Paladin honouring Environmental Performance Bond commitment stipulated in Mining Development Agreement

Malawi’s largest mine. Kayelekera Uranium Mine operated by Paladin Africa Limited in Karonga, Northern Malawi. -9.996408, 33.700476.

Paladin Africa Limited, a subsidiary of the Australian mining company Paladin Energy Limited, asserted this week that it is complying with all the terms set out in the Mining Development Agreement signed six years ago with the Malawian government. Paladin operates and extracts uranium from Malawi’s largest mine, Kayelekera mine in Karonga, northern Malawi.

The company and government has come under pressure recently in Malawi with calls made by civil society and political figures for the renegotiation of the “stinking development agreement” that is currently protected by a confidentiality clause. Malawians are still waiting for the Minister of Mining, John Bande, to honour his promise to publicise the agreement and the results of the government’s consultations on whether or not to renegotiate. 

Nevertheless, some Malawians have seen the agreement and it appears that Greg Walker, the face of Paladin in Malawi, felt it necessary to respond to reports that the company had not yet met environmental obligations. According to Clause 18.14(a) of the agreement, an Environmental Performance Bond must be established in the form of an irrevocable letter of credit, in favour of the Director of Environmental Affairs, for the restoration and rehabilitation of the environment during operations and following mine closure.

Media reports incorrectly alleged that Paladin and the Reserve Bank of Malawi (RBM) were yet to establish a bond, following remarks by RBM’s spokesperson Ralph Tseka that the Central Bank could not trace the bond. Bande also appears to have been misinformed according to comments made to Nyasa Times by Walker.

Walker, Paladin Africa’s General Manager of International Affairs, indicated that Paladin has a MWK 3.9 billion (USD 10 million) facility with Nedbank Malawi Limited (30 June 2009) and Standard Bank Limited (2 September 2009)  in line with environmental obligations stipulated under Clause 18.14(a) of the agreement.

The relevant clause clearly states that the Bond is to be established with a ‘commercial bank in Malawi’, which is what occurred. It is not at all surprising therefore that the RBM could find no trace of such an agreement. These facilities have been continuously in place since that time; have been renewed annually as per the Development Agreement and are currently in force until December 3, 2013.

There is therefore no question of non-compliance by Paladin on this issue. It is regrettable that the Minister for Mining, Hon. John Bande, did not appear to be aware of this fact.

In other news, over 4,000 families have been affected by flooding in Karonga, the district that is home to Kayelekera mine. The Vice President, Khumbo Kachali, sought private sector assistance this week for these families. Alluding to the support of other companies, Kachalie was perhaps making a veiled plea to Paladin,

Eland Coal Mine should be commended for helping the needy. I ask the same spirit should be in the private sector and non governmental organisations operating in Karonga to come to assist the people.

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