Mining & Trade News

The small-scale mining craze that has hit areas around Milepa Trading Centre in Chiradzulu and nearby surrounding places of Zomba and Mulanje, is resulting in sound financial earnings for members of the local population, which is transforming their lives.

Mining & Trade Review tour of the areas revealed that scores of the residents have started businesses like make-shift restaurants and liquor shops, motorcycle taxis, and selling second hand clothes targeting the miners and gold buyers.

Said a Kabaza operator Ladmen Kamfose: “My life and that of my family has drastically improved since the gold was found around here, sometime around November last year. My motorcycle [Kabanza] taxi has made me lots of profits than before.”

“Around November and December, at the peak of mining, we [motorcycle operators] used to make a net profit of between K20,000 to K25,000 per day implying we could even compete with some minibus operators in terms of daily profits.”

Kamfose, however, said the earnings are now dwindling because a lot of miners who flocked to the area are relocating to other places in nearby Phalombe District, where it is deemed there is also plenty of gold.

“Just like my colleague here is saying, this mining venture, though informal, has made businesses boom in this area. People are no longer the same, they have money. How I wish government formalized the mining and helped out to prospect for more gold, which we believe is plenty around these areas. Indeed, local peoples’ lives would drastically improve,” Said Yamikani Maduka, Chair for the Mining Initiative in the area.

He also concurred with Kamfose that the coming of the gold mining initiative in the area has extremely helped masses of people to survive the serious food shortage in the area.

Maduka said mining has made existing businesses boom, new ones being established, and lots of locals finding part time jobs that are helping them to ably buy food and other needs.

With the mining of gold, vendors, who previously mainly traded in reputable markets in Chiradzulu, Zomba, Mulanje and Phalombe, have now become residents of Milepa, selling their wares.

According to chair of the Milepa Business Fraternity, Mc Mrazio Mandawala, businesses that have seen a remarkable revenue boom are shabeens, resthouses, bars, fish vending, butcheries, and many other informal businesses.

During the visit to the mining sites, Mining & Trade Review also observed that there are many sex workers in the area, alcoholism and threat of marriage breakages due to men using money earned from mining activities to entice women.

Indian investors say there is a need for the governments of Malawi and India to sign a Double Taxation Treaty in order to prevent the taxation of the same income or assets in both countries, which is a stumbling block to investment.

A representative of the investors who is also MD for Trinity Ventures Inc. K.S. Gurulingaswamy says in an interview with Mining & Trade Review that it will be beneficial for Malawi to have a Double Taxation Pact with India in order to attract huge investments from that country.

Gurulingaswamy says:  “There are large number of rich Indian business people who are interested to invest in Malawi due to the good opportunities available.”

“They are interested to invest in sectors such as Agriculture, Tourism, Mining, and Renewable Energy.  However, due to the non-existence of a Double Taxation Treaty between the countries and the uncertainty faced due to it, such investors are hesitant to invest and start businesses in Malawi.”

Double taxation treaties offer several benefits to investors including avoidance of double taxation, which is done by specifying rules on how income should be taxed in each country to ensure that taxpayers are not unfairly taxed on the same income or assets in both countries.

Gurulingaswamy, whose company is prospecting for black granite in Mchinji, also explains that such a pact plays a role in the promotion of cross-border trade and investment by providing clarity and certainty to individuals and businesses regarding their tax liabilities in different countries.

“This clarity reduces tax-related uncertainties and promotes international economic activities,” he says.

Gurulingaswamy says tax treaties can also make a country more attractive for foreign investors by providing favourable tax treatment, such as reduced withholding tax rates on dividends, interest, and royalties explaining that this can incentivize foreign companies to invest in the country by making it more financially appealing.

Tax treaties also facilitate cooperation and exchange of information between countries’ tax authorities.

He says: “This helps in preventing tax evasion and ensuring compliance with tax laws by allowing the exchange of information between the signatory countries.”

“By providing clear guidelines for determining tax liabilities in cases involving cross-border transactions, tax treaties can reduce administrative burdens for taxpayers. This clarity simplifies tax compliance procedures, saving time and resources.”

Currently, South Africa, Ethiopia, Botswana, Namibia, Mozambique, Kenya, Tanzania, Zambia, Uganda and Morocco, which are enjoying massive investments from India, have a Double Taxation Treaty with the Asian economic giant.

Malawi has signed double taxation treaties with Botswana, Denmark, France, Kenya, Mozambique, Netherlands, Sweden, Switzerland, United Kingdom and United States of America.

There are also pending treaties with Egypt, Mauritius, Norway, China, Seychelles, Zambia and Zimbabwe.

Malawi taxes at source unlike countries like the United States that tax worldwide income on its citizens.

A locally registered firm Why Limestone Mining is looking for potential partners to invest a minimum of $200,000 to enhance productivity of a lime plant in the district of Karonga in northern Malawi.

In a Malawi Projects Investment Compendium Volume 4 published by the Malawi Investment and Trade Centre (MITC), MD for the Company John Swira says that the opportunity being offered has the capacity of generating more benefits and is a low risk investment.

“The current developers have invested over $800,000 to date, have installed production machinery and have ran batches of lime productions successfully,” says Swira.

He explains that the business process has brought the project to the point where it is possible to offer additional new investors the following benefits: 60% to 90% shareholding in Why Limestone Limited, a company which has a capacity of production of lime of 200 tones per month.

He says what is required for the project is financiers or equity partners who can inject money in order for the business to reach its full potential, or acquisition of the business is possible.

The project which is located in Northern part of Malawi in Karonga District, currently operational, already carried pre-feasibility studies, feasibility studies and other studies.   

Mining in Malawi is an under-explored activity accounting for about 1% of Gross Domestic Product (GDP) but it holds a great potential to develop Malawi’s economy and attract a great deal of investors.

According to the Geological Survey Department, an airborne geophysical survey conducted in 2015 revealed an abundance of mineral deposits including rare earth minerals, bauxite, uranium, graphite, vermiculite coal, gemstones, alluvial gold, monazite, limestone, phosphate, pyrite, glass sands, dimension stone and titanium heavy bearing mineral sands.

Formal mining activities are happening for coal, and lime while gemstones are extracted by small-scale miners.

In order to cultivate and sustain a conducive environment for growth of investments in the sector, the Government of Malawi reviewed and endorsed the Mines and Minerals Act of 2023.

The Government grants duty free and VAT free importation of mining equipment to investors in the mining sector.

In order to access the incentives, an investor is required to obtain a mining license from the Ministry of Mining.

Furthermore, the Department of Geological Survey set up a geo-data management platform to ease information access by investors and other stakeholders.

Local producers of cement have bemoaned the continued shortage of foreign exchange coupled with the decision by the Malawi Government to continue issuing more cement import licences to traders saying the situation may prompt them to close shop leading to hundreds of Malawians, directly and indirectly employed by the industry, losing jobs.

The Ministry of Trade and Industry announced last month that it had issued 30 import licences to cement traders to ensure adequate supply of the product on the market to address the escalating prices.

The development came after the Ministry had also issued cement import licences to contractors working on big donor funded road projects in light of cement shortages.

But commenting on the development in an interview, Chairman of Cement Products Limited (CPL) Aslam Gaffar said the root cause of the cement shortages is underproduction by local manufacturers due to shortage of foreign exchange to import raw materials and spare parts for plants stressing on the need to make more foreign exchange available to the cement manufacturers to import raw materials.

“We, local producers, have the capacity to meet the demand on the Malawi market but what we need is foreign exchange, which is not readily available, to import raw materials and spare parts to maintain our clinker production plants and grinding mills to produce at full capacity,” he said.

Gaffar explained that the escalating prices of cement on the local market are as a result of profiteering by traders who are charging similar prices for local and imported cement brands of the same attributes.

A snap survey by Mining & Trade Review in the major cities of Lilongwe and Blantyre confirmed Gaffar’s observation with prices for CPL’s most popular brand Njati and Shayona Cement Corporation’s leading brand Akshar fetching up to K18,000 at par with imported brands such as Sinoma from Zambia of similar strength. However, the ex-factory price for Njati is K9,800.

Gaffar observed that in a fair market situation, the foreign brands world have fetched higher prices than local brands of similar attributes taking into account transport costs and the surcharge that Government charges on imported cement.

“We, producers, are not doing import parity pricing but the resellers. Government needs to find ways of regulating the market in order to bring sanity and deal with escalation of prices for locally produced brands,” he said.

Gaffar also urged the contractors working on donor funded road projects, who are paid in US Dollars, to buy cement from the local manufacturers.

“These road projects are either European Union or World Bank funded implying that the contractors are receiving dollars. We need that Dollar to pay for our inputs but these contractors prefer to sell the Dollar at premiums and buy cement from our distributors at premium prices, and because the Dollar has been sold at a premium, they make more money,” he said.

CPL and Shayona are the only companies that produce clinker locally with CPL owning a clinker factory at Njereza in Mangochi and Shayona running a plant in Kasungu. The other local cement producer, Portland, imports clinker which is processed into cement at its factory in Blantyre.

Shayona Cement MD Jitendra Patel in a separate interview also expressed concern over Government’s move to issue more cement import licenses to traders describing it as killing the local industry.

“This shows lack of seriousness by Government to nurture the local industry to ensure that it continues creating more job opportunities while reducing the national import bill,” he said.

Patel wondered where is the logic on the part of Government in encouraging cement imports which are a drain in foreign exchange when the local producers are failing to meet the country’s cement demand due to reduced production as a result of shortage of foreign exchange to import raw materials and spare parts for maintenance of their plants.

“Importing cement as a finished product requires a lot of forex; only a fraction of that is what we need for our raw materials since we source limestone, which is a key ingredient, and some other raw materials locally,” Patel said.

Coordinator for Chamber of Mines and Energy in Malawi Grain Malunga commented in a separate interview that it will be interesting to see how these licensed importers find foreign exchange when cement producers are failing to access the same to import raw materials.

Malunga also encouraged the cement producers to find ways to source more raw materials such as gypsum, iron ore, coal and kaolinitic clays locally.

“These Companies need to explore ways to partners with local gypsum miners to source the raw material from local producers,” he said. 

But Ministry of Trade and Industry Spokesperson Mayeso Msokera was quoted in the local media as saying Government will continue issuing import licenses to traders to supplement the deficit from local production.

Msokera said the licenses are valid for one year with specific limitations on quantities assigned to a trader.

Shayona Cement is a leading producer of cement in Malawi with a production capacity of 1,500 tonnes per day, and is conducting an expansion programme for its plant to increase production to 2,500 tonnes per day.

CPL, which is also running an expansion programme for its factory, has a production capacity of 1,000 tonnes per day.

Malawi has an annual market demand of about 1.8-million tonnes which the producers say they can easily meet but are producing very low quantities due to lack of foreign exchange to import raw materials and spare parts for the machines.    

Sugar group Illovo Malawi says it is optimistic that better weather and a return to normal power generation by Electricity Generation Company (Egenco) will improve the output from its agricultural operations, which will positively impact production efficiency and factory throughout.

In its audited financial statements for the year ended August 31, 2022 signed by Group’s Chairman Gavin Dagleish and MD Lekani Katandula, Illovo says it will continue pumping in more efforts to improve the performance of the group while providing the ultimate consumers with affordable prices.

It says: “More efforts on drip irrigation and other elements of the agricultural recovery plan replete with excellent agronomic practices, continued grower support, a proactive approach at plant maintenance and efficient production initiatives and embedding of the overall performance improvement initiatives throughout the entire business value chain should result in even further growth in the group results.

“The group will continue pursuing various initiatives in commercial and logistical operations that are expected to contribute to better delivery of excellent quality product pack sizes at affordable prices to the ultimate consumers.”

“Efforts at growth will also be engaged further in the export markets to assist us counter the impact on the business of the scarcity of foreign exchange and further ensure maximization of value from every ton of sugar sold.”

Dagleish and Katandula, however, say that delivery of cost optimization efforts for the business continues to suffer from depreciating exchange rates for the Malawi kwacha against major trading currencies.

They also bemoan increasing inflation and interest rates, and the scarcity of foreign currency and fuel.

“The Group will therefore continue to actively engage significant efforts at cost reduction, improvement of operational efficiency, export revenue enhancement, and domestic market growth to drive delivery of good results for the business and all stakeholders into the foreseeable future,” Reads the statement.

However, despite the challenges, the Group experienced significant growth in domestic market and sold 213 550 tonnes from 175 578 tonnes in the prior period.

The Group achieved 14% growth turnover to K186.6 billion, 24% growth in operating cost profit to K39.5 billion and 31% growth in profit before tax to K38.4 billion over the prior year.

Illovo Group also contributed to the Malawi fiscus by paying and collecting tax on behalf of government amounting to K28.2 billion and managed to fully repay its debt and achieve a net cash position in the year despite the challenges it faced.

However, Cyclones Ana and Gombe that the country experienced in the first quarter of the year 2022, impacted on the delay by the Group to commence cane crushing exercise for the 2022 season by weeks as the wet fields could not be accessed for cane harvesting and haulage.

Dagleish and Katandula state: “The persistent rainfall negatively impacted cane quality and sucrose recoveries and high ash content which caused plant mechanical problems resulting in high incidences of downtime.”

“The two factories planned to start production mid-April 2022 but could not successfully achieve this due to muddy cane, especially at Nchalo and general plant downtime.”

“Both factories eventually started production initially at low throughout rates particularly in the first week of May 2022 while factor throughout was affected by plant mechanical problems resulting from the poor quality of the cane.”

Within the year, domestic revenue for the Group continued to register growth despite the reduced inventory levels in the period from late March to mid-May 2022 resulting from the delayed crushing cane.

“The Group commits to continue contributing to the development of the country through significant employment, trade opportunities, tax contributions, and various statutory payments,” reads the statement.

Cement production in Malawi is expected to increase due to continued demand for the commodity resulting in an increase in production of about 20 percent of the raw materials like limestone, iron ore and kaolinitic clays also known as podzolana.

This is stated in Malawi’s 2021 Annual Economic Report published by the Ministry of Finance and Economic Affairs.

The Report states that in the Cement Industry, Shayona Cement Corporation, Cement Products Limited and Lafarge Cement (Malawi) Limited remain the only three biggest players in cement manufacturing in Malawi.

It, however, reads that only Shayona Cement Factory based at Chamama in Kasungu District and Cement Products Limited (CPL) Factory based at Njereza in Mangochi District are currently using the locally mined limestone and iron ore to produce cement in Malawi with a daily production rate pegged at 1,500 and 1,200 metric tonnes of cement per day, respectively.

It says during the period under review, the two companies had a combined consumption of limestone of up to 575, 397.02 metric tonnes from their respective mines and used 5,018.16 metric tonnes of iron ore sourced from Artisanal Small-scale Miners (ASMs) at Nthare Hills in Chiradzulu district to manufacture cement.

Lafarge Cement (Malawi) also manufactures cement using locally mined kaolinitic clays sourced from Senzani in Ntcheu District.

“This clay is part of the raw materials used in the manufacturing of cement due to its binding element and properties,” reads the report.

During 2020, Lafarge now known as Portland Cement Company, used a total of 26,599.62 metric tonnes of kaolinitic clays valued at MK239.165 million.

Nonetheless, Malawi’s cement industry is encountering a number of problems which are hindering its growth which include electricity blackouts, shortage of foreign exchange to import raw materials for production and unfair market competition posed by imported cement brands.

Shayona Cement Operations Manager Prajeesh Padmanabhan told Mining and Trade Review in an earlier interview that influx of imported cement is impacting on the company’s revenue to invest in expansion as it is forcing it to sell cement at very low prices.

“We are facing the challenges from imported cement on supply demand scenario which are pushing us to sell our cement at a very thin margin,” he said.

He said foreign exchange problems are making it difficult for Shayona to import raw materials for cement production such as gypsum which the company sources from Oman and sometimes Tanzania.

Padmanabhan, however, said due to the Company’s passion to support local industry and save foreign exchange, there have been attempts to source gypsum locally but levels of sustainability were hard to attain.

 “We have discussed with the gypsum mining groups in Dowa several times and once we even issued a purchase order but unfortunately they could not supply. If we can secure gypsum as per required quality in Malawi, it will help us lot,” he said.

MD for Cement Products Limited (CPL) Akbar Gaffar told Mining & Trade Review in a separate interview that due to scarcity of foreign exchange, the Company is facing challenges in importation of materials not only used for cement manufacturing but also cement packaging and procurement of spare parts for its heavy duty machines. 

Gaffar said: “As a company, we are failing to procure essential products in order to run a smooth and efficient production line.”

“Delays in remittances of foreign exchange have impacted our output marginally whereby we have been forced to produce less until sufficient raw materials are available.”

“In figures, this has translated to lost production of approximately 6,000 tonnes of cement.”

Padmanabhan and Gaffar also lamented prolonged electricity blackouts saying they force the cement producers to use diesel generators, which is more expensive.

Chairman for CPL Aslam Gaffar also told Mining & Trade Review that added to the host of problems is the current diesel shortages which are impacting on the production line.

As one way of retaining and expanding trade and export activities and links opportunities, Malawi Investment and Trade Centre (MITC) has announced that it has identified potential export markets for various commodities through its various export promotion efforts.

In a press statement, CEO for MITC Paul Kwengwere says the demand for the commodities range from 10 metric tonnes to 120,000 metric tonnes.

The markets are for commodities like soya beans, groundnuts, rice, tea, coffee, macadamia, sunflower, pigeon peas, sesame, chick peas, tomatoes, mangoes and pineapples, among others.

Kwengwere says: “As MITC our mandate involves promoting Malawian products on the international market with the intention of identifying viable export markets for such.”

“So through the trade fairs, trade missions and expos that we attended in the last financial year of 2021-2022, we have managed to identify these export markets.”

“These market opportunities are from verified potential buyers who are ready to discuss pricing and tonnage issues with those that are interested.”

“We are encouraging those with the said commodities to contact our office so that we link them to the potential buyers for further engagement.”

Kwengwere explains that the potential export markets are in countries such as Mozambique, Zimbabwe, South Africa, India, Democratic Republic of Congo, Zambia, Tanzania, Botswana, United Arab Emirates, China, Japan and Indonesia.

Recently, MITC announced a funding opportunity, worth €25 million, for players in the horticulture sector.

The funding is part of the Caribbean Pacific Liaison Committee (COLEACP) framework programme on agricultural value chains under the Fit for Market+ programme financed by the European Union.

The Fit for Market+ programme is aimed at providing technical support to African, Caribbean and Pacific (ACP) countries like Malawi to maintain and improve the capacity of smallholder farmer groups and horticultural Micro, Small and Medium Enterprises (MSMEs) to access

domestic, regional and international markets.

Public Relations Manager for MITC Deliby Chimbalu described the funding as a great opportunity for business people in the horticulture sector.

“One of the key challenges facing our businesses is lack of finance or funding to implement their projects that could benefit the country’s economy. So opportunities like these need to be utilized that is why we are encouraging those operating in the horticulture sector to apply for this funding.”

“This Fit for Market+ programme under COLEACP will run for five years and it is very

important because the technical assistance that they provide focused on building capacity of

MSMEs in areas of developing export market plans, preparing business plans, export standards

awareness and improving their access to national, regional and international horticulture

markets among others.”

COLEACP designs and manages development programmes in the agriculture and food sector funded by donors, mainly the European Union (EU) and the organization of African, Caribbean and Pacific (ACP) states.

MITC is an investment and trade promotion and facilitation agency in Malawi.

MITC identifies, develops and packages investment opportunities in Malawi; provides a professional service to all clientele; brands and markets Malawi as an investment destination; retains and expands trade and export activities and links opportunities to the developmental needs of the Malawi community.

Organizers of business and entrepreneurship symposium dubbed Wealth Creation Conference, Sycamore Consult Limited says all preparations are through to host the much anticipated business symposium in the capital city, Lilongwe.

The conference to be held on August 31, 2022 at Bingu International Convention Centre (BICC) is set to bring together local and international business executives and entrepreneurs to share experiences on sustainable means of navigating through economic hardships and wealth creation ladder.

Speaking to Mining and Trade Review, the firm’s CEO Audrey Mwala hinted that the conference has been themed; “Mindset change” with a sole purpose to awaken many Malawians to diverse business opportunities currently at their disposal amidst economic crisis the country is going through.

Mwala stressed that the conference is critical as it has tried to bring together notable practical based business executives and seasoned entrepreneurs who will speak based on diverse experiences attained through years of running successful businesses.

Notable figures expected to speak at the conference include Jimmy Korea Mpatsa of Mpatsa Holdings Limited, Prophet Shepherd Bushiri, Standard Bank of Malawi CEO Philip Madinga and seasoned entrepreneur Napoleon Dzombe.

She said: “The speakers are ready, I talked to them they are not only ready to but also excited to have the opportunity to share their experiences for the benefit of many people in Malawi. Malawi is not a poor country, there is no reason why Malawian should be poor. We need to have the right mindset of wealth creation. Everyone can become rich.”

“This conference is very crucial because it is about making a decision between living a life of poverty or a life of wealth. The steps to wealth creation will be laid bare, not by people that speak theory, people that write or just motivate other people without having the experience of being on the ground to implement, and go through the grind, but these people are talking from experience, sharing their moments of fear, doubt, pain confusion, discomfort and yet victory at the end

“The conference will tame the key challenge local business firms are facing, which is failing to think big and grow big. The conference will show how the speakers started and where they are today.”

In an attempt to market potential business opportunities able to lure foreign investors into the country, the Malawi and Belgium will hold a business webinar on September 22, 2022 aimed at discussing business opportunities between the countries.

A press statement by country’s investment and trade promotion and facilitation agency, Malawi Investment and Trade Centre (MITC) says the webinar which is targeting the private sector will discuss the business climate and investment opportunities available in Malawi to attract potential investors from Belgium.

The statement also explains that the meeting will provide a platform to strengthen and promote trade links between Malawi and Belgium.

Public Relations Manager for MITC, Deliby Chimbalu has described the business webinar as an important platform for exchanging important business information between Malawi and Belgium.

Chimbalu said: “This webinar is a great opportunity for our private sector to know and understand the available business opportunities in Belgium.”

“It is also a perfect space for them to learn and understand the market requirements especially those wanting to export to Europe in general and Belgium in particular.”

The business webinar is being organized by the Malawi Embassy in Brussels in conjunction with MITC and the Belgium Chamber of Commerce, CBL-ACP.

Belgium is one of Malawi’s top export destinations and recent data from the Observatory of Economic Complexity (OEC) World indicates that in 2020, Malawi exported about $161million to Belgium.

The main products that Malawi exports to Belgium are raw tobacco, sugar and tea. 

As a promotion agency, MITC identifies, develops and packages investment opportunities in Malawi; provides a professional service to all clientele; brands and markets Malawi as an investment destination; retains and expands trade and export activities and links opportunities to the developmental needs of the Malawi community.

MITC also operates as a One-Stop Service Centre for business start-ups in Malawi.