Wrangle over Ntcheu rubies, Malawi – Mining & Trade Review

201803 Malawi Mining & Trade Review Cover Ruby

Wrangle over Ntcheu rubies

…Nyala Mines Limited injunction vacated

…New owner kick-starts geological assessment

By Chiku Jere

Government has won a legal battle involving mining rights for the highly-valued Chimwadzulu Hills corundum deposit in Ntcheu after previous tenement holder, Nyala Mines Limited, had sought a court injunction stopping authorities from awarding the tenement to a new applicant.

Acting Director for Department of Mines Atileni  Wona confirmed to Mining & Trade Review that the new licence holder Mwalawanga Mining Limited which was awarded the mineral rights for Chimwadzulu was failing to kick-start its operations on the mine site due to Nyala’s court action after government rejected the latter’s application for renewal of the mining licence.

The government rejected Nyala’s renewal of the licence due to the company’s breach of some licence requirements, among them, failure to submit the application a year earlier before the expiry of the 10-year licence.

It is also alleged that the company was under-declaring production and was incessantly claiming that it was not making any profits, which deprived government of revenue from the extracted minerals.

New licencee Mwalawanga Mining Limited is said to be owned by several individuals, among them, lawyer Ishmael Wadi, who is running front-line operations.

When Mining & Trade Review inquired about how far the new company has gone in as far as commencement of operations, Wadi said the company is ready to start implementing plans, but it was failing to go full-throttle because of the legal battle between government and the previous licence holder.

We have already been formally introduced to the communities, and we have started partial engagements with them in as far as corporate social responsibility and community development agreement are concerned. We, also, have deployed our geologist on the site who is doing some geological assessment. The only thing holding us back is the court case between the previous licencee and government. Once that is cleared, we are ready to go,

said Wadi.

He also reported that Nyala has maintained its security personnel at the site who are guarding the new equipment that the company bought.

So as you can see, there is need to have these issues amicably ironed out first before we fully start our operations,

said Wadi, adding that his company was open to discussion with Nyala for the two entities to reach a deal which will allow Mwalawanga to hire or rent Nyala’s equipment.

But Wona said the successful vacation of the injunction by government means that the new licence holder can go ahead with operations, as the court found that the grounds of argument that Nyala Mines Limited presented were not holding water.

In essence, the court found our action of rejecting Nyala’s licence renewal application not in conflict with any law, hence the vacation of the injunction implying that government’s decision has been upheld and validated,

claimed Wona.

Meanwhile, US-based buyers for Chimwadzulu mine products have expressed interest to work with the new licence holder in ensuring that there continues to be a ready market for the products.

US-based International Mining Consultant, David Hargreaves of Fair Trade Gemstones Ltd, told Mining & Trade Review in an email that despite the change in ownership of the mineral rights, his company is still interested to continue buying from the mine and promoting it worldwide.

He said:

I am a regular reader of your magazine. My interest in Malawi dates back to the early 1990s when I redeveloped the Chimwadzulu gemstone mine.

My company, Fair Trade Gemstones is still interested to buy from the mine and promote it worldwide through its associate, Columbia Gem House of the USA.

Columbia Gem House has done much work in developing the marketing and the financing of local facilities, including schools, hospitals and water.

Hargreaves also said he could be materially useful to the restoration not only of the mine but also the furtherance of the gemstone industry in Malawi.

If any of the involved parties wishes to contact me, we can progress. I bring over 20 years of experience of the project to the table. I appreciate that Malawi would like to build a mining industry, but it needs help. I consult to many of the leading gemstone producers worldwide and would like to help Malawi,

he said.

Wadi welcomed the proposal from Fair Trade Gemstones saying his company is ready to work with any party in the development of the mine at all levels starting from production to marketing.

I find their proposal interesting, let them come up with something on the table,

he said.

Rubies and sapphires are highly valued gemstones and when well processed, their prices outdo diamonds on the world market.

Government has not yet made public the terms of the licence for Mwalawanga and when asked in an earlier interview Wona only said “we are working on the terms.”

However, the Government signed a development agreement with the previous licence holder Nyala Mines which stipulated that locals have 30% participation in the mine, 10% of equity is issued to government, and the government also receives 10% royalty of the gross value of corundum exported.

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 annual 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.

201803 Malawi Mining & Trade Review Cartoon Ruby Mine

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

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

 

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