Malawi’s Chimwadzulu ruby mine saga – Mining & Trade Review

Chimwadzulu mine saga

…Government awards Ntcheu rubies licence to new miner

…Security dogs deployed on mine to guard against invaders

…Nyala claims there is a lot of mischief and vows to fight on

201801 Malawi Mining & Trade Review Cover

By Chiku Jere

Government has confirmed that it has awarded the Chimwadzulu corundum mining license to a new company, Mwalawanga Mining Limited, after rejecting an application for license renewal by previous tenement holder, Nyala Mines Limited, due to the company’s failure to meet a number of license obligations.

Speaking in an interview with Mining & Trade Review, MinesDep artment Acting Director Atileni Wona said the department went ahead to award the license to a new applicant after giving the previous holder ample time to appeal.

Yes I can confirm that Nyala Mines Limited are no longer owners of the Chimwadzulu corundum mines. The licence has been awarded to Mwalawanga which is owned by lawyer Ishmael Wadi and his associates. The previous owner did not come forward with the grounds of appeal in a set period of time which made us go ahead and award the rights to another company,

Wona explained.

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

Nyala Mines signed a development agreement with the Malawi Government stipulating that locals has 30% 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.

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

The licensing committee examined all these terms which were contained in Nyala mines development agreement and mining license requirements as stipulated by various legal instruments on mining and environmental protection, before making the decision to reject the renewal of the licence,

Wona said.

Meanwhile, Wona has said the Department of Mines will soon be formally introducing the new investor to Ntcheu District Council as well as to the Chimwadzulu area community.

Responding to this publication’s inquiry about Mwalawanga Mining Limited’s immediate and long term plans, Wadi, who is said to be a front man for the new     company’s activities, gave an excuse that he was in a meeting, promising to call back later with a brief explanation of whatever developments they intend to implement.

However, Nyala Mines Limited Managing Director Abdul Mahomed said his company is not aware that the government has awarded the mining licence to a new company.

This is news to me. It seems there is a lot of mischief on the part of those handling the issue on government side, but on our part, we will still pursue the issue until justice is served,

Mahomed said.

In a previous interview Mahomed expressed dismay with government action to reject his application to renew the licence, calling it unfair to his company which had invested lots of money in the mine.

He described the grounds under which his licence renewal was rejected as not holding, saying during the years of operating the mine, his company was fulfilling all the   requirements such as payment of royalties, taxes and commissioning 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.

Mining & Trade Review is yet to know the terms of the new licence but can confirm that the new company has already announced its presence in the area by, among other things, engaging a security company that has deployed their personnel who are using trained dogs to guard the area.

Project Officer (Extractives) for Quadria Muslim Association of Malawi (QMAM), a civil society organisation which has been implementing a mining governance project in the area, Ismael Biswas, welcomed the awarding of the new license saying it shows that the future of the mine is now known since things were getting out of control after the community learnt that the Nyala licence had expired.

He said he expects government, through the Department of Mines, to properly inform Ntcheu District Council bearing in mind that the council has been involved in the developments that have been unfolding at Chimwadzulu mining area.

Doing so will eliminate inconsistencies in terms of information flow between the Department of Mines and the council,

Biswas said.

The QMAM Officer who has been working with the people on the ground in the area through sensitization and empowerment programmes also said that it is imperative that the new company engages the community first before commencing mining activities.

The company should know that the community is well informed on mining issues and there exists a working vibrant committee that oversees issues of mining around the Chimwadzulu area, through which the company can engage the community to obtain a social licence,

he said.

He also said through engagement, the company should seal a binding development agreement with the community to allow the people from the area benefit from the mineral endowment of their area.

This, Biswas said, is a very important step to take as it will help the company forge a working relationship with the community which has been deprived of tangible developments from mining activities that started some 40years ago, in 1970s in the area.

In an earlier interview with Mining & Trade Review, Chairperson for Tonse Tipindule Committee (a community action group formed by the civil society under the Tilitonse Fund-financed mining governance project) from Katsekera area where the mine is located, Nazalio Linyenga, called on government to come up with an arrangement which will involve training members of the communities in artisanal mining to allow them mine the rubies and sell them to the licenced company.

This can be one way of empowering the communities. But if government awards a licence to a new company, then a clear development agreement should be entered between the company and the people from the area to ensure that we benefit from the mineral endowment found beneath our land,

he suggested.

Linyenga was speaking on the sidelines the 2017 Alternative Mining Indaba organized by Natural Resources Justice  Network (NRJN) with financial support from Open Society Initiative for Southern Africa (OSISA) in collaboration with Norwegian Church Aid (NCA) and Oxfam.

Soon after news spread that government has rejected to renew Nyala Mines licence, illegal miners invaded the area and buyers from as far as Mozambique and other neighbouring countries were reportedly seen in the area.

Community members benefited from this period of chaos by selling minerals they extracted at prices ranging from K20,000 to K1million. I know two youngsters who became rich overnight and bought cars,

said Linyenga.

 

However, he said the illegal mining has now been stopped after government deployed the police, who were later replaced by dog handlers reportedly hired by the new licence holder to guard the area.

Rubies are one of the highly valued traditional cardinal gemstones identified by pink to blood-red (pigeon blood) colour whose quality is determined by colour, cut and clarity along with carat weight.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 57 (January 2018).

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

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