By Tawonga Mayuni
Civil Society Organisations (CSOs) working in Malawi’s extractive sector and the Malawi Chamber of Mines and Energy have called on the Malawi Government to review the Mining Development Agreement (MDA) for Kayelekera Uranium Mine in Karonga before the miner, Lotus Africa, resumes production at the mine currently on care and maintenance.
The Malawi Government signed the Kayelekera MDA with the previous operator of the mine Australia’s Paladin Africa before production of the Kayelekera yellow cake started in 2009.
Under the agreement, the Malawi Government acquired 15% shareholding in the mine in exchange for a reduction of royalties from the 5% stipulated in the taxation laws to 3%.
The miner never declared any dividends to shareholders including the Malawi Government until it placed the mine on care and maintenance in 2014 in the aftermath of the Fukushima Nuclear Disaster in Japan, which led to closure of many nuclear plants in Asia hence a slump in demand and prices for the commodity.
Paladin later sold the mine to Lotus Africa, which is also an Australian listed company, and the Malawi Government has renewed the Kayelekera Mining Licence for Lotus for a further 15 years.
But National Coordinator for the Natural Resources Justice Network (NRJN) Kennedy Rashid said in an interview that he expects the government to review the MDA since a number of laws governing the mining sector including the Mines and Minerals Act (MMA) and the Taxation Act have changed.
The new Mines and Minerals Act has a clause that allows the Government to acquire up to 10 percent free equity in large scale mines.
“Since the laws have changed from the time the initial MDA was agreed, it is only proper to review the agreement and set a trend for all other emerging projects across Malawi. The new laws should be enforced under this agreement,” Rashid said.
Rashid urged the country’s leaders to stop championing their interests in mining projects but work in accordance with the law to ensure adequate benefits of mining projects to government through increased tax revenue and the rural communities in mining areas such as Kayelekera through Corporate Social Responsibility (CSR) and Community Development Agreements (CDA).
He also urged the government to ensure that there is adequate consultations with various stakeholders before making decisions on mining projects.
“The government should at least get input from the stakeholders including the general public on their expectations from large scale mines such as Kayelekera and how they want the process to proceed as the mine is of international, national and community interest,” he said
Rashid also said he expects the government to put up clear regulations for the CDA so that the community members can interface with the company and benefit directly.
“There seems to be no clear regulations on the ground as it has been seen in Karonga where communities have not been civic educated or equipped with the CDA regulations. With clear CDA regulations, communities can interface and benefit directly from mining activities” he said
National Coordinator for the Chamber of Mines and Energy Grain Malunga conquered with Rashid saying tthe Development agreement should be renegotiated in tandem with the current Taxation Act and the Mines and Minerals Act 2019.
Malunga also proposed that a community fund to be managed in a transparent matter should be set up for the Kayelekera Community to substantially benefit from proceeds of uranium sales from the mine as the system of channeling mining revenue to Government’s Account Number 1 does not directly benefit communities in mining areas.
A number of CSOs notably Oxfam in Malawi previously criticized the Malawi Government for failing to negotiate a better deal for Kayelekera which resulted in loss of taxation revenue for the nation through reduction of royalties and tax incentives that were given to the miner.
Lotus is currently conducting studies to resume production at the mine as prospects for a rebound in uranium prices on the world market appear buoyant with new nuclear power plants set to open in Asian countries such as India and China.
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