The piece “Malawi Government’s side on Globe Metals & Mining Kanyika Niobium Project” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 36 that is circulating this April 2016.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Malawi Government’s side on Globe Metals & Mining Kanyika Niobium Project
There have been conflicting statements on the way forward for the Kanyika Niobium Project, which is expected to produce the next big mine in Malawi after the Kayelekera Mine in Karonga. General Manager for Globe Metals & Mining, the developer for the project, Neville Huxham, lashed out at Mining & Trade Review for publishing in the February 2016 edition that development agreement negotiations for the project were concluded. In cementing that we rightfully quoted the government in that article, we publish the questionnaire interview that we had with Government spokesperson on mining issues in the Ministry of Natural Resources, Energy and Mining, Levison Undi.
Question: I understand that the government granted a mining license to Globe Metals & Mining for the Kanyika Niobium Project which was conditionally tied to the successful conclusion of negotiations for the development agreement. What is the progress on the negotiations for the development agreement?
Response: Negotiations were finalized.
Question: The information we have indicates that Globe Metals submitted a draft development agreement similar to what government has with Paladin Africa on Kayelekera Uranium mining, which gives the government 15% shareholding in exchange for a reduction of the royalty rate from the 5% stipulated in the laws to 3%. What is the position of government on this kind of a suggestion?
Response: Globe’s Mining Agreement has nothing to do with Paladin’s Agreement. Yes Globe submitted a draft agreement which was discussed with government on a similar format to that of Paladin agreement but the terms were completely different. Government has a 15% shareholding but the royalty to be paid by Globe is 5% as stipulated in the Act.
Question: Is the government deliberately dragging its feet in concluding the mining deal? Some quarters claim that the delay is to allow the passing of the revised Mines and Minerals Act which will, obviously, have impact on the mining agreements, how true are such insinuations… and is the Kanyika Niobium project a victim of the same?
Response: As indicated above, the negotiations were finalized. The Mining industry is going through a down turn because the prices of most of the metals are very low. Globe is therefore looking for partners to finance the project. Nothing to do with the Development Agreement. There is nothing in the new mining act that can impact on the mining agreement. The new changes in the draft Mines and Minerals Act like Community Agreements were already taken on board in the mining agreement.
Question: When should we expect the discussions to be finalized since four years have passed and the echoed song on this issue has been “we are still discussing” which has proven to be very frustrating to both the investors and the community that would benefit from the mine activities?
Response: Globe will require more than US$250 million to invest in the mining operation. This magnitude of money is usually raised through financiers such as banks. As indicated above the metal prices are very low now and no banks are willing to lend finances for new mining projects. Globe is facing the same problem of identifying a financier. Globe has announced this position on its website which I am sure Mining and Trade Review has been following as it has written articles on the same before. The investor is NOT frustrated with Government.
Question: How do you assure the Kanyika community of the future of the project understanding the thinking from some circles that the Chinese investors in Globe are fooling us Malawians as they just want to keep on speculating just to reserve the project’s resource and keep it away from other investors? I am asking this question on the understanding that in China they have plenty of such resources.
Response: The project will certainly take off the ground at some point although it is difficult to predict as to when. Globe has now and again announced that it is looking for a local partner in the wake that the Chinese may not be willing to participate (a local consortium already identified). The bottom line is that the metal prices are low worldwide and many companies are not willing to proceed with opening new mines. Two-three years from now, when the prices pick up, the song will be different. This type of cycle is not unusual in the mining industry.