Update 7 January 2015: Paladin announced today that following a storm on 5 January there has been some “minor storm damage” at the mine:

A 20-minute, high-intensity storm resulted in some 25mm of rain falling at the Site.

The resultant surge of stormwater caused the liner in the plant run-off tank to rupture, releasing up to 500m3 of material to the bunded areas of the site. Up to 0.05m3 (50 litres) may have overtopped one of the containment bunds due to the nature of the rainfall event at the time.

Following discovery of the damaged tank, the Company immediately commenced protection and remediation procedures and the site remains secure. A sampling programme to analyse water from within the local stream system was also initiated to confirm no contamination occurred.

The Company has formally advised relevant Government of Malawi authorities of the incident.

This follows accusations by the Natural Resources Justice Network that the company had released toxic water into the local river system. On the 5 January Paladin refuted to these allegations. Kossam Munthali, Chairperson of the Natural Resources Justice Network has since commented,

What we know is that Paladin has one tailing pond, but it was supposed to have two ponds from the onset to contain the waste. So, discharging the waste is not a practice. Environmental-related matters must give due respect to the constitution and international best practices.

We demand that the Karonga District Council Health and Environmental Services Committee and us CSO players should go and verify independently the waste management system and other related issues. Kayelekera is not a no-go zone.

The sins of Paladin should not be transferred to Malawians Living in Karonga. This is about the future generations of Malawians.

Update 6 January 2015: Assertions have been made by some non-governmental organisations under the Natural Resources Justice Network against Paladin that the Kayelekera Uranium Mine is contaminating the local river system with discharged water (read more about the treatment process below). Yesterday (5 January 2015) Paladin released an announcement “Kayelekera – Response to Misleading NGO Statements” in which the company denies claims that is has released toxic water and asserts that it will take legal action “unless these perpetrators of gross misinformation cease their dissemination of irresponsible and misleading fabrications”.

The announcement explained that no treated water has been discharged into the river system:

As previously announced, Paladin plans to commence the controlled release of surplus water into the local river system in early 2015 (during the monsoonal wet season) and has modified a section of the treatment plant at KM to allow treatment to meet Malawi and internationally recognised discharge standards, including the World Health Organisation (WHO) drinking water guideline for uranium content. The controlled water release is necessary to avoid any possible unplanned and uncontrolled discharge of run-off water contained in storage ponds at KM during the period of Care and Maintenance. During production operations, captured run-off water is used and recycled in processing of uranium ore. As yet, there has been relatively light and infrequent rainfall in northern Malawi, hence little or no run-off has occurred. Therefore no water has been treated and released to-date.

***

At the end of October, the Parliamentary Committee for Natural Resources and Climate Change was invited to Paladin Africa’s Kayelekera Uranium Project. This is Malawi’s largest mining project although it is on care and maintenance at present. The parliamentarians were accompanied by former Minister responsible for mining, Hon. Grain Malunga, civil servants from the Environmental Affairs, Mines and Water Resources Departments and journalists from a variety of media houses. The visit was the largest one since the mine opening in 2009.

The focus of the visit was two-fold:

1. a discussion and explanation of Kayelekera Mine’s plan to to begin a process of controlled release of treated water into the Sere-North Rukuru river system, and
2. a tour of the mine site (including processing plant).

Most of the visitors gathered at the District Council offices in Karonga and travelled together to the mine site, which is 52 kilometres west of Karonga Boma. The visitors were met by Bruce Ryan, Manager of Safety, Health, Environment and Radiation, at about 10am, then passed through security, which included a breathalyser, and finally boarded Paladin Africa’s vehicles to be taken to the mine site.

The visit kicked off with a safety induction led by Zebron Nkosi followed by presentations on the current status of the mine on care and maintenance, environmental management and water management (treatment and discharge) strategy. The site tour that commenced after lunch included a visit to Kayelekera Pit, the Water Treatment Process Plant, the Process Control Room, the Plant Laboratory and the Tailings Storage Facility.

Presentation 1: Greg Walker – Introduction and Care & Maintenance

Greg Walker, Acting General Manager of Operations and Resident Director, provided an overview to Kayelekera Uranium Project and an update on the mine’s care and maintenance.

Kayelekera was acquired by Paladin Energy in 1997. In August 2000, Paladin Africa was incorporated (company ownership: 85% – Paladin Energy and 15% – Government of Malawi). Paladin Africa holds Mining Licence 152 and one exploration licence, while 4 other Exclusive Prospecting Licences are pending. The overall expenditure to date totals USD671.3 million and the mine generated 10 percent of Malawi’s Gross Domestic Product before it went on care and maintenance (other parties may beg to differ with the economic benefits of the mine for Malawi).

The mine is located 52 kilometres from Lake Malawi and is in a high rainfall area; water management is thus a critical environmental issue. The open pit is 1 kilometre long, 500 metres wide and 100 metres deep. It contains 14 million tonnes of ore and 31 million tonnes of waste rock. When all the dumps are constructed, the final disturbed area will be 2.8 square kilometres.

In 2007 when the Kayelekera Bankable Feasibility Study was completed and the decision was taken to proceed with development, the uranium oxide price was USD75/lb. This was expected to increase over time. However, in March 2011, the Fukushima earthquake and tsunami resulted in the shutdown of 58 nuclear reactors in Japan and a drop in uranium prices, which has not recovered. The continued depressed price for uranium oxide was one of the factors that led to the company’s decision to put the mine on care and maintenance in February 2014 (production ceased on 21 May 2014). The other reason was the unsustainable cash demand to maintain the loss-making operation, which has “not made a single Kwacha in profit” according to Walker.

Kayelekera was described as one of the highest cost uranium producers in the world. Walker explained that this is because of its remoteness, the lack of support infrastructure and skilled professional staff and the unavailability of grid power. The Electricity Supply Corporation of Malawi’s low transmission capacity is a challenge for the development of mining across Malawi as reported in the last few weeks by The Nation (Exclusive: Malawi’s shocking energy gap, Support energy for mining or bust and Malawi makes case for PPP in energy sector). Kayelekera would have saved up to USD5/lb in operating costs if it had been connected to the national electricity grid.

Care and maintenance has resulted in an economic slowdown for Karonga and the district, as well as the nation. In Karonga, there are fewer directly employed residents and suspension has impacted indirect employment, the amount of money in circulation and direct and indirect local suppliers, and some people may leave the district. A Social Impact Assessment conducted at the end of 2013 indicated that businesses in Karonga have diversified and are not wholly depending on the mine and the care and maintenance will ease inflationary pressure caused by rapid growth around the mine in recent years.

According to the Economist Intelligence Unit report for Malawi’s 4th Quarter, suspension of operations moderates export growth. The government will receive no royalty payments from January 2015 until the mine goes back online.

Care and maintenance also resulted in many employees being made redundant. Walker stated that packages provided to employees exceeded Malawi’s minimum requirements and on average, payouts were 10.7 months salary together with other termination benefits. 213 Malawian employees and 24 expatriate staff have been retained to secure and maintain the site.

Suspension is “pain in the short term, but down the track it will be better for everybody”, Walker concluded. Operations will be restarted once the uranium oxide prices increase to over USD75/lb and the mine is connected to the national electricity grid. When these conditions are met, it will take six to nine months to restart mine production and USD60 million will be required to bring the mine back online.

Presentation 2: Bruce Ryan – Safety, Health, Environment & Radiation

Bruce Ryan, Manager of Safety, Health, Environment and Radiation, presented on the Care and Maintenance Environmental Management Plan which addresses all environmental issues identified during this phase, commitments made during the Environmental Impact Assessment phase and conditions under the licences and development agreement.

Four rivers (Chapwasha, Sere, Muswanga and North Rukuru) and two streams (Champhanje and Kantchindu) as well as occupational and physical radiation are regularly monitored. This includes continuous gamma exposure monitoring per worker, random gamma surveys around the site and monthly surveying of radiation surface contamination (such as of offices, tea rooms, vehicles and equipment). Monitoring is also conducted outside the mine site.

Quarterly reports are submitted to the Environmental Affairs Department and independent analyses are sent directly to the Department. According to Ryan, radiation exists slightly above background levels. The limit is 20 milliSieverts, which is the average accumulated background radiation dose to an individual for 1 year, exclusive of radon. The highest level at the mine is 3mSv. The Guardian has published an accessible guide to what each level means.

Malawi’s Atomic Energy Act No.16 of 2011 provides for the establishment of the Atomic Energy Regulatory Authority, which shall consist of a Board and a Secretariat, responsible for radiation protection and safety. According to the Ministry of Natural Resources, Energy and Mining’s new website, this Authority is currently being established. This is necessary to ensure government capacity and resources are available to monitor radiation, such as at Kayelekera mine.

Presentation 3: David Holmes – Water Treatment and Discharge

David Holmes, Group Principal Hydrogeologist, presented on the company’s plans to begin a process of controlled release of treated water into the Sere-North Rukuru river system. Holmes explained that a section of its processing plant at the mine has been modified to enable it to treat water to remove contaminants prior to release in line with national and international standards.

Paladin has announced that:

There would be no risk to people drawing water for domestic purposes from the river system downstream from KM [Kayelekera Mine], nor any threat to the environment.

Treating and discharging water is required in order to deal with run-off water that is captured at the mine and was previously recycled and used in the processing of uranium ore. With the onset of the rains, the controlled release of water is necessary to prevent the storage ponds (Runoff Water Pond 1 and 2) from reaching capacity and overflowing. The Tailings Storage Facility will not overflow as evaporation exceeds inflow.

Holmes explained that the most practical solution is to treat the water at the process plant to an acceptable standard for release into the environment.

On 30 July 2014, Paladin Africa applied for a licence from the Government of Malawi to discharge treated water from the mine into the local river system during the next two or three wet seasons, depending on how long the mine remains on care and maintenance. The Water Resources Department provided guidance and the National Water Resources Management and Development Committee met on 16 September 2014 to assess the application. Their recommendation was approved by the Minister on 22 October 2014.

The Committee recommended that prior to the commencement of the treated water discharge programme, extensive community consultations be held. For this reason, the parliamentary committee was invited to inspect the water treatment plant modifications, and Paladin called a District Executive Committee meeting and held meetings with communities located downstream of the mine on the North Rukuru River and surroundings.

Laboratory trials commenced in March 2014 and produced favourable results including the removal of uranium. In July, a full scale water treatment plant was set up. Holmes explained that the treated water will meet the licensed discharge criteria that are based on the Malawian regulatory requirements for discharge into inland waters (Malawi Standard MS539; 2002) and conform to international guidelines.

The image below indicates the pH, sulfate and uranium levels at the end of the discharge pipe and after being diluted with water from the North Rukuru River.

Below is an overview of some of the information presented by Paladin:

• Treatment and discharge of up to 450,000 cubic metres per year. This is less than 0.3 per cent of the long term average volume of water that naturally flows down the North Rukuru River.
• World Health Organisation (WHO) guideline for uranium in drinking water of 0.03mg/litre will be met (see the WHO’s website for further information here). WHO states that the “guideline value is designated as provisional because of scientific uncertainties surrounding uranium toxicity”.
• Sulfate concentration will be no more than 800mg/litre of water. WHO does not provide a guideline value because “existing data do not identify a level of sulfate in drinking-water that is likely to cause adverse human health effects” although concentrations of 1000-1200mg/litre indicate a laxative effect but no increase in diarrhoea, dehydration or weight loss. WHO emphasises that health authorities should be notified of sources of drinking water that contain sulfate concentrations in excess of 500mg/litre. The presence of sulfate in drinking water may cause noticeable taste at concentrations above 250mg/litre and may contribute to the corrosion of distribution systems.
• Monitoring conducted by mine’s Environment Department with Government’s Water Resources Department accompanying on sampling events. In addition, the Environmental Affairs Department will independently sample and test water to ensure compliance. Samples will be analysed by internal and external laboratories for the water treatment plant at 13 locations upstream and downstream of the discharge point. Four hourly analyses of critical parameters of uranium and sulfate in the water treatment plant and four analyses of key parameters per day in the discharge line to the Sere River at three locations for
  • pH
  • Electrocoagulation
  • Total suspended solids
  • Calcium
  • Sulfate
  • Uranium
  • Radium-226
  • Chemical oxygen demand
  • Dissolved oxygen
• Uranium already in the district. An extensive data set collected since 2006 shows that there are naturally occurring uranium levels in the Sere River that have ranged up to 1.76mg/litre on occasion and values in the range of 0.15-0.3mg/litre are not uncommon. The mine pit ground water discharges are naturally high in uranium and historically discharged via the Champhanje Stream and natural springs, while natural groundwater in the pit area can be up to 100mg/litre, currently arround 30mg/litre.
• Automatic shutdown of plant if any deviation from the discharge criteria is recorded. In the event of any such deviation, the process allows for water to be recycled for further processing.

A briefing provided by Paladin is available here: 27 October 2014 Paladin Africa Announcement: Kayelekera Mine Plans to Begin Controlled Release of Treated Water.

***

After the presentations and before lunch at the mine, Hon. Werani Chilenga, the Chairperson of the Parliamentary Committee on Natural Resources and Climate Change, introduced the parliamentarians (the list of MPs in the Committee can be viewed below) and made a short statement. He thanked Paladin and noted,

We are not visiting Kayelekera as spies, but we want to familiarise ourselves with the activities of the mine.

After lunch, the group donned protective hats and goggles in preparation for the mine tour. Below are a few images from the visit.

At the end of the site visit, Paladin staff demonstrated that the water processed by the plant is safe to drink. Greg Walker is shown in the video below drinking a glass of water processed by the water treatment plant. It is diluted with some other water to replicate the dilution of the treated water with river water before it is discharged.

Following the tour, Walker made final remarks and the Water Resources Department addressed the parliamentarians, explaining the process undertaken to approve Paladin’s application to discharge water into public waters. The floor was then open for a one-hour question and answer session, summarised below:

Questions and issues raised by parliamentarians directed to Paladin

• How is uranium oxide secured during transportation? Karonga police escort the vehicles.
• What led to the decision to give government 15% ownership? Government was given free carry equity and government gave some concessions on super profits tax and company tax, however, government did not have to put up any money.
• How does the company protect against vandalism? Half of the staff at the mine are in security. Pilfering is a big issue and people are relentless, security towers, fences, infrared and surveillance are in place, and Paladin has also engaged chiefs.
• What is Paladin providing in terms of support to education? Paladin has provided classrooms, school books, Christmas packs and teachers’ housing. In addition, Friends and Employees of Paladin have contributed USD0.75 million for various projects such as supporting Karonga Deaf School and a school and orphanage for the visually impaired.
• Allegations of corruption. Walker: “We do not pay anything to government ministries. Paladin has never paid a single dollar to any member of government in this country, and I say this with no fear of contradiction. […] It hasn’t happened and it won’t happen”. When an accusation was made against Paladin in Parliament (an MP made a claim that Paladin was involved in corrupt practices), Walker approached the Anti-Corruption Bureau to investigate the allegation. The MP in turn said that he was just repeating a rumour. Paladin is bound by stringent corruption laws (Australian Law and the Australian and Candian Stock Exchanges).
• Why was the exploration licence seized by government? Paladin wants to continue exploring, however, the Exclusive Prospecting Licence was rejected for renewal and the company applied again. Positive discussions have now been held.
• Is the 3% royalty too low given levels of poverty in Malawi? Many have criticised the 3% royalty rate as the Act stipulates 5%. According to Paladin, when the Mining Development Agreement was being negotiated, most countries in the Southern African Development Community had a royalty rate of 3% and the World Bank was making the same recommendation. Paladin put the case to government that the project could not support a 5% royalty rate and this was not common practice in neighbouring countries. In the first 30 years of uranium production in Namibia, the royalty was 0%.
• Is the Mining Development Agreement public yet? Walker: “There is no confidentiality clause in the agreement. The government of the day when the deal was made asked the company to keep the agreement a secret”. Walker was of the opinion that the government thought that there would be more resource projects and did not want this Agreement to be used as a basis for future agreements. The government under the People’s Party wanted transparency and the Minister wrote to ask to release the agreement. Paladin agreed, but nothing happened for 12 months.
• What amount is given to government? Paladin pays a number of taxes including withholding tax and payroll tax; company tax has not been paid as the project has not made a profit. Paladin is EITI compliant.

Questions and issues raised by journalists directed to parliamentarians and government officials

• How did the government approve the application? The application was discussed and reviewed stringently. An official from the Water Department indicated that there is “no reason to doubt at all the government won’t take responsibilities of people at Kayelekera. […] What was agreed with the licence will be applied and if there is no compliance, the law will take its course”.
• How is government monitoring activities?
  • The water samples are to be sent to an independent board.
  • An officer from Environmental Affairs Department explained that the government faces challenges in monitoring activities due to financial constraints and no one desk officer is dedicated to the mining project as different issues are handled by different agencies and departments, e.g. Mines, Labour, Environment, Water.
  • The necessary Atomic Energy Regulatory Authority has not yet been established although a CEO is currently being recruited and officers will be seconded to the institution.
  • Parliamentarians will look at the budget. However, the Water Resources Department was allocated MWK3 million (USD6,400) for monitoring visits for the year. This works out at MWK250,000 (approximately USD530) per month. We “cannot monitor water from Nsanje to Chitipa”.

The Deputy Chairperson of the Committee, Hon. Alex Major, concluded the visit,

Our hope as an oversight body […], we would like to see that this mine is open so that Malawians still benefit.

***

Please find below a list of all parliamentarians in the Natural Resources and Climate Change Committee. Not all of the MPs listed below took part in the mine visit and several others who participated from other committees are not listed below.

• Hon. Werani Chilenga (Chairperson)
• Hon. Alex Major (Deputy Chairperson)
• Hon. Aisha Mambo Adams
• Hon. Marko Ezra Ching’onga
• Hon. Filipo Chinkhondo
• Hon. Harry Chimpeni Njoka
• Hon. Ephriam Mganda Chiume
• Hon. Daniel Hamilton Chiwere
• Hon. Geoffrey Meleka Chiwondo
• Hon. Mwai Kamuyambeni
• Hon. George Johnsen Kamwanja
• Hon. Godwin Grey Kanjere
• Hon. Kasimu Liguluwe
• Hon. Dr. Francis Erick Lucious Mkungula
• Hon. Rashid John Mussa Pemba
• Hon. Bauden Mphatso Mtonga
• Hon. Victor Musowa
• Hon. Commodius Nyirenda
• Hon. Vincent W. Ghambi
• Hon. James Bond Kamwambi
• Hon. Frank Tumpale Mwenifumbo
• Hon. Richard Msowoya
• Hon. Malani Mtonga
• Hon. Juliana Lunguzi
• Hon. Chimwendo Richard Banda
• Hon. Felix Elia Jumbe
• Hon. Jessie Kabwila

***

Some media house have reported on the visit and Paladin’s announcement to release treated water into the Sere-North Rukuru river system.

• Malawi NGOs warn Paladin of radiation pollution: Karonga residents fear for their health, 19 November 2014, Tiwonge Kumwenda, Nyasa Times
• Paladin Energy Says Malawi Tailings Water Doesn’t Pose Risk, 24 November 2014, Frank Jomo, Bloomberg News
• Uranium Mine Sludge Discharge Permit Threatens Lake Malawi, 25 November 2014, Environment News Service
• Develop or burst, Kyungu tells mine investors: Warns Paladin on Malawi trailing water, 1 December 2014, Tiwonge Kumwenda, Nyasa Times

Paladin Africa provided a travel and accommodation allowance.