Malawi’s Mining, Oil and Gas News #26: May 2017

Malawi’s Mining, Oil and Gas News #26: May 2017

Malawi’s oil contracts were published online this month which is a huge step towards greater transparency in the sector.

Society & Extractives

The Anti-Corruption confirmed that it is investigating payments made by RAK Gas in relation to the awarding of oil contracts:

Sources in the Anti-Corruption Bureau, as well as senior members of Banda’s People’s Party, who asked not to be named, also queried a pre-election payment of $5-million by RAK Gas to Banda’s Mudzi Transformation Trust, which built or renovated houses for the poor in Malawi.

Chikusa and Banda’s spokesperson, Andekuche Chantunya, both told the CIJM that the donations were part of the company’s corporate social responsibility programme.

The Malawi government divided Lake Malawi into six segments for oil and gas exploration.The licences for blocks 4 and 5 were held by RAK Gas MB45, a Cayman Island subsidiary of the state oil company of the Ras Al Khaima Emirate in the UAR.

Malawi’s graft-busting body, the ACB, confirmed that it is probing RAK Gas but declined to provide more details.

“We are conducting investigations in relation to payments made by RAK Gas. The bureau will not be drawn to comment more on the issue, as doing so may prejudice the investigation,” said ACB spokesperson Egrita Ndala in an e-mailed response.

Hon. Werani Chilenga MP, Chair of the Parliamentary Committee for Natural Resources and Climate Change ‘warn[ed] government on costly oil exploration shortcuts‘:

It is always surprising that despite the absence of petroleum policy, the government thinks the process of awarding licences and subsequent exploration exercises are still justified. But we are saying let us have the policy and the new act in place before we push for exploration. We are not against the oil exploration, we are against using shortcuts in the process

Discussion the boundary dispute between Tanzania and Malawi over Lake Malawi continued to dominate the extractives related headlines. This followed the Tanzanian High Commissioner to Malawi’s comments about sharing oil resources:

Tanzania has now started talking. The statement by its High Commissioner to Malawi, Mrs. Victoria Mwakasege, that her country wants to benefit from the oil resources in Lake Malawi should prod Malawian authorities to do two things: one to expedite the mediation talks on the dispute between the two countries, and two, to bring on board Mozambique which also shares the lake.

International Women in Mining and Adam Smith International released the report ‘Women in Mining, Can a mining law unlock the potential of women?’ focused on Malawi and Sierra Leon as case studies based on interviews with 40 people in the mining sector. The analysis identifies five enabling factors and fifteen targeted, actionable recommendations ‘to unlock the potential of women working in mining’.

In other news, police officers were dispatched to address ‘small-scale illegal mining’ for alluvial gold in Namalaka, Mangochi. And Gregory Gondwe, writing for the Centre for Investigative Journalism Malawi, reports that the

Government of Malawi has been accused of colluding with several mining companies to exploit natural resources at the expense of local communities who are promised either compensations that never come or end up having their resources damaged and polluted.

Private Sector

Mkango identified new zones of high grade uranium, tantalum and niobium at Thambani in Mwanza. The company released Financial Statements and Management’s Discussion & Analysis for period ending 31 March 2017.

Paladin also released its reports for that period. The Nation reported that there is ‘Hope for Kayelekeraalthough our financial model shows that price for uranium oxide still needs to more than double for production to resume.

Government

Following confirmation by the Anti-Corruption Bureau that it is investigating payments made by RAK Gas in relation to its oil contracts and licences, the Department of Mines shared with The Nation a list of other companies that had applied for oil exploration licences but were not successful (all six blocks have now been awarded).

According to Chiwambo, some of the companies on the waiting list, include Bahari Resources Limited, which is a private Channel Islands-registered company with oil and  gas interests offshore the Comoros Islands; Pan African Oil Ltd, which provides exploration of crude oil and natural gas projects and was incorporated in 2007 and is based in Calgary Canada; Nu Energy Petroleum Corporation and Kainsha Energy Limited of Zambia.

The government has also confirmedthat it is consulting on the addendum negotiated to address weaknesses in the production sharing agreements signed eight days before the 2014 elections. According to one unnamed ‘expert’ interviewedby The Nation,

This delay is denying Malawians of the vital information as to whether Malawi has oil and gas or not. The activities being delayed can also help Malawians to know the actual benefits to be accrued from the oil and gas sector.

President Mutharika opened the 4th ordinary session of the Pan-African parliament and the took the opportunity to make his sentiments clear to Tanzania about where he stands on their territorial claim:

Our national boundaries should never be an excuse for division. I have used the word excuse because excuses are not reasons anyway. From the 1890 Heligoland Treaty to the 1964 Resolution on Border Disputes among African States by the OAU, there has never been a reason for disrespecting the territorial integrity and sovereignty of nations. Africa did not come to be what it is by mistake. It is then wise to remember that we co-exist peacefully because our forefathers who founded the countries we govern today valued unity in spite of our boundaries.

In 1964, we all pledged that we will respect the borders we found by colonialism. In Resolution 17(1) of the First Ordinary Session of the Assembly of Heads of State and Government of the OAU, all member states solemnly pledged and declared “to respect the borders existing on their achievement of national independence.” The most outstanding of those forefathers was Julius Nyerere who sponsored the resolution and led Tanzania in playing an active role in respecting the territorial integrity we inherited from colonialism. Paradoxically, our unity lies in the borders that divide us. On 6th March 1997, in Accra, the founding President of Tanzania, Nyere himself, said we must continue respecting the borders we found because “without unity, there is no future for Africa.”

This came just after ‘The cat has been let out of the bag’. Kasakura wrote that in his column with The Weekend Nation after Tanzania’s High Commissioner in Malawi, Victoria Mwakasege, made these comments:

It is not a secret that Malawi has started exploring oil on the lake. In as far as we are concerned, we would also want to benefit from the same resources.

That is the way things should be, but we need to find a solution to deal with these matters and the talks will give us a direction on the way forward on the matter.”

The issue about Tanzania publishing a new map was heavily misinterpreted.

Our position on the lake has never changed because we have always maintained that our common border is in the middle of that lake.

The issue is that we always demarcate new districts and regions and, therefore, time and again we publish new maps to highlight those changes.

Malawi continues to wait for the outcome of mediation headed by former Mozambican President Joaquim Chissano. Malawi’s Minister of Foreign Affairs and International Cooperation Francis Kasaila said

We vehemently protested the publication of that map. But what we were told by the government of Tanzania is that it was a mistake by a certain overzealous official. They, however, said that did not represent the official position of their government. We hope that the mediation will bear fruits. The second-round of talks should take place in the coming month, after it was rescheduled due to other commitments by the mediation team members.

Tanzania at a late stage indicated its government representatives were not available for talks with the High Level Mediation Team in South Africa on 8 and 9 May. Kasaila said that Malawi could take the case to the International Court of Justice:

The government of Malawi has been committed to the mediation process and peaceful resolution of the dispute through contact and dialogue but we are now ready to take Tanzania to the International Court of Justice because they have been stalling the mediation efforts since 2012

Former President Joyce Banda, who has not returned to Malawi since her loss at the 2014 elections, also spoke about the dispute with Tanzania.

I don’t want to be dragged into any politics over the Lake dispute. Lake Malawi belongs to us. History supports us in totality. This is not the time to play politics over this matter. Let’s unite in defending what belongs to us.

I am particularly concerned with the recent remarks by the Tanzania envoy seeking for their share on the oil exploration. This is a different matter all together, which means their claims for the Lake are on resources, which must not be entertained at all cost.

Parliament opened this month. In his State of the Nation Address, President Arthur Peter Mutharika said of the mining sector:

Mining Development

Mr. Speaker, Sir, the mining sector has potential to significantly contribute to the country’s sustainable economic growth and development. During the year under review, Government implemented several initiatives which included:-

  • the establishment of a modern geo-data management platform to provide investors with a trouble-free access to geo-scientific information essential for making well informed mining investment decisions;
  • the setting up of a modern computer-based mining cadastral system to provide a more transparent, effective and efficient platform for the processing and management of mineral rights; and
  • the review of the Mines and Minerals Act of 1981 to align it with the national Mines and Minerals Policy.

Mr. Speaker, Sir, Government will continue advancing various reforms to support the mining industry in order to help boost the country’s economy by providing competitive mining incentives, equitable shares of profit, sound infrastructure development and local community investments.

The Budget Statement is available here.

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