Editorial (Marcel Chimwala): We demand transparency from govt. on Chimwadzulu mine issue

Marcel Chimwala

EDITORIAL

We demand transparency from govt. on Chimwadzulu mine issue

It is interesting that government, which usually loses court cases, has successfully vacated an injunction which an investor, Nyala Mines, obtained restraining the Ministry of Natural Resources, Energy and Mining from awarding the Chimwadzulu Corundum licence to another miner, Mwalawanga Mining Limited.

The development certainly implies that the new investor, whose hands were tied by the injunction, is now free to start work at the mine for rubies and sapphires, the most expensive gemstones which are priced more than gemstones when well processed.

In fact, there were a number of reasons why the government never granted an extension of the 10-year mining licence to Nyala ranging from delays to apply for the extension of the licence, allegations of under-declaration of revenue from the mine for tax evasion purposes and failure to meet environmental conservation requirements.

We will not go into detail to try to prove these allegations because as the case has ended in government favour, these are water under the bridge.

However, our concern is lack of transparency on how the government has taken on board the new miner for these precious stones.

We are told this so called Mwalawanga Mining Limited is owned by a local consortium with renowned legal bull Ishamel Wadi as a front man but it is surprising that the other Directors who are to benefit from this Malawian treasure are still not known.

We would have expected the government and the Directors to come forward and address the media on what their plans for the mine are, their budget for development of the mine and what they have in store for the people of Malawi and Chimwadzulu community in particular.

In fact, the government signed a development agreement with the previous investor, 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 provision of US$20,000 annually 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.

This implies that government, among other things, used this development agreement to assess the eligibility of Nyala to be granted an extension of the licence.

But what about this Mwalawanga Mining Limited; how is the government going to monitor and assess its operations if we are not told that there is a   similar development agreement in place?

The other question we have is on the competency of the company to successfully invest in such a mining venture.

We are told Mwalawanga is a new company; so did the government undertake any due-diligence on the company to find out if it has the technical know-how, financial muscle and market advantage for such a venture?

Certainly, such questions will keep on boggling the minds of Malawians more especially people of Chimwadzulu if the government continues to keep the licence terms for Mwalawanga under wraps.

This lack of transparency on the part of the government is also a threat to the strides that the country is making in fulfilling the requirements of the Extractive Industry Transparency Initiative (EITI), a global standard for good governance of oil, gas and mineral resources.

The other point is that it is laughable that guards for the two companies are still at Chimwadzulu with Nyala Guards guarding equipment and Mwalawanga guarding the precious stones which were being illegally mined by invaders.

We advise the government to sort out this mess by using its influence to do away with the previous investor and let Mwalawanga get to work.

***

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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