EDITORIAL

Mining licences must not be held for speculative purposes

It is unfortunate that wrangles for mineral licences are the order of the day in Malawi mainly because the sector has all along been poorly governed as evidenced by some questionable decisions that have been made concerning licence applications.

As reported in our main article, a mining licence was granted to a local company Ilomba Granite on June 28, 1995 and its expiry date was set at June 27, 2020.

The government revoked the licence from the company during the time of the Joyce Banda administration because since 1995, the company has not made any tangible development at the site.

Now Ilomba has obtained an injunction restraining any other applicant from working at the site and the government has rescinded its decision to revoke the licence.

The decision has affected other licence applicants such as J&Y Gemstone Centre and Mining which had shown keen interest to develop a sodalite mine in the vicinity of the granite deposit as with the current cadastral system, licences do not overlap.

Listening to the story, one would ask the following questions: On what basis did the government that time in 1995 grant a 25-year mining licence to Illomba Granite?

Does it mean the granite resource at Ilomba is such big that the mine would be productive for such a long period of time? If it is such a big deposit, why is the company not active on the mine?

We, therefore, conclude that this is just one of many cases where by companies are holding licences for speculative reasons in so doing they are denying a chance for potential investors to develop mines at the sites.

It happens all over the world that investors just apply for licences and shelve them while monitoring the market waiting for the price of the targeted commodity to rise to warrant the sale of the licence at an attractive price.

In Malawi, Ilomba is not the only tenement that has stayed for long without being developed, there are many others including Kangankunde in Balaka where injunctions are also the order of the day, as the government, which has been tired of seeing a potential resource just idle, approved the transfer of the licence to a new investor.

There have also been a controversy pitting the government and Paladin Energy over its exploration licences in the Kayelekera area regarding uranium exploration licences that have remained idle such that during the previous administration of Joyce Banda, the government wanted to revoke the licences and give them to capable local investors.

Surely, in having tenements such as these idle, Malawi is losing out on mining development due to selfish interest of some investors.

This is why in many countries where the mining sector is substantially contributing to the economy, they have laws that adequately empower the government to revoke licences held for speculative reasons. The revenue collection bodies in these countries are also strict in ensuring that any investor who sells a tenement pays capital gain taxes to the government.

We, therefore, urge the law makers to ensure that such provisions are incorporated in the Revised Mines and Minerals Act whose Bill is expected in parliament soon.

Surely, Malawi will benefit more from the mining sector if the resources are fully exploited other than if we continue to leave investors hold licences for a long period to sell them at a whooping profit.

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This piece was initially published in Malawi’s Mining & Trade Review Issue Number 53 (September 2017).

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