Political interference foils Malawi’s largest mining investment – Mining & Trade Review (November 2015)

The piece “Kayelekera mess up: Political interference foils Malawi’s largest mining investment” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 31 that is circulating this November 2015.

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

2015-11 Mining and Trade Review Front Cover

Kayelekera mess up

Political interference foils Malawi’s largest mining investment

By Marcel Chimwala

While Namibia continues to reap from investment in uranium mining by dual listed Paladin Energy, Malawi has lost the opportunity to keep production afloat at Paladin’s Kayelekera Uranium Mine partly due to political interference and failure to provide necessary infrastructure to support the investment.

Paladin mothballed the Kayelekera Uranium Mine in Karonga in early 2014 citing low uranium prices on the global market which had a knock on effect on the profitability of the company’s operations.

Late former President Bingu Wa Mutharika officially launched the Kayelekera Uranium Mine in April 2009 and the mine was still operating when Mutharika died in April 2012.

Government sources told Mining & Trade Review that Paladin was subjected to immense political pressure from the ruling clique regarding proceeds from Kayelekera when President Joyce Banda succeeded Mutharika because some figures in her ruling People’s Party suspected that the company had financial links with Mutharika.

Paladin Africa former General Manager Greg Walker commented that the government that time made it difficult for his office to process temporary employment permits for Kayelekera Mine employees who were hired as expatriates.

President Joyce Banda and other politicians openly accused Paladin “of stealing from the country” in their political rallies insisting on the need to renegotiate the development agreement that the Malawi Government signed with Paladin.

The Banda administration refused to renew five exclusive prospecting licences that Paladin held in the Kayelekera area for the purposes of conducting further exploration to extend the mine life, which was pegged at 10 years.

Further exploration would have helped the dual listed miner to raise more funds for operations at the loss making Kayelekera through the stock exchange.

Meanwhile, the current Peter Mutharika administration has renewed Paladin’s three out of five exploration licences for the Kayelekera area.

Paladin’s CEO Alexander Molyneux said in the company’s activities report for the quarter of the year ending September 30 that the company has not been able to have the other two licences renewed because another firm, Intra Energy, holds coal exploration licences for the same areas.

The Malawi Government has deferred renewal of the licences in respect of the new law currently being formulated which stipulates that licences do not overlap.

Said Molyneux:

Government of Malawi is endeavouring to clear these license overlaps before the introduction of the new Mining Act.

Paladin will continue to monitor the situation and liaise with the Malawi Mines Department and prepare for the introduction of the new legislation.

Paladin’s exploration work in the September quarter concentrated on surface geophysical surveys, stream sediment sampling and geological mapping in areas to the east of the mine.

A member of the licensing committee confided to Mining & Trade Review that the committee was previously directed by the Joyce Banda administration not to renew Paladin’s licences because of a number of issues including environmental concerns, which politicians and civil society leaders raised on Kayelekera.

When she met leaders of opposition political parties at the New State House now known as Kamuzu Palace, Banda received complaints from the politicians who raised a number of allegations against Paladin that were forwarded to the then Paladin Africa General Manager Greg Walker through the Ministry of Mining.

It was laughable that one of the allegations from the politicians was that we were also mining diamonds at Kayelekera. However, even the country’s top geologists including Dr. Leonard Kalindekafe who was the Principal Secretary for the Ministry of Mining at that time would agree that uranium and diamonds do not occur in the same geological environment,

said Walker.

Private sector sources say mining investors in Malawi have also been under pressure from politicians who siphon money from the companies purportedly to finance presidential initiatives such as One Cow per Family and Mudzi Transformation Trust.

Besides political interference, Paladin and other mining investors have been complaining of the failure by the government to provide them with relevant infrastructure including adequate electricity for the operations.

Kayelekera is a high cost uranium producer because we cannot tap power from the national grid due to the country’s inadequate generation capacity,

said Walker whose company is listed on both Australian and Canadian Stock Exchanges.

Paladin has, meanwhile, closed its Malawi head office in Lilongwe and has just left a skeleton of staff to take care of the mine currently on care and maintenance.

Seasoned geologist Grain Malunga told Mining & Trade Review in an interview that Malawi would continue to lose its attractiveness to investors if it keeps on mistreating existing investors.

He observed that it was the coming in of Paladin that symbolized to the world that Malawi was ready to receive big investment in mining and it was sad that the investor suspended operations at Kayelekera while it continues operations at its Langer Heinrich mine in Namibia.

Malunga said he was trying to talk to the government to renew the other Paladin exploration licences and had already convinced the coal miners in the licence areas to allow that the licences overlap.

Let us use the existing 1981 legislation. We cannot be using a law that has not been enacted. Under the existing law, licences can overlap,

said Malunga.

Despite politicians and some civil society leaders in Malawi questioning Paladin on environmental issues at Kayelekera, the mine’s environmental plan won kudos from several miners in the region who used it as a model to develop their plans.

Minister of Natural Resources, Energy and Mining was reported to have accused the media of failing Kayelekera through negative reporting at a media sensitization workshop that his ministry conducted in Liwonde a couple of months ago but the media hit back accusing the government of foiling the investment.

One response to “Political interference foils Malawi’s largest mining investment – Mining & Trade Review (November 2015)

  1. Pingback: Link Roundup for Extractive Industries in Malawi: November 2015 | Mining in Malawi·

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