treaties which can stand in its way if decisions are made to protect the local coal industry.
However, we also feel Malawi is a sovereign state and the decisions made by its leaders are primarily meant to protect the citizens.
In this vein, we are not looking at protecting the companies, which we understand, have an initial goal to make profits. Rather, we are looking at the plight of the employees of the coal mining companies who stand to lose their jobs if the companies close their mining operations.
Of course, we understand that local companies need to have the stamina to compete globally in this free market era. However, we also have to bear in mind that due to several factors, among them lack of availability of cheap and reliable power, production costs for coal and other significant minerals in Malawi are higher than in neighbouring countries.
On that note, we say that it is not only the coal subsector that needs such protection. Cement producers, which are also big employers, too need similar protection.
So, if Tanzania has made that decision to protect its local industry, what is failing us Malawians?
It was not a long time ago that we used to have long queues at pump stations due to scarcity of fuel. It was said that the reason for it was low foreign exchange levels at the country’s reserves which made it impossible for the country to buy adequate fuel.
The country’s economists said such a situation resulted from the country’s huge appetite for imports thus we have been importing more than we are exporting.
We at Mining Review believe embracing a policy to protect our local industry and nurturing it can help us to resist from falling into the same trap again.
We, therefore, have hope in the words of the State President His Excellency Professor Arthur Peter Mutharika who pledged to protect investors “fiscally and physically” in his address at the recently held Malawi Investment Forum.