The piece “Mutharika spells out buoyant prospects” featured below was initially published in Malawi’s Mining Review Issue Number 26 2015 that is circulating this June 2015.

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

Mutharika spells out buoyant prospects

…Review of mining legislation to facilitate investment

…Mining to contribute 20% GDP by 2020

By Chiku Jere

With floods, drought and other siblings of climate change having a knock on effect on the performance of the core sector of agriculture and tobacco prices reeling under the curse of the global anti-smoking lobby, Malawi expects mining to come to the economic fore in the near future with the President projecting a huge increase in the sector’s contribution to GDP.

Delivering his State of Nation Address when he presided over the opening of the 2015-2016 budget meeting on May 5, 2015, His Excellency the State President  Professor Arthur Peter Mutharika explained that the on-going review of the Mines and Minerals Act (1981) as well as the implementation of some corresponding policies will contribute to a dramatic increase in the mining sector’s contribution to the economy as the country seeks to make a paradigm shift from an agro-based to mineral based economy.

From a meager 3% in 2004, the mining sector now contributes 10.8% to Malawi’s GDP and Mutharika foresees the sector’s contribution to GDP hitting 20% by the year 2020.

Government will, among other interventions, use the recently completed Country-wide Airborne Geophysical Survey to attract prospective investors as well as put in place deliberate policies to encourage increased local participation in the sector,

he said.

Malawi, which has a New Mines and Minerals Policy in place, is reviewing archaic pieces of legislation including the Mines and Minerals Act (1981) in order to come up with a law that conforms to current international best practices while ensuring that benefits accrued from the sector trickle down to the local population.

In his speech, the Malawi leader also reiterated his Government’s commitment to enhancing transparency and accountability in the mining sector.

He said Government will formally be applying for the candidature of the Extractive Industries Transparency Initiative (EITI) later this year, once all preparatory processes are concluded.

In view of the commitment by Government to enhance transparency in the mining sector, Mr. Speaker, Sir, Government will join the EITI to promote revenue transparency,

Mutharika said.

Malawi, which hugely relies on tobacco as a major source of foreign exchange, is an agro-based economy with the agricultural sector accounting for over 39 percent of GDP, 85% of the labour force and 83% of foreign exchange earnings.

The Government is, therefore, promoting the mining sector to attract investors and consequently ensure robust growth of the sector and economic diversification from overdependence on agriculture which is exposed to natural risks including floods and drought while the future of the major crop, tobacco, is being haunted by the anti-smoking lobby.

President Mutharika noted that his government is as well promoting the energy sector to meet the energy needs of some mining projects, which are failing the feasibility test due to lack of reliable, sustainable and affordable energy.

Reliable, sustainable and affordable energy is a necessary precondition for economic growth, social development and survival of all human societies and in recognition of this, a search for alternative sustainable energy sources and the initiation of energy cost-effective projects centred on the people and investor’s needs are of utmost importance,

he said.

He said his government will be introducing new incentives to facilitate Public Private Partnerships (PPPs) in the energy sector, and also called upon private players to invest in the introduction of other viable alternative energy sources such as solar, wind as well as biogas.

Professor Mutharika also said there is need for enhancement of efficiency in the services offered by the Electricity Supply Corporation of Malawi (Escom) by separating its functions into independent generation, transmission, distribution and marketing units.

Malawi hosts proven quantities of a variety of minerals such as rare earths, bauxite, uranium, niobium, tantalum, strontianite, corundum, graphite, limestone, titanium, heavy sands, vermiculite, coal, phosphate, pyrite, glass sands, dimension stones and gemstones.

The country has also anomalous sites for gold, platinum group metals, diamond and copper.

However, lack of adequate and reliable power has proven to be a stumbling block to kickstart mining operations for a number of minerals notably heavy mineral sands, whose deposits exist in the Lake Malawi and Chilwa shores.

Kayelekera, the country’s biggest mining investment now on care and maintenance, uses diesel for its operations.

Malawi is also hoping to cash on the oil and gas subsector having awarded all its six hydrocarbon exploration tenements to international expatriate firms.

Experts have rated Malawi, especially the Lake Malawi and Shire Valley area, as a potential target for the discovery of hydrocarbons as it falls within the African Great Rift Valley area which has seen oil being discovered up North in countries such as Burundi, Uganda, Tanzania and Kenya.