Technical file with Grain Malunga: A Reflection on the Mines and Minerals Act (1981)

TECHNICAL FILE

By Grain Wyson Phillip Malunga FIMMM Minerals, Geology, Environment & Corporate Affairs Consultant

A Reflection on the Mines and Minerals Act (1981)

ABSTRACT

Recent reaction from stakeholders in the mining sector has been the inadequacy of the Mines and Minerals Act (1981) in addressing issues related with transparency in handling of mining contracts by government, environmental management and community benefit sharing.

These have not been the only issues that need to be addressed in coming up with the new Mines and Minerals Act. This paper tries to highlight other shortfalls that need to be addressed in line with the Mines and Minerals Policy (2013).

INTRODUCTION

The current Mines and Minerals Act (1981) was drafted based on the existing Acts from the region, more especially Namibia and Botswana. That time Malawi was engaged in exploration activities through government which had insignificant mining operations. Malawi Development Corporation was in cement production while lime production and artisanal/small scale gemstone prospecting were under individuals.

The act had no foundation based on Mines and Minerals Policy and did not have challenges emerging from benefit sharing and sustainable development.

This paper looks at issues that make this act shortcoming to current emerging issues.

SHORTFALLS IN THE CURRENT MINES AND MINERALS ACT (1981)

The Commissioner for Mines and Minerals has been the Principal Secretary except in circumstances where the Minister may appoint another Officer to act as such. The Mines Department was established in 1983 and is not referred in the Act.

The Act does not address emerging issues that have arisen through private sector involvement in the minerals sector through exploration and mining.

Some of the issues are as follows:

  1. The need to recognize Malawi as a sovereign state with no recognition of the interests of the British Crown
  1. Mineral wealth needs to be vested in state and not the president on behalf of the people of Malawi
  1. Ministerial discretion needs to be removed through establishment of a Minerals Advisory Board to look into allocation of mineral rights for minister’s consideration.
  1. There is need to hramonise the provisions of the Mines and Minerals Act (MMA) with other Acts governing Environment, Agriculture, Land, Public Roads and water Resources.
  1. The MMA needs to be clear on issues related with security of tenure, licence retention and holding of licences for speculative purposes.
  1. Mining contracts for strategic minerals and those dealing with large scale investors require parliamentary oversight.
  1. Trading in Precious metals and gemstones should be through miners, dealers and brokers licenced through Minerals Advisory Board.
  1. Community Benefit Sharing is a serious emerging issue and must be addressed through non-tax revenue such as royalties and ground rents.
  1. The role of State Enterprises is necessary where strategic minerals of lesser value are required for infrastructure development and import substitution. State equity in strategic minerals and liquid minerals will require participation of State Owned Enterprises that will have the mandate to undertake economic empowerment through divesture.
  1. Taxation types and levels will require a stability clause in order to determine fully profitability of a project. Taxation should not be negotiated to avoid skewing and discretional tendencies that breed corruption and misunderstanding.
  1. Adherence to environmental management and rehabilitation needs to be secured through an environmental bond.
  1. Conditions for employment of expatriate staff needs to safeguard employment of local skilled and non-skilled labour.
  1. The rights of local people and minority groups need to be protected in order to encourage peaceful coexistence.
  1. The structure of the institutions under the minerals sector needs to be properly set up and enacted so that the sector is ably administered and promoted.

The private sector hopes that these issues will be adequately addressed and that the new Act will be simple, clear and will serve both government and mining companies in a manner as to benefit mining communities for promotion of sustainable development.

EXPECTATION OF ALL STAKEHOLDERS

The new Minerals and Mines Act is expected to address the following:

  1. Vesting of minerals in the state
  2. Introduction of stable taxation and fiscal regime
  3. Promote transparency in contract negotiations
  4. Introduce accountability and transparency in mining revenue management
  5. Introduction of Minerals Advisory Board under the Commission for Minerals and Mines
  6. Introduce legally binding Community Development Agreement or benefit sharing with local communities
  7. Introduction of Environmental Bond

CONCLUSION

The current Mines and Minerals Act (1981) was introduced at a time when the minerals sector was at its infancy stage and before the establishment of Department of Mines. The role of the Director of Mines is overshadowed by the Commissioner of Mines who is the Principal Secretary.

Current issues surrounding sustainable development in mining requires equitable benefit sharing among mining companies, government and mining communities in a way as to promote the development of the industry. Therefore the new MMA should promote private sector investment in mining while equally generating economic benefits to the country for current and future generation.

BIBLIOGRAPHY

Malawi Government. 1981.  Mines and Minerals Act (Cap. 61:01). Ministry of Natural Resources, Energy and Mining. (2013). Mines and Minerals Policy of Malawi, Lilongwe.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 66 (October 2018).

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

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