Mining and quarrying contributed 0.9% to Malawi’s Gross Domestic Product in 2014. Contributions are projected to remain below 1% for the next two years according to the Government’s Annual Economic Report 2015. It will be challenging for the Government to meet its goal of increase mining’s contributions to GDP to 20% by 2020 even though the report indicates rising growth rates for the sector in coming years.

During the most recent sitting of parliament, which included the budget session, the Ministry of Finance, Economic Planning and Development provided its Annual Economic Report 2015 among the budget documents. However, in President Arthur Peter Muthrika’s State of the Nation address to open the session of parliament, he stated that mining contributes 6% to GDP, contradicting information in the report. That said, reliable and accurate GDP statistics are very difficult to obtain which can have harmful effects.

The highlights of the Annual Economic Report 2015 on mining are captured below. Chapter 6 on mining and quarrying can be read here.

The electronic version of the full report is currently not available online but the 2014 version can be downloaded here (the chapter on mining and quarrying looks very similar to the 2015 report).

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Overview of the Sector

• Malawi’s mining sector contracted by 4.6% in 2014 mainly because of the suspension of production of uranium at Paladin Africa’s Kayelekera Uranium Mine. The mine will likely remain on care and maintenance in 2015 and 2016.
• The mining sector will rebound in 2015 with a growth rate of 2% because of release of results of countrywide geophysical airborne survey and the new Kanyika Niobium Project.
• The stabilisation of the exchange rate and greater availability of foreign exchange are also expected to contribute to growth in the sector as mining machinery and parts have to be imported.
• Malawi’s current electricity capacity through the Electricity Supply Corporation of Malawi (ESCOM) is 351MW. The demand for electricity is projected to as 534MW this year, 798Mw in 2012 and 1,106MW in 2025.
• 40% of investment pledges to the Malawi Investment and Trade Centre in 2013/2014 were to the energy sector (approx USD 300 million).

Source: National Statistical Office and Department of Economic Planning and Development (in Annual Economic Report 2015, Government of Malawi)

* Projections

Mineral Production

• Rock aggregates (1.04 million tonnes), coal (63.7 thousand tonnes), cement (57.9 thousand tonnes) and agricultural lime (20.3 thousand tonnes) had the highest production levels in 2014.

Mineral Production and Monetary Values in Malawi (2013-2015)

Source: Department of Mines (in Annual Economic Report 2015, Government of Malawi)

* Projections

Coal

• Malawi has over 22 million tonnes of proven coal reserves but coal production declined in 2014 due to the non-availability of fuel for processing and transportation.
• Production projected to increase for coal in 2015 due to increased demand as companies venture into coal fired power production.
• The sub-sector’s largest producers, accounting for 95% of coal production, are Mchenga , Kaziwiziwi, Malcoal and Eland coal mining companies. Their combined capacity is 10,000 metric tonnes.
• Coal is mainly used domestically for the provision of energy for different production processes: cement, tobacco, textiles, brewery, food processing and ethanol industries.

Uranium

• Kayelekera Uranium Mine, commissioned in 2009, is the largest mining investment in the country.
• The capacity of the plant is 1.5 thousand tonnes of uranium concentrate per year.
• The mine is currently on care and maintenance following the drop in uranium oxide prices with have been on average below USD 40 per pound for the last two years.

Agricultural, Calcitic and Hydrated Lime Production

• The three largest producers (Zalco, Lime-Co and Flouride) of agricultural, calcitic and hydrated lime increased their production capacity in 2014. Their combined production capacity is 3,500MT.
• Domestic demand remains robust from tobacco, poultry and paint industries.
• Small- to medium-scale enterprise, particularly the Lirangwe Lime Makers Association and Balaka Lime Makers Association, dominates production of hydrated lime. The One Village One Product programme, supported by the Japanese government, has provided significant technical and material assistance.

Phosphate 

• Deposits suitable for compound phosphate fertilisers are found at Tundulu in Phalombe District.
• Reserves amount to 2 million tonnes, averaging 17% phosphorus pentoxide.
• Part of the area is already being developed by Optichem for phosphate mining to use in fertiliser production

Employment in the Mining Sector

• Employment levels in the sector declined significantly in 2014 due to reduced production of quarry aggregate and the suspension of production at Kayelekera Uranium Mine.
• The sector also employs about 13,500 artisanal and small scale miners and 22,000 people are self-employed in the small-scale sector although it is “generally difficult to get an actual number […] since most of these operate in remote areas and are unregulated”.
• Prospects for increased economic activity in 2015 indicate that there may be a rise in employment.
• Women account for 10-15% of the workforce.

Formal Employment in Malawi’s Mining Sector (2013-2014)

Source: Department of Mines (in Annual Economic Report 2015, Government of Malawi)

Export of Minerals

• Coal, ornamental/dimension stones and gemstones continue to dominate the export of minerals in 2015.
• The Government, through the Department of Mines, generated MWK 1,418,111,267.21 in royalties, licence processing and ground fees between July 2014 and March 2015. This is about USD 3.1 million.
• Malawi does not have fixed prices for particular minerals or gemstones.

New Mining Operations and Licences

Source: Department of Mines (in Annual Economic Report 2015, Government of Malawi)

Mining Investment Opportunities

Malawi’s Mining Potential

• Malawi’s mineral sector is still in its infancy stage.
• Potential exploration targets include gold, uranium, platinum group metals, base metals, nickel, copper, dimension stone, phosphates, heavy mineral sands, graphite and coal.
• Sanders Geophysics Limited has conducted a country-wide airborne geophysical survey with the results to be released 2015/2016.
• Artisanal and small-scale mining activities have grown considerably and are a source of livelihood for many families in rural areas

Source: Geological Surveys Bulletins and Private Companies Mineral Exploration Reports (in Annual Economic Report 2015 and in 2014 edition, Government of Malawi), taken from “a regional geochemical drainage reconnaissance survey prior to 1973”

Pipeline Projects

• More exploration activities took place in 2015 than in 2014.
• Negotiations are ongoing between Government and Globe Metals & Mining for Kanyika Niobium Project, which is expected to begin in 2016. The project has an estimated deposit of around 50 million tonnes of multi-commodity minerals and could earn Malawi in excess of USD 100 million per annum.
• Major projects in the pipeline are summarised below (however, this table is identical to the table in last year’s report)

Source: Geological Surveys Bulletins and Private Companies Mineral Exploration Reports (in Annual Economic Report 2015 and in 2014 edition, Government of Malawi)