Community pleads with Malawi govt to extend Nyala’s ruby mining licence

Community pleads with govt to extend Nyala’s mining licence

…“The company is doing a lot to develop the area”

…Govt needs to discuss with Nyala as partners – Chamber

By Marcel Chimwala

Members of the community in Chimwadzulu area in Ntcheu District where a local company, Nyala Mines Limited, has been mining gemstones have backed the company to continue its mining activities in the area so that they keep on benefitting from its corporate social responsibility (CSR) activities.

Mining & Trade Review interviewed a cross-section of people in the area following government’s decision not to renew a 10-year mining licence for Nyala Mines, which was granted in 2007.

Minister of Natural Resources, Energy and Mining, Aggrey Masi, has written the company informing it of the government’s decision not to renew the licence mainly because Nyala sought the renewal a few days before the   expiry date which is contrary to legal requirements which stipulate that a holder of a mining licence must apply for renewal at least a year before expiry of the licence.

But the members of the community told Mining & Trade Review that the government needs to discuss with Nyala Mines as a partner in development, iron out their   differences and map out ways to continue with the project.

The fact is that if Nyala leaves this place, we, the people of this area will suffer while the government officials making these decisions in the boardrooms at Capital Hill in Lilongwe continue with their opulent lives. We are saying we will suffer because the investor has employed about 50 people from this area and assist us in different ways as part of its CSR programme,

said the area’s Group Village Headman Katsekera.

Nyala Mines’ CSR activities have, among other things, included repainting of Katsekela Health Centre, building a placenta disposal at the site, construction of a borehole at the hospital premises and provision of shelves for the health centers’ dispensary. The company also uses its vehicles to ferry critically ill patients to Ntcheu District Hospital.

In the education sector, Nyala Mines has assisted the community with different interventions including construction of two classroom blocks, construction of four teacher houses and maintenance of two already existing houses at Kandoma Primary school, and payment of monthly salaries to 12 volunteer teachers at Kandoma and Katsekera Primary Schools.

In addition, the company buys school uniforms for some needy pupils, and supplies stationery equipment to the schools.

In a few years, Nyala has done a lot for our area as compared to previous holders of the mining licence. So we, people of the area, believe that if they continue, they will finance more development projects which will change the face of this area,

said the Group Village Headman.

His sentiments were echoed by Chairman of the Dzonze Development Fund, a local committee that oversees development projects conducted by the company, Helbert Chikhosi, who asked the government to reconsider its decision and renew Nyala’s licence.

The government has to listen to the voice of us, the people, and extend the licence for Nyala Mines because they have shown that they have the passion for development of the area,

he said.

A study report by the Tonse Tipindule Project, a mining governance project which was being implemented with funding from the Tilitonse Fund, also commended Nyala Mines for its comprehensive CSR programme.

It said regardless of the absence of a memorandum of understanding between the company and the community, Nyala has assisted greatly in the development of the community in several respects.

It is pleasing to note that besides carrying out several CSR projects, Nyala Mining Company has by far managed to employ community members surrounding Chimwadzulu hill mainly as guards and brick breakers,

said the report.

Nyala Mines Project Geologist Thomas Mussa-Mbewe also bemoaned the government’s decision not to renew Nyala’s licence saying it will have a huge impact on the lives of the employees of the company.

I greatly feel sorry for the 50 unskilled locals employed by Nyala Mines. If the mine closes, what will be their source of livelihood?

It is sad that instead of making decisions to create more jobs, the government has killed jobs for Malawians through such an unfortunate decision,

he said.

But Director for the Department of Mines in the Ministry of Natural Resources, Energy and Mining, Atileni Wona said Nyala has the right to appeal against government’s decision.

All is not lost for the company as there is still a chance to appeal and the government will look at the grounds of appeal and reconsider whether to renew the licence or not,

said Wona.

Nyala Mines signed a development agreement [see this contract here] with the Malawi Government on June 18, 2008 and the agreement includes that government encourages 30% local participation in the mine, 10% of the equity of Nyala is issued to government, and also government receives 10% royalty of the gross value of corundum exported.

201711 Malawi Mining & Trade Review Nyala Mine Ruby CSR, Education, Water, Health, Environment

The development agreement also provides that government receives an amount equivalent to the sales royalty once the corundum has been cut, polished and sold by Nyala’s Canadian partner, Columbia Gem House Inc.

Under the agreement, Nyala is exempted from resource rent tax; value added tax on capital purchases, duty and tax for imported materials, equipment and consumables for use in mining and processing of minerals.

There is also a provision for training to Malawians, support to local education and health sector and provision of US$20,000 for corporate social responsibility projects in the locality.

The development agreement also requires Nyala to set up a lapidary in Malawi to ensure that the minerals are processed locally.

The licensing committee examined these terms contained in the development agreement and mining license requirements as stipulated by various legal instruments on mining and environmental protection before making the decision,

said Wona.

But Managing Director for Nyala Mines, Abdul Mahomed, described the government’s decision as unfair to his company which has invested lots of money to develop the project including purchase of state of the art mineral processing equipment.

It is very disappointing that the government is killing this investment by a local company which has clearly demonstrated its passion to develop local communities through various CSR activities,

said Mahomed.

201711 Malawi Mining & Trade Review Nyala Mining Ruby Abdul MahomedHe said contrary to government claims, his company has met all the licence requirements including payment of royalties and taxes and execution of an environmental and social impact assessment study.

Mahomed said:

We have worked hard to develop this project. The stage is now set and all we need now is support from all stakeholders to realize the true potential of this deposit and the benefits it can bring to the people of Malawi.

We need to focus on the key message which is the amazing future plans drawn up for Nyala as well as the gemstone sector in Malawi.

He said, currently, his company is exploring various options to deal with the issue, and the first of which will be to engage with the government to seek an amicable resolution.

National Coordinator for Malawi Chamber of Mines and Energy Grain Malunga commented that the government and Nyala Mines would have avoided the current scenario if they had worked closely as partners.

Since the government has 10% shares in the mine, the Secretary for Mines or Treasury automatically sits in the board of Nyala so I think if there were any issues against the company, they would have been sorted out by the board,

he said.

Meanwhile, over 500 illegal miners have invaded the mine after getting wind of the news that government has rejected to renew the company’s license.

The illegal miners include children who are deserting classes to look for the precious stones.

Mahomed said:

The black-market has taken hold and foreigners are taking advantage of the poor people of the area and the result will be an increase in alcoholism, prostitution and violent clashes between rival groups.

I pray to God Almighty that he protects our community from this foreseeable calamity.

As we went to press, government had deployed police officers to provide security at the mine.

201711 Malawi Mining & Trade Review Nyala Mine Ruby, Equipment, Staff

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 55 (November 2017).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

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4 responses to “Community pleads with Malawi govt to extend Nyala’s ruby mining licence

  1. The ruby pic is just amazing,that’s pigeon blood the top grade ruby, that stone alone can cover all the costs for the so called CSR. For me I think nyala mine can do better than these structures much as various stakeholders are lobbying for CSR in the communities close to the mine,there should also be major projects at district level,something that the district’s will benefit for a long time, i.e secondary school,markets,multi purpose hall just to name afew.
    This mine has been operational since the 1950’s but the country hasn’t benefited much,a good way forward is for government to engage expert Gemologist who will negotiate with potential investors including nyala, in other countries these rich mines are co-owned by governments.

  2. Would your paper do investigating journalism as to how much this company has managed to sell Malawi rubies and sapphires for the past 10years. Coz as I read through, I could see this was all the community and the owner fed u as gospel truth, we are also told the company has been making loses ever since and government did not make any monies despite having 10% stakes in the venture, why and why would someone want to keep on investing his/her scarce resources on something he or she cannot make any gains and we are talking of 10 years.
    Find out who buys these rubies and at how much, the company convinced government they would add value the stones right here in Malawi, were you guys able to see the lapidary place?
    Our neighboring country, new in ruby business are already selling theirs in Singapore through auction and recently made over $50m(quarterly sales) and its all over the papers, why is it different with Nyala, why the secrecy (this is what your paper should dig). Its unfortunate that this mine which opened in 1958 has operated in secrecy and we thought the coming on of Nyala would be different.

    I hope government fast track the process of awarding the mine to whosoever so that there is order at the site. And government should show interest on how everything is done at the mine up to the selling point, it appears the country is shortchanged or has been shortchanged by different companies that have been licensed to mine these rare stones.

  3. Pingback: Editorial with Marcel Chimwala: Malawi government must cautiously handle mining licence issues | Mining in Malawi·

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