By Grain Wyson Phillip Malunga FIMMM Minerals, Geology, Environment & Corporate Affairs Consultant
Reflection on the Minerals Sector in Malawi
The minerals sector in Malawi is at infancy stage. Most activities are at exploration stage and very few small scale mines exist. These cannot significantly contribute to national economic development.
The Civil Society needs civic education on issues related with benefit sharing in a country that is in the early stages of mineral resources development. Their contribution sustainable development partners is welcome and their advocacy should be constructive and evidence based.
The minerals sector in Malawi is grossly misunderstood. Many think that the sector is producing and there is a lot of illicit financial flows and the people are not benefiting from their mineral endowment. This paper aims at putting into perspective what is on the ground and what needs to be done for the sector to significantly contribute to the nation’s Gross Domestic Product (GDP).
Status of the minerals sector in Malawi
The last three years have seen contribution of mining to the economy at 0.9%. The contribution to the economy has mainly come from coal, limestone (for agriculture and cement), rock aggregate and semi-precious stones.
The minerals are for local consumption with the exception of semi-precious stones (gemstones).
The rock aggregate sector makes a significant contribution to the economy of the country. About 20 operating quarries for production of rock aggregate both at commercial and project level contribute around 3.0 billion Kwacha. A boom in the construction sector is steadily increasing revenue in mining and quarrying.
Coal has the potential to grow the economy through its use as a source of energy for agro-processing and thermal power generation. Our coal fields require serious exploration and evaluation in order to promote energy generation mix and steam generation for agro-processing.
The minerals sector is at an exploration stage. This stage requires government to take the lead in undertaking grass roots exploration and mineral evaluation in order to attract foreign direct investment.
Attractive discoveries can be put on auction for government to recover its grassroots investment. This is true with high value minerals that are sought in international markets. This category of minerals include gold, rare earths, uranium, graphite, and niobium. Other minerals government can give extra attention are strategic minerals such as coal, limestone, iron ore and rock phosphates. Coal, limestone and iron ore are needed for infrastructure development while rock phosphate and iron sulphites are agro minerals that can promote agriculture productivity.
An estimated resource of 800 million tonnes of coal is obtainable in the North and Southern Karroo basins. Out of this about 22 million tonnes have been proved to exist in a number of coal fields across the country. Much of the coal was produced from Mchenga and Kaziwiziwi coal mines. Other smaller contributing mines were Mini Jalawe Mine, Chombe Coal Mine and Nkhauti Mine.
The coal is mainly used for provision of energy for different production processes in the cement, tobacco, textile, brewery, food processing and ethanol industries.
The cement industry will see an increase in production through an expansion drive by Shayona Cement Corporation in Kasungu and Cement Products Limited in Mangochi that has completed construction of a modern clinker plant at Njereza. Cement production is expected to increase from 210,000 to 350,000 tonnes per annum. Shayona Cement Corporation is currently producing 650 tonnes per day while Cement Products Limited is testing its 1,000 tonnes per day clinker plant. Malawi is geared to produce about 600,000 tonnes of cement per annum.
There is an opportunity for lime production in Malawi. The market is soil conditioning, water treatment, construction, agro processing (Sugar purification), poultry and paint industries. The country produces about 3000 tonnes of slaked lime per annum and the remaining 40,000 tonnes is agriculture lime.
Malawi has seen a proliferation of civil societies fighting for natural resource justice. This is very interesting for a country that is at exploration stage. Most of these were born to fight uranium production in Malawi with funds from anti-nuclear lobbyists. These groupings have failed to justify their relevance in other sectors such as aggregate, coal and gemstone mining. They have often targeted foreign investors who are helping government to undertake grass root exploration up to bankable feasibility undertaking. It takes a period of up to 10 years to come up with an investment decision. This is a period of mapping, sampling and testing to assess viability of a mineral deposit. This is a normal process with no hidden motives as perceived by the Civil Society and other stakeholders.
The introduction of the mining cadastre system will help clean up the minerals data base. This will promote transparency in the issuance of mineral rights once the new Mines and Minerals Bill is enacted.
Recent improvement in stakeholder relationship has been noted through the establishment of Malawi Extractive Industries Transparency Initiative (MWEITI). This process has engaged the communities, Civil Society and Government in understanding the need to be transparent and accountable on issues related with fiscal policy and management. Improvement in community benefit sharing and social responsibility has been included in the new Mines and Minerals Bill.
Advanced Exploration Projects
The country is geared to be a significant exporter of niobium, rare earths (lanthanides) and graphite. Globe Metals and Mining completed techno-economic and environmental feasibility study for production of niobium concentrate. The company is busy mobilising financial resources and forming strategic technical alliances to develop the deposit at Kanyika in Mzimba. The company will be a significant supplier of niobium in steel and space industry.
Mkango Resources is undertaking a bankable feasibility study and an Environmental and Social Impact Study for production of rare earths at Songwe in Phalombe. The company is ready to be an important supplier of heavy lanthanides for the electronic and renewable energy industry.
Bwanje Cement Company is at an advanced stage in the preparation of a bankable document for production of cement and chemical grade lime at Golomoti in Ntcheu. The company is busy talking to potential and technical partners to develop the deposit.
Optichem-Mota_Engil Joint Venture is undertaking a drilling program on Nanthache Hill in Phalombe to increase reserves for phosphate-rare earths deposit. The project is geared to make Malawi self-sufficient in supply of NPK +S fertilisers while also supplying rare earths to electronic and renewable energy industry.
Sovereign Metals is undertaking a bankable and an Environmental and Social Impact Study for production of flake graphite at Malingunde in Lilongwe. The company has touted it as a world class flake graphite found in sapprolite and easy to mine and process.
The Mining and Quarrying sector is estimated to grow at 2.3 % in 2018. This will come from coal and aggregate. The yet to be enacted Mines and Minerals Bill will boost exploration activities and the adoption of a computerised Licencing Management System. This will encourage transparency, accountability and implementation of a stable fiscal regime for the mining sector. Coal mining is expected to increase due to government’s promotion of thermal power generation and opening of export markets to Zambia, Tanzania and Rwanda.
Access to mining projects poses a challenge where low value minerals are in remote areas and capital expenditure on roads and energy makes project not viable.
The mining industry is faced with energy crisis. Paladin Africa Limited went into care and maintenance due to increasing operating costs arising from diesel power generation.
Interconnection with Southern Africa Power Pool (SAPP) through Mozambique and Zambia is seen as one of the solutions including thermal power generation using imported and local coal.
Environmental and Social Issues
The minerals sector in Malawi faces an environmental challenge in artisanal and small scale mining in the areas of gold panning, coal mining and aggregate quarrying. Gold panning in Mangochi and Balaka is creating pits and trenches that are not being rehabilitated and streams are carrying heavy soil load that is affecting aquatic life. Deforestation and social decay is expected to grow if regulatory enforcement is not effected immediately.
Coal mining has the potential of polluting river water in North Rukuru, Chombe Catchment Area, North Rumphi River and, Kaziwiziwi and South Rukuru rivers. There is fear of increase of heavy metals and destruction of habitats for aquatic life if environmental monitoring is ignored. Parliament is expected to pass an amended Environmental Management Act of 1996.
Community benefit sharing and engagement have been included in the new Mines and Minerals Bill. The Geological Survey and Department of Mines have been structured or transformed to effectively manage issues related with Occupational Health and Safety in collaboration with the Ministries responsible for Labour and Health.
Country Mining Vision
The African Mining Vision (AMV) got a boost in 2017 when the African Minerals Development Centre (AMDC) sponsored a Country Mining Vision (CMV) workshop for Malawi. Malawi responded by drafting a CMV which was synchronised with the Mines and Minerals Policy (2013).
This initiative will help Malawi link its minerals sector with local economic linkages including infrastructure development, local content and skills development.
Health and Safety
Progress has been made in the promotion of Occupational Safety and Health (OSH). Ministries responsible for Health, Labour and Mines are promoting elimination of TB in the mining sector, encouraging TB and silicosis screening and facilitating compensation for those eligible.
The following legislation and policies guide the administration of OSH in Malawi:
- Mines and Minerals Act Cap 61:01 (1981)
- Explosives Act (14.01)
- Employment Act (1996)
- Labour Relations Act (1999)
- Workers Compensation Act (2000)
- Occupational Safety, Health and Welfare Act (1997)
The minerals sector has the capacity to contribute to national economic development. New geo-resources data has been generated and institutional capacity has been enhanced through introduction of mining cadaster system and introduction of tertiary education to fill in skills gap.
Community benefit sharing and stable fiscal regime will be operational after enactment of the new Mines and Minerals bill.
There is high probability that within the next four years Malawi will see significant contribution of the mining sector to its economy. The Civil Society Organizations should be a partner in sustainable development and not being used as a destabilizing element in the promotion of the minerals sector in Malawi. Meaningful economic development will come from local participation in mining and not fighting for community development programs and corporate social responsibility. Let us think big as a nation.
This piece was initially published in Malawi’s Mining & Trade Review Issue Number 64 (August 2018).