Malawi’s Mining, Oil and Gas News #31
November & December 2017
Mining in Malawi turned 5 in November! Towards the end of the year exploration companies Mkango Resources and Sovereign Metals made some promising announcements, a National Alternative Mining Indaba was held, we continued to struggle with electricity as a nation, the Mines and Minerals Bill was yet again not tabled in parliament, and more news!
First, take a look at the Mining & Trade Review’s top mineral sector projects in 2017.
Hamra (petroleum exploration blocks 2 and 3) held a number of meetings as part of its exploration activities, reminding the public that oil production, should it take place, is a long way off. The reception was mixed: Chiefs want training before oil exploration; Upland oil exploration meets resistance in Northern Region; and Karonga communities fight Hamra: Expert says ‘no oil yet’ in Lake Malawi.
In the meantime, Government committed to finalising its petroleum policy, but appears not to have met its own deadline. And the Anti-Corruption Bureau continues probing former president Joyce Banda’s Mudzi Transformation Trust in relation to payments received from RAK Gas that allegedly are connected with the award of petroleum licences and contracts.
Business & Infrastructure
Electricity – or lack of it – has been a challenge for industry and households that are connected (less than 10% of the population at present, which is why this issue will not be a deal breaker in the 2019 election). The government is in the process of procuring and installing generators in Mzuzu, Lilongwe and Blantyre; the electricity tariffs are going up as a result.
The World Bank launched three reports on Malawi’s economy and business sector.
- Malawi Economic Monitor, November 2017 : Land for Inclusive Development
- Summary of Malawi investment climate assessment
The latter paper,
addresses several key obstacles that are slowing down the investment climate in Malawi. A major issue is Malawi’s competitiveness; Malawi has a lower cost of labor than any other comparator country in its region. However, despite this advantage, it remains extremely uncompetitive in the international economy. Investment climate characteristics could explain the difference in Malawi’s competitiveness as macro-instability along with lack of access to financing play a key role. Other major business constraints are the lack of electricity through out the country, lack of available skilled workers, crime, and corruption. The paper goes on to give broad recommendations on how to solve these issues.
Yet there are some promising developments:
- Malawi to start construction of Mzuzu international airport in January 2018
- Vale, partner Mitsui ink $2.7bn Nacala coal corridor funding
- Minister Mussa launches Buy Malawi Strategy website with calls for patriotism
President Arthur Peter Mutharika opened parliament in November and the Leader of the Opposition Lazarus Chakwera responded. Mining and petroleum were not explicitly mentioned although electricity was discussed. The Mines and Minerals Bill was not tabled.
The World Bank in their recent update on the Malawi Mining Governance and Growth Support Project indicated the bill (of which their loan financed its development) will be tabled in February 2018.
The Third Malawi Growth and Development Strategy is complete with the aim of securing single-digit inflation and a GDP growth rate of over 7%. Mining is no longer listed separately as a priority sector.
Mkango and Sovereign Metals exploration
Mkango Resources entered an agreement with Talaxis, a subsidiary of SGX-listed Noble Group, to fund the development of its Songwe Hill Rare Earths Project in Phalombe, Malawi. According to the agreement,
[…] Talaxis will fund a bankable feasibility study in return for a 49-percent interest in the project. Talaxis will also have the option to acquire another 26-percent stake by arranging further funding to develop the project.
In addition, Talaxis can acquire a 49-percent interest in a new venture established by Mkango focused on neodymium powders and magnets, including Mkango’s collaboration with Metalysis. After those project investments are completed, Mkango will retain a 25-percent stake in Songwe, free carried to production, and a 51-percent in interest in the new venture.
The company was also granted an exclusive prospecting licence targeting nickel and cobalt at Chimimbe Hill nickel in Mchinji district, central Malawi.
Company fully funded to complete PFS and DFS: Recent A$6.5M capital raise to Australian and North American institutions enabling completion of all technical works associated with prefeasibility and definitive feasibility studies.
Experienced company personnel appointed: PFS Project Manager, Environmental Manager and Malawi-based Operations Manager appointed. Key consultants appointed: Metallurgical, environmental, groundwater and tailings consultants appointed. Further appointments to occur in the coming weeks.
Key work programs underway to fast-track completion by mid-2018: Baseline environmental studies have been ongoing since April 2017, PFS metallurgical program has commenced at SGS Lakefield in Canada.
Resource infill and regional exploration drilling to commence shortly: 6000m resource infill and regional drilling program set to commence shortly.
To find more about this project, take a look at the company’s November 2017 presentation.
In mid-December, the Natural Resources Justice Network convened the third National Alternative Mining Indaba. This usually brings together a diverse group of stakeholders including government. However, government did not attend because, according to Sangwani Phiri, spokesperson for the Ministry of Natural Resources, Energy and Mining,
[…] the mining conference’s first day coincided with a tree planting exercise presided over by President Peter Mutharika; hence, the absence of the ministry’s officials at the opening of the conference.
Bits & bobs
And one of Malawi’s own, Bushiri finalises a $200mil deal with South Sudan for roads and mining.