Malawi’s Mining, Oil and Gas News #25: April 2017

Malawi’s first Extractive Industries Transparency Initiative (EITI) report was finalised in April. You can download it here.

Take a look at 10 things I learned from the first report.

Based on the financial model I helped develop for Kayelekera Uranium Mine, I shared more about the data collection and analysis process on the Natural Resource Governance Institute blog.

Society & Extractives

This month the eight Tanzanians (generally referred to as ‘spies’ by the Malawian press) who came to Malawi on a visit to understand uranium mining and its potential impacts were convicted of trespassing. However, they were subsequently given a suspended sentence and able to return home.

• Malawi court convicts 8 Tanzania ‘spies’ on criminal trespass, Nyasa Times
• Malawi: Why Malawi’s Case Against the Tanzanian Eight Is a Travesty of Justice, The Conversation
• Tanzania ‘spies’ get suspended sentence: Malawi court orders they should be repatriated, Nyasa Times
• Malawi court sets free eight Tanzania suspected of being spies, Maravi Post

It comes as no surprise – given the great public interest – that reportage of oil and gas exploration in Lake Malawi continues. Hon. Werani Chilenga, Chair of the Parliamentary Committee for Natural Resources and Climate Change, said

We don’t have a policy in place and we are using an outdated law, the 1983 Petroleum Act, which vests all petroleum products in the hands of the life president. We are not comfortable with this scenario

• Hear other voices on oil exploration, The Daily Times
• MPs concerned with ‘shortcuts’ on Lake Malawi oil exploration, Nyasa Times
• Off-Shore Drilling on Lake Malawi. Perhaps Not Now, Mr. President., Tiunike Online
• Fresh water or oil: Kenani tells Malawi to choose, Malawi24
• Parliament committee against oil exploration in Lake Malawi: says Malawi has outdated laws to safeguard petroleum production, Maravi Post

Malawian Professor of Law Danwood Chirwa (University of Cape Town) also weighed into the debate here:

Most pressing is the need to seriously debate the pros and cons of offshore drilling. We might consider oil as the natural resource we have been waiting for, but it would be foolish not to recognise that Lake Malawi is itself an important and unique natural resource. It offers us fresh water in abundance, holds in its liquefied bosom a diverse range of unique fish species, and above all, offers the natural beauty that has attracted many tourists before and can attract more, with properly planning, commitment and dedication.

Malawi badly needs to expand its base of revenue as international aid is shrinking, but this should not lead us into a desperate oil rush. We risk being slighted by the so-called oil curse that has smitten many of our African brothers and sisters elsewhere on the continent.

The Minister of Tourism, Joseph Mwanamvekha, said at Malawi’s ‘first ever tourism conference’ that

Malawi has rich natural and cultural resources that offer unique and diverse opportunities for tourism and this increases its contribution towards the economic and social development of the country. However, these natural resources have to be conserved for their sustainable use

The Open Society Initiative of Southern Africa released its Southern Africa Mineral Governance Barometer. Malawi fared reasonably well, but like most countries in the region can improve enforcement and monitoring of legislation and regulations. And in order to realise the Africa Mining Vision, more work needs to be done on enhancing linkages with the rest of the economy (Malawi is said to be making some headway in this regard). I helped with the research, and my reflections are summed up here.

• Mineral governance in southern Africa undermined by implementation failures, says watchdog, The Daily Maverick

There have been a number of arrests at Kamuzu International Airport over attempts at externalising forex, smuggling ivory, and this month precious stones. A South African woman Ms Lerato Muhadi Motaung, employed by Oxfam South Africa, pleaded guilty and was fined MWK 50,000 for being found in possession of precious stones worth MWK 20,000 (the photos in all the news articles show rose quartz, but the type of stone was not reported).

• South African national found with precious stones at KIA, Malawi24

• OXFAM youth coordinator arrested at Lilongwe Airport for illegal possession of precious stones, Maravi Post

• Oxfam distances itself from precious stones found at KIA, Malawi24

Oxfam Malawi issued a press statement:

Oxfam in Malawi Country Director John Makina said this on the arrest of an Oxfam South Africa employee found in possession of precious stones at Kamuzu International Airport:

Oxfam in Malawi confirms that Ms Lerato Muhadi Motaung was arrested by police at Kamuzu International Airport (KIA) on Wednesday 12 April 2017.  Ms Motaung is a South African and an employee of Oxfam South Africa based in Johannesburg.

She was in Malawi for a training on Participatory Action Research, organised by Oxfam and was expected to leave the country on 12 April 2017 when KIA authorities arrested her for being found in procession of the precious stones.

Oxfam understands that authorities valued the stones found in possession of Ms. Motaung at twenty-thousand kwacha.

On Thursday 13 April 2017, Ms. Motaung appeared before the court in Lilongwe. She answered to two charges; being found in possession of reserved minerals and attempting to export them contrary to Section 99 (1) (a) (i) and Section 119 (2) of Minerals and Mines Act respectively – to which she pleaded guilty. The court fined Ms Motaung Fifty thousand Kwacha and Ms Motaung paid the fine and the court has since set her free.

Ms Motaung left the country on Friday, 14th April, 2017.

As an organization, Oxfam does not in any way condone any illegal or criminal acts. Oxfam is happy that following the arrest, the law ran its course and authorities did their work without any interference so that rule of law prevails.

For further details, please contact Oxfam in Malawi Country Director through [email protected] or 00265999 835 035

Private Sector

The first JORC estimate for Sovereign Metals’ Malingunde Project has been finalised the company announced. The company highlighted some beneficial features of the project:

• A high-grade core @ ~10% TGC which will provide the focus for the upcoming Scoping Study;
• Very soft, free-digging material for the life of mine and a very low strip ratio will equate to very low mining costs;
• No requirement for primary crushing and grinding, significantly reducing capital requirements and operating costs;
• Proximity to Malawi’s capital means access to existing infrastructure – rail, water, power & labour;
• Best in class concentrates in terms of flake size and concentrate grade will equate to premium concentrate pricing

Continued depressed uranium prices have resulted in the retrenchment of further staff at Kayelekera Uranium Mine, operated by Paladin Africa, subsidiary of ASX-listed Paladin Energy. Government has a 15% stake in Paladin Africa.

• Paladin retrenches 22 employees, The Daily Times
• Kayelekera retrenches 22 more, The Nation

Planning for the re-start of Kayelekera Uranium Mine is underway again, according to the company’s recently released Quarterly Activities Report (for period ending 31 March 2017).

The Company is in discussion with external consultants with respect to the potential to prepare a re-start project implementation plan. The aim of this work would be to establish a definitive plan for a re-start including updated capital expenditure and cost estimates, together with a detailed implementation schedule.

Mkango’s latest reports for the period ending 31 December 2016 are also available online, covering the latest information on Songwe Hill Rare Earths Project in Phalombe, and exploration in Thambani, Mwanza District. According to the report,

Exploration has identified a number of areas with potential for uranium, zircon, corundum and niobium.

Check out Grain Malunga’s latest technical file on platinum in Malawi. He also commented on the release of the first MWEITI report to The Nation in  ‘Extractive industries raised K5.94bn in 2015‘:

In an interview yesterday, mining expert Grain Malunga, a former Cabinet minister and member of Parliament (MP), said the figures show that the country is still at a grassroot level of exploration and should help civil society organisations (CSOs) understand that companies in the industry are still doing explorations rather than the actual mining.

He said: “CSOs are misinforming communities that Malawi is mining, but the benefits are not seen. But we are at an exploration stage where companies are at the moment putting in money to look for minerals and not to mine.

Government

Through the Malawi Mining Governance and Growth Support Project (financed largely through a World Bank loan), the government has hired two consultants (Gary McMahon and Sridar Kannan) to provide guidance on how Malawi can best manage and allocate revenue from the mining sector, i.e., how and where should money be spent or saved. During consultations, civil society again called for a separate government account to receive the proceeds from the mining sector.

• On Malawi’ extractive industry: CSOs calls for separate minerals proceeds account to flow to communities’ development
• CSOs unhappy with mining laws review

Malawi and Tanzania have (once again) set a deadline for resolving the boundary dispute over the northern boundary across Lake Malawi (or Lake Nyasa if you are from across the border) that flared up after the government issued petroleum exploration licences covering the now contested area. Former Mozambican president Joaquim Chissano continues to head up the mediation team.

The Government has also announced its intention to hold a third investment forum. It is planned for November this year. Minister of Finance, Economic Planning and Development, Hon Goodall Gondwe, has suggested the outlook for the economy is positive and the Economist Intelligence Unit concurs, at least to some extent:

We share the view that the economy has turned a corner. The kwacha has been fairly stable since mid-2016 (after depreciating by over 50 percent against the dollar over the previous 12 months) and inflation is trending downwards (falling to 18.2 percent in January, its lowest rate since May 2012). Improved macroeconomic stability, aided by a stronger agricultural performance and some donor-funded investment, will spur higher growth in 2017.

We are, however, less confident than the government about the pace of recovery and given the low levels of private investment and continued stagnation in the mineral sector, we think that growth is likely to fall far short of the 6 percent target.

Discussions continue on the new medium-term development strategy to replace Malawi Growth and Development Strategy that came to an end last year. The five priority areas  in the new strategy are agriculture and climate change management, education and skills development, energy and industrial development, transport and ICT infrastructure, and, health and population. The cabinet is yet to agree on these.

Finally, also in April, the president appointed a new governor for the Reserve Bank following the retirement of Charles Chuka. The new governor is Dalitso Kabame.

• Mutharika appoints Daliso Kabambe as new Reserve Bank of Malawi Governor: Exit Chuka, Nyasa Times

• Dalitso Kabambe new Reserve Bank boss, The Daily Times