Fatality at Paladin’s Kayelekera uranium mine (photo courtesy of Paladin)

Paladin Energy announced today that a Malawian employee, Khwima Phiri, has died at Kayelekera uranium mine in Karonga, Malawi. He was employed in the mine’s engineering workshop and died yesterday morning “after being struck in the chest by a light vehicle wheel he was inflating at the time”.

Paladin, the operator of Malawi’s largest mine, has notified the relevant authorities and police and will be investigate the incident further.

According to the press release, the mine has operated for 489 days without a Lost Time Injury. This tragic incident is likely to cast a shadow over the company which is already facing mounting criticism following reports that Malawi is losing out from the favourable tax regime agreed with the company. As a result of tax incentives, one estimate suggests that Malawi may lose between USD 205 million and USD 281 million over the 13 years of the project.

Read the full report online: Malawi’s mining opportunity: Increasing revenues, improving legislation.

Consequently, there have been numerous calls for the Mining Development Agreement to be renegotiated. Just last week, the United Nations’ Special Rapporteur on the Right to Food Olivier de Schutter said that Malawi is losing out due tax incentives given to Paladin. He explained why this may be the case,

Malawi is not in a position to increase the royalty rates that it demands from the company because it fears that the company otherwise would not invest on the territory and Paladin on the other hand is quite understandably using it’s very strong bargaining position to obtain a deal in Malawi that is much better than for example what it has in Western Australia.

Whether there’s been anything illegal I doubt, but it is really a difficulty for countries such as Malawi to negotiate such deals in a context in which they do not see that they have a strong bargaining position and in which they’re meant to understand that they should not demand too much otherwise investors will leave.

Paladin has asserted that without these incentives the project would not have been feasible. Rick Crabb, the chairman of Paladin Energy Limited, rebuffed the claims made by the UN’s de Schutter that Malawi is losing so much revenue and reiterated that the mine is making a loss

The key economic benefits to Malawi include purchases with foreign currency, royalties paid of about $1.4 billion kwacha, social develop programs of about $5.3 kwacha and we’re employing some 700-800 nationals who pay tax and we’re purchasing goods and services from Malawi in the order of about $47 billion kwacha. At the moment there’s no income tax paid because the mine is not profitable.

If we hadn’t have been successful in signing you know what is a fair and equitable development agreement, which the Malawian government you know had international advice on, the project certainly would not have proceeded.

Some Malawians have wondered why “it has taken foreign visitors to warn the Malawian Government that it is conceding too much in agreements its official signs with investors concerning minerals”, others suggest Malawi should learn from Botswana’s successful journey in benefiting from its resources, and a final commentator has once again called on Government to “act on Kayelekera uranium raw deal now!”.

These calls are likely to increase following the death of Khwima Phiri. Our condolences to Mr. Phiri’s family and friends.