The piece “Malawi conducts scrutiny on mines bill” featured below was initially published in Malawi’s Mining Review Issue Number 25, May 2015.

The full edition is available for download here.

To learn more about this quarterly publication, edited by Marcel Chimwala, read the post about the “Voice of the mineral sector in Malawi”.

Malawi conducts scrutiny on mines bill

A cross section of Malawians of different walks of life had an opportunity to scrutinize the New Mines and Minerals Bill and inject their input into the all important document at a national   consultative workshop that was held in Lilongwe from April 14 to 15 with funding from the World Bank and European Union courtesy of the Mining Governance and Growth Support Project.

The workshop was officially opened by the Minister of Natural Resources, Energy and Mining, Honourable Bright Msaka who stressed that the aim of the Malawi Government is to come up with a law that will promote sustainable mining in Malawi.

Msaka said:

There is no doubt in the opinion of Government that mining still remains one of the key priority sectors that can significantly contribute to socioeconomic development of the country. This is also envisioned in the current Malawi Growth and Development Strategy.

However, in order for the mining industry and our mineral resources to make the expected contribution to the country’s economic growth, there is need for concerted, consistent and steadfast effort towards promotion of sustainable mining. This, in the main, will be possible only if we develop a sound and comprehensive mining legislation, which takes into account prevailing international best practices, attract investment and enables Malawians to derive optimum benefits from mining.

The Minister also said he envisages a modern Mines and Minerals Bill to be one that adequately addresses corporate social responsibility, has in place a system for determining fair practices, enforces transparent and accountable decision making, encourages local equity participation, recognises the value of minerals exhibitions, protects investors from being hounded out of their investments, and does not ignore the role of women and the youth.

Members of private mining companies who gave their views on the bill agreed with Msaka that besides addressing several other pertinent issues, the new law should protect investors from being hounded out of their investments.

I support the Minister’s statement on protection of local investors because in the case of Malcoal, we are encountering problems to compete with cheap coal imported from neighbouring countries which is flooding the Malawi market. We recommend that the new law has provisions that will guide the government to intervene in such situations and put in place measures to halt these coal imports so that we can survive on the market,

commented Eugene Khoriyo, Country Director for Malcoal Mining.

He explained that the coal subsector is one of the major employers in the mining sector which makes it imperative for the government to protect it to ensure its survival.

Cement producing companies also shared the same feelings with Shayona Cement and Cement Products Limited complaining of cheap imports invading the cement market.

In our case, we are preparing for an expansion project that will involve installation of a clinker plant, which is a huge investment. We urge government to incorporate clauses in the law that will ensure survival of such investments by controlling cheap cement imports for the sake of our survival and that of our employees

said Cement Products Limited Chairman Aslam Gaffar in an interview after the workshop.

Chiefs also had their say on the bill with Paramount Chief Kyungu stressing that the government should include measures to ensure that mining companies fulfill the corporate social responsibility pledges they make to the communities when launching projects.

We have to ensure that corporate social responsibility must be real. Companies should not run away from it,

said Kyungu.

The Paramount Chief also urged the government to incorporate measures that will allow communities have shares in the mining ventures taking place in their areas in order to ensure that the communities directly benefit from the projects.

The point was backed by District Commissioner for Blantyre, Mr. Charles Kalemba ,who proposed that people whose land have been taken away for mining purposes must be allowed to use their land as a token to acquire shares in the projects.

On their part, civil society representatives proposed that the bill, which has clauses to allow government hold up to 10% free equity in large scale mining ventures, should also make it mandatory for mining companies to give some shares to locals.

In addition, they proposed that the government sets up a company to invest in joint venture arrangements with foreign mining investors.

The bill has to ensure that Malawians are the real owners of the resource and that should not only be lip service. It should also not give ground for corruption to any government official,

said Executive Director for Institute for Policy Interaction, Rafiq Hajat.

Representatives of financial institutions also aired out their expectations at the event. They pointed out that provision for huge investments in corporate social responsibility projects as proposed by some delegates will make it difficult for mining companies to acquire project financing from banks.

Financial institutions will always finance projects that are viable and forcing companies to make massive investments into non-profitable or social responsibility projects will affect the viability of projects, and this will put off investors,

commented Mr. Mutisunge Banda of Standard Bank’s Investment Banking Department.

Commissioner for Mines, Mr. Charles Kaphwiyo argued against giving more shares to locals in mining companies saying such a scenario would expose them to the risks of the industry as mining as a business is exposed to uncertainties on the world commodity markets.

Mining Law Consultant Professor James Otto responded to the Civil Society concerns of lack of community engagement in the sector saying the new bill has adequate clauses on the issue.

There are clauses that ensure community engagement in the proposed new law, and one of these is the introduction of community agreements. Malawi is also in the cause of subscribing to the Extractive Industry Transparency Initiative, which will promote transparency and accountability in the sector,

said Otto.

Professor Otto said he could not recommend the idea of forming a state-owned company to invest in mining as proposed by the members of the civil society because it failed in several countries.

He also agreed with Kaphwiyo that despite ensuring that benefits from the mining sector trickle down to as many Malawians as possible, the bill has been drafted to ensure that Malawi has a competitive advantage in attracting investors since countries in the region and beyond are competing to attract investment.

There is no mining boom in Malawi. We are only working on prospects and we want this bill to attract investors to exploit these prospects for the benefit of the country,

he said.

At the workshop, officials from the Ministry made presentations on what is contained in the bill and welcomed comments from members of the audience which, among others, included traditional leaders, district commissioners, religious leaders, members of parliament and civil society groups.

The gathering was a follow up to the National Consultative Symposium on the bill that was held at Bingu International Conference Centre from July 16 to 17, 2014.

As opposed to the Mines and Minerals Act of 1981, which vests resource ownership on the President on behalf of the people of Malawi, the proposed law says the resources of Malawi are directly owned by the State.

The seriousness of the delegates, their active participation and the richness of the contributions certainly showed that the decision by the Malawi Government to review the old mining laws and the contribution by the financiers World Bank and European Union are of great significance.