Mining & Trade News

UAE oil exploration firm Rak Gas LLC, which held exploration licenses for Blocks 4 and 5, has terminated its oil exploration activities in Malawi.

Rak Gas has become the last multinational oil search firm to pull out of Malawi following another Asian firm Pacific Oil and Gas (Block 6), South Africa’s Energy for Africa (Block 1), and recently Hamra Oil (Blocks 2 and 3).

Country Manager for Rak Gas Martin Kansichi Banda confirmed to Mining & Trade Review that just like Hamra Oil, Rak Gas has notified the Ministry of Mining that it is pulling out of Malawi because it is difficult to mobilise equipment and human resource for oil exploration in Malawi due to travel restrictions that countries are enforcing to fight the coronavirus (Covid-19) pandemic.

“Oil exploration programmes demand that we mobilise equipment and experts from overseas and this is difficult due to boarder restrictions countries are enforcing to fight Covid-19,” said Banda.

He said currently the Rak Gas Malawi office is settling all its taxation obligations to wind up activities with a clean book.

Commenting on the development, Chairperson for Natural Resources Justice Network (NRJN) Kossam Munthali said the relinquishment of the licenses by the oil and gas companies may not be related to Covid-19 but that as the country, Malawi is not ready in that direction in terms of issues to do with legislative environment.

Munthali said the country might be lacking direction in the oil and gas sector due to the legislative framework which is very outdated. 

He said: “You may recall; these are the same companies that signed Petroleum Sharing Agreements less than a week to elections in 2012 and as Civil Society Organizations (CSOs) we were very shocked in terms of timing.”

“So this have told us that what they wanted is unachievable. They are only sending a signal to say we were not ready as a country.”

“I also hope wherever they go they will not speak bad of this country. If they were frustrated, then the government needs to do some setting and see how we can move.”

Munthali stressed that the country requires serious investors that can express demonstrative investment to sustainably exploit the minerals for the benefit of Malawians and not only for their own selfish course.

He also in order to attract the right investors, Malawi needs proper legislative architecture which is conducive not only to investors but also the people of the country.

Munthali said: “Petroleum Exploration and Production Act that we are using today is so archaic and dirty and is not speaking to the current practices.”

“The 1983 paper is a long overdue, we just need to quickly to go back to the drawing board.”

“This should be a wakeup call to the government to expedite review of the legislative framework.”

He also said though the country might not have serious investors for oil and gas, the upstream petroleum industry still be there and still belong to the nation.

He said: “Let me also remind the government that they need to provide us with figures on how much these companies have been contributing to the government through Petroleum Training Funds.”

“We need to know how we have managed to utilize these funds.”

Munthali said the last time he checked the records the companies were paying US$50,000 per block every year to the Malawi Government.

Coordinator for Chamber of Mines and Energy Grain Malunga commented that though the oil and gas investors have closed offices in the country, Malawi is still holds prospects in the future of upstream petroleum.

Malunga also said when the Ministry of Mining grants relinquishment certificates to the companies, it will have an opportunity to re-demarcate the big blocks.

“New companies will come in under re-demarcated exploration blocks. Good for Malawi. The blocks were too big,” Malunga said.

Meanwhile, the Ministry of Mining is still in the process of assessing whether the companies have met all obligations with both the government and local communities to be granted cancellation certificate.

But Minister of Mining Rashid Gaffar told Mining & Trade Review in a recent interview that government has no intention to block the companies from relinquishing the licenses.

The National Bank of Malawi (NBM) plc has announced that it has now completed the acquisition of a 51 percent controlling stake in Akiba Commercial Bank plc (ACB) in Tanzania for a consideration of USD 7.31 million.

A statement from MSE says the acquisition, made through a share subscription, is in line with NBM plc’s current strategic plan which has regional expansion as one of its key thrusts.

“This acquisition is expected to bring about growth in the business for both NBM Plc and ACB as it upscales the business of ACB to the standards of NBM plc,” the statement announces.

NBM is listed on the Malawi Stock Exchange with a market capitalization of K304 billion (US$388 million). The investment in ACB is approximately 2 percent of NBMs current market capitalization.

ACB is a Tanzanian bank offering a range of banking and financial services. It was established in 1997 with 300 Tanzanian entrepreneurs as its initial shareholders. It has strong SME roots and operates 18 branches across Tanzania.

Meanwhile, the statement advises NBM shareholders that negotiations are continuing for an additional stake in ACB.

Other trading announcements include ongoing shareholding negotiations by FDH Financial Holdings Limited, the majority shareholder in FDH Bank plc to effect changes in the company’s shareholding structure.

“Shareholders are therefore advised to exercise caution in dealing in their shares and consult professional advisors before dealing in their shares until such time as the result of the negotiations is known,” reads the statement in part.

Further the statement discloses that by the end of December, 2020, Malawi’s NICO Holdings plc, a listed entity on the Malawi Stock Exchange (MSE), registered improved market performance as a result of profits made by its subsidiary, NICO Life Insurance Company Limited.

According to the MSE trading statement, actual adjustments in NICO Holdings’ group profit after tax for the year ended 31st December 2020 are expected to be higher by more than 20 percent from that of the previous corresponding period. Illovo Sugar (Malawi) plc also declared an anticipation of its profit after tax for the half year ended 28 February 2021 to be 60 percent higher than the previous corresponding

Government says it is in the process of introducing new banana plant varieties to regain the glory that the crop lost to Banana Bunchy Top (BBTD) virus, which ravaged 11 countries in the sub-Saharan Africa in 2016.

Agriculture Minister, Lobin Lowe, said the districts of Mulanje and Thyolo, famous for some of the lost naturally-flavored varieties, will be case studies on the effects of BBTD and how the banana virus disrupted livelihoods as imported species dominated the local market.

In Mulanje alone, the disease affected 6,000 hectares of land, affecting 185,000 farming households.

“The Ministry is lobbying farmers in affected areas to uproot all bananas from their farmlands in order to replant new disinfected ones,” he said explaining that the process has, however, been facing resistance from some farmers who were used to the old variety.

Lowe said that to ensure that its production is doubled, the ministry will be introducing the new crop in other districts while using the two districts as trial epicentres.

A study by the Food and Agricultural Organization (FAO) of the United Nations shows that, in 1999, Malawi registered a sharp increase in the production of the banana crop from 93,000 tons in 1998 to 300,000 tons.

Figures from the World Bank show that Malawi earned more than $6.6 billion from banana sales in 2015, before production dropped sharply due to Banana Bunchy Top Virus.

BBTD was first detected in Nkhata Bay, where it is believed to have been brought by smugglers. Infected plants are dwarfed from their early growth stages and do not bear fruit.

Malawi President Lazarus Chakwera says his administration is determined to scale-up transport infrastructure development projects in the country in order to attain job, wealth and food security creation agendas.

Chakwera cited in his speech themed   “Accelerating the Change Malawians Fought For” presented when he opened the third meeting in the 49 session of parliament and the 2021/2022 budget meeting in Lilongwe.

The president explained that improved transport infrastructure is part of the three delivery accelerators that the current administration will invest time, resources, and energy in to speed up the realization development agendas.

Chakwera said: “Transport infrastructure and public works has been identified as an accelerator of economic activities. There can be no exchange of goods and services without transport infrastructure.”

“In the next financial year, my Administration will commence construction and rehabilitation of several road projects including:  Expansion to dual carriageway of the M1 road from Crossroads Roundabout to Alimaunde in Kanengo, Lilongwe at a total cost of US$25 million through a grant from the People’s Republic of China.”

He also announced that government intends to expand to dual carriageway M1 Road Section between Lilongwe Hotel and Lilongwe CCAP estimated to cost about US$ 30 million with a grant from the Japanese Government and the stretch between Lilongwe Hotel and Crossroads Roundabout will be financed locally.

Government is also planning to rehabilitate M1 Road from Kamuzu International Airport Junction to Mzimba Turn Off and from Kacheche to Chiweta at an estimated cost of 195 million Euros co-financed by the European Investment Bank and the Malawi Government as well as Nsipe – Liwonde Road at an estimated cost of US$30 million financed by the African Development Bank.

Chakwera said: “My Administration will use part of the MK1 trillion Infrastructure bonds which will be raised on the local market to rehabilitate and upgrade eight roads.”

Among the roads to be refined from infrastructure bonds include; Nsanje – Marka Road – Completing upgrading to paved 28 kilometres; Dzaleka – Ntchisi – Mpalo – Malomo Road upgrading to paved road covering a distance of 70 kilometres and the M5 Balaka Market – Kaphatenga – Dwangwa Mukwiya (Nkhatabay) – rehabilitation covering a distance of 469 kilometers

“We will also commission the design and construction of the other stretch from Edingeni- Kamchocho-Euthini-Mpherembe-Rumphi as this road has a huge significance in this agricultural rich area,” he said.

On rail transport, the President stressed that his administration will resuscitate the Sena Corridor Railway from the Port of Beira in Mozambique to Limbe in Blantyre. The project will involve rehabilitation and upgrading of the 201 kilometre Limbe – Marka railway section.

Chakwera said: “The funding for these 40 works will also come from the MK1 trillion Government bond. In addition, my Administration will prioritize the construction of the Salima-Tunduma Railway-line under the Build Operate and Transfer Model following review of the relevant laws to make this happen.”

“Meanwhile, a feasibility study of this railway will start as a matter of urgency. Still on railway lines, we will also commence construction of a 170 metre long Rail – Road bridge across the Ruo River.”

On water transport services, the President announced that government will finalize the construction works on a MK10 billion Port at Likoma Island which will include a landing facility at Chizumulu Island.

He also said his government is planning to resuscitate local aviation industry through establishment of the Malawi Civil Aviation Authority to regulate the air transport sub – sector.

“We will have a fully-fledged Civil Aviation Authority by June 2022, my administration is determined to bring back the glory that our flagship airline once enjoyed and we will recapitalize Malawi Airlines.”

Meanwhile government is revising the National Construction Industry Act of 1996 and its subsidiary regulations to be in line with African Union’s Agenda 2063 and the Africa Continental Free Trade Area.

Government is expected to enforce Malawian construction firms Order of 2014 which requires foreign firms to either partner in a Joint Venture arrangement or subcontract at least 30 percent of the works by volume or value to local Malawians.

Minister of Agriculture Lobin Lowe says he is impressed with how the multimillion dollar Agricultural Commercialization Project (AGCOM) is fairing in commercializing local daily farming in the country.

The Minister made the remarks on Wednesday when he toured Thyolo district to appreciate dairy farming activities being carried out by Mangunda Milk Bulking Group.

Lowe expressed excitement at the knowledge and skills the famers had on how to sustainably run daily farming.

“Am really impressed with how the project is fairing in terms of the economic empowerment of farmers, especially women,” he said noting that the design of the program was to attain production sustainability through animal cross breeding and the provision access to markets through the producer and off-taker arrangement.”

But the minister admitted that the existing 3% withholding tax and pricing constraints suffocate farmer’s business growth. He then promised that his ministry will consult widely to address the two issues.

On the withholding tax, he indicated the need to revise the 3% tax deduction arrangement since government expanded the tax band of withholding tax to be subjected to income of over K100-thousand.

According to a snap survey conducted around local retail outlets by the Milk Bulking group, milk farmers yield less when compared to the profits made by an off-taker. It was revealed that an off-taker sells a litre at K1,200 yet he purchases the same milk at Mk210 per litre.

Lowe asked the group to put its house in order as it looks in the possibility of facilitating the acquisition of milk processing unit so that the farmers can reap meaningful returns from their labour.

He added that ministry, through the department of Animal Health and Livestock Development, is currently in the process of analyzing a piece of legislation that will facilitate establishment of a Milk and Milk-Product Board, which will, among others, negotiate prices on behalf of the local farmers.

In his remarks, AGCOM National Coordinator Dr. Teddie Nakhumwa said the project’s development objective is to increase commercialization and competitiveness of agricultural value chain products in crops, livestock and fisheries.

He said it intends to rectify fiscal constraints encountered by small and medium scale farmers such as poor access to organized markets, poorly organized farmers and farmer groups, poor access to competitively priced finance and poor market infrastructure.

“The project provides 70% matching grants for the purchase of capital equipment and also insures that farmers lend from commercial banks to finance operations by guaranteeing 70% of their loans,” he said adding that the project also provides public infrastructure through connecting producer organisations to power, irrigation and road infrastructure—in what is known as Last Mile Infrastructure.

The project only supports producer groups that have formal arrangements with off-takers to promote a business culture among small and medium scale milk farmers.

And one of the project beneficiaries Elizabeth Mwalama, a 51 years old widow based in Chimwanga village T/A Naseta in Thyolo district hailed the project for helping in transforming people’s economic statuses.

“My life has been transformed through this project. Initially, I had no capacity to support my five children, but with the daily farming that was introduced to us through our milk bulking group, I can now afford a smile knowing my financial struggles are over” said Mwalama.

AGCOM has so far approved 45 PAs, out of which, 25 have already paid the required 30 percent contribution and are already accessing funds from AGCOM for implementation of the sub-projects. Over 400 hectares of land for local and foreign investments have been identified to secure an enabling business environment for PAs.

Despite the prevalence of the coronavirus (Covid-19) pandemic, Malawi’s publicly listed conglomerate Press Corporation Limited (PCL) says it has registered a profit of K38.22-billion largely buoyed by the energy and financial sectors.

In a summary of audited results for the year ended December 31, 2020, signed by Group CEO George Partridge and Chairman Randson Mwandiwa, the Group says the energy sector comprising ethanol producers PressCane and Ethco delivered excellent results registering 116% growth in its profit after tax.

It says: “The performance was driven by the improved margins following the agreement of a new pricing model with the Malawi Energy Regulatory Authority (MERA).”

“Results were further buoyed by an upside from the production of hand sanitizers, a new product line, in the wake of Covid-19 pandemic, supported by the availability of additional feedstock carried over from the previous year.”

In the financial sector, PCL subsidiary National Bank of Malawi delivered strong results with a 31% growth in its profit after tax. The results were driven by a 17% growth in non-interest income and a 27% and 6% growth in customer deposits and the loan book respectively.

‘’The Bank’s efforts to improve the quality of the loan book saw a 45% reduction in net impairment losses. Going forward, the focus is to reduce the level of Non-performing Loans to be within the bank’s risk appetite,’’ state Partridge and Mwandiwa.

However, poor performance of brewer Castel Malawi negatively affected the growth of the conglomerate with the Directors concluding that it would be in the best interest of the Group to divest PCL’s remaining 20% stake in the company.

“Negotiations to that effect have now been concluded at a price of USD12 million, and the proceeds will be realized in 2021,’’ reads the statement.

In the consumer goods segment, PCL’s subsidiary PTC also continued to make losses mainly due to working capital constraints which is also undermining the implementation of the revised strategic plan.

‘’The board is considering several strategic options to improve the wellbeing of the company by inviting other new investors into the group,’’ the statement reads.

On the macroeconomic outlook, the statement reads that with the presence of Covid-19 vaccines, Directors of PCL envisage improved economic prospects for 2021 with GDP growth of 3.5% projected up from the 0.6% achieved in 2020.

It says: “Management is confident of delivering planned results. The prevailing foreign currency shortages and the related impact on exchange rates, however, remain a major downside risk. The significant increase in public debt poses another major challenge to economic growth.”

‘’The Group continues to search for profitable investment in the power segment. Negotiations for a Power Purchase Agreement are underway. Leveraging on its position in the market, the Group is well positioned for continued growth.’’

Despite businesses being whipped by the global coronavirus pandemic, about 30 Malawian firms have expressed interest to participate at the 2021 Dubai International Expo that will take place in Dubai in United Arab Emirates (UAE).

A statement by Malawi Investment and Trade Centre (MITC) indicates that the trade fair will run from October 2021 to March 2022.

Responding to an emailed questionnaire MITC Investment Promotion Manager Modie Chanza said companies from different sectors of the economy have expressed interest in both exhibition, participation and also sending goods for retail at the Malawi pavilion.

Chanza said participation at the expo is free and that the participants will only be responsible for transport and accommodation of which she said MITC has already courted airline and hotel owners to offer fair prices.

“The expo organizers have negotiated for discounts on flights with Emirates Airlines and also selected hotels in order to make participation more affordable.”

“Participation at the expo is going to be beneficial to both the country and for the businesses that take part.”

“It provides an opportunity for Malawi to sell her brand and position herself on the international market with her unique investment and trade opportunities,” Chanza said.

Chanza also said strategic marketing is a necessary factor to the success and growth of businesses especially in difficult times of the Covid-19 pandemic.

She believes the 2021 Dubai Expo will provide the needed strategic platform understanding that it is the first large scale international business and trade event to take place during the era of the pandemic.

Chanza said the expo will be an eye opener to local investors and exporters to start thinking outside the box in order to excel and compete even in difficult times.

She said: “Furthermore, such platforms provide opportunities for exposure and impactful relationships created through networking.”

“We expect that there will be strong growth in the global economy once the pandemic is fully under control and by taking part in this important global event we anticipate that Malawian businesses will be in a position to take advantage of opportunities in Trade, Investment and Tourism.”

Amongst the expected participants is a local gems and jewelry firm, Nyasa Mining Cooperative (NMC) which will carry unprocessed stones and jewelry for retail and exhibiting. 

Speaking in separate interview, NMC Chairperson Percy Maleta said the expo will also act as platform to sell their ideas planned for the Year 2021.

According to Maleta, NMC plans to open Nyasa Unique Gallery in May 2021 in Area 43 Lilongwe; Nyasa Lapidary and Jewelry Centre to start last quarter of 2021 also in Lilongwe and; Nyasa Tile Making and Ornaments Factory to start operating in the last quarter of 2021 in Mzimba district.

“We will be selling these businesses at the Expo; the idea is to get strategic partners. We are also taking to Dubai a tone of different varieties of gemstones and minerals including gold produced by Artisanal and Small Scale Miners (ASMS) across the country; these will be showcased and some given as samples to potential investors.”

“The Expo is a platform where Malawi gemstones and other minerals will be showcased and to announce to the world that the country is ready and inviting those that are looking for investment in the mining sector especially the sub sector,” Maleta said.

From the list of the participants, NMC is the only ASM cooperative expected to showcase at the international trade event.

Responding to why many ASMs are reluctant to take part in international expos of which some can be answers to their challenges, Maleta said players in the subsector have a mindset of taking the expos as expensive ventures to participate using their own resources.

Maleta said the majority of ASMs have the tendency of participating in international events that are fully sponsored.

He said: “This is where Nyasa Mining is different from the word GO. We funded our own training to be taught by the Ministry of Trade on cooperative education, got registered and started participating in all the international events with our own resources except for the time Export Development Fund partially supported us when we went to the Beijing 2019 Expo in China.”

“I should also mention that MITC sponsored our accommodation for 30-days in Beijing and the booths in Beijing and Shanghai otherwise all other expenses like air tickets, accommodation and yet all was on us.”

“This alone scares most ASMs yet these events are the place where we meet and interact with the best of the mining industry; these are the events that teach us new ways of doing things in the sector; these are the events where we network and promote our products as they are normally attended by tens of thousands of people and chances of clinching deals are high.”

The expo is organized under the auspices of the World Expo and the next event is expected to be held in Yokohama, Japan in 2025.

Independent Power Producers (IPPs) pursuing solar power generation projects are expected to add about 121 MW to Malawi’s power grid by the end of this year, it was learnt in Parliament.

In a ministerial statement, Minister of Energy Newton Kambala informed the house that 60MW Salima project and 20MW Golomoti project both owned by JCM Matswani will be ready by April and December respectively while the 20MW Atlas Kanengo Project and the 21MW Phanes Energy Nkhotakota Project are expected to be functional by September.

“Malawi Government through Electricity Generation Company (EGENCO) is diversifying its energy sources and is pursuing installation of a solar PV plants in Salima, Nkhotakota, Lilongwe and Dedza which are at advanced procurement stage.”

“The Single Buyer, Power Market Limited, has approved the projects to be implemented. The projects will commence in the second half of the year 2021,” Kambala said.

Currently, EGENCO generates about 300MW of electricity from the installed electricity generation capacity of 508MW against projected demand of 719MW from the growing population and industry.

If the solar IPPs successfully commission the power plants, the country will raise the energy generation bar to 421MW by the end of this year.

Power Purchase Agreements (PPAs) have been negotiated with Power Market Limited as the licensed agent for buying power from all the producers.

The single buyer, independent as required, was still housed in Electricity Supply Corporation of Malawi (ESCOM) hence, the PPAs were signed by ESCOM as the single buyer at the time of amendment of the Electricity Act.

In the statement, Kambala also said despite opening up of the power sector to the IPPs, Government continues to participate in the market through the state owned company Electricity Generation Company (EGENCO). 

Kambala said: “In order to sustain the power supply from the existing power plants, there are maintenance and rehabilitation to existing power plants.”

“The plants that have recently been rehabilitated include Tedzani 3 and currently work on the rehabilitation of Tedzani 1 and 2 is in progress. EGENCO has also rehabilitated Nkula A.”

“Apart from the maintenance and rehabilitation, new projects are being planned and executed. One such project is the 18MW hydro power plant at Tedzani which started in 2018 and is expected to finish in 2021 with funding from the Japanese Government.”

Though Malawi’s new energy policy advocates for diversification of sources of power, hydro power remains the most attractive source considering its least cost operating cost despite its high investment cost.

EGENCO is currently planning to construct the Mpatamanga Hydro Power Plant, expand the Wovwe Power Plant, and set up the Kammwamba Coal Fired Power Plant.

MyBucks Banking Corporation says it expects Malawi’s macroeconomic stability to continue in 2021 supported by the stable food prices and lower than prior year project global oil prices.

In a financial statement signed by Board Chairperson Francis Pelekamoyo, the Banking Group explains that it expects the impact of the novel corona virus (Covid -19) on certain sectors of the economy to be felt in the medium term.

The statement reads: “Despite that the Covid -19 Pandemic is with us here, the group will remain vigilant in monitoring and managing risks related to Covid -19.”

‘’The group has implemented a new digital banking system after year end. With the new system in place, will drive the digitization agenda to grow the business as well as enhance customer experience.’’

‘’We will also focus on cost rationalization, prudent management of risk and liquidity, diversification of the balance sheet, whilst maintaining a healthy capacity position.’’

During the year, the Group conducted the acquisition of Nedbank Malawi and fully integrated the operations of Nedbank into MyBucks. This acquisition has enabled the group to serve its stakeholders from additional points of representations and also continue to offer unique products to its focus customer segments.

Meanwhile, the Group will continue to focus on achieving growth through acquisitions, mergers and organic means where necessary.

However, the group continues to show strong performance year on year. The revenue grew by 26% driven by a 65% growth in loans and advances and 25% in treasury investments.

 ‘’The group’s profit after tax of Mk2.2 billion was 53% above prior year. This was due to growth in interest generating assets, mainly the 65% growth in the loan book,’’ the statement reads.