Government takes on Mchenga Coal Mines over outstanding dues

By Wahard Betha

The Ministry of Mining has threatened to close privately owned Mchenga Coal Mine located in Rumphi District if the company owners fail to settle outstanding dues to Government.

Making a presentation before Parliamentary Committee on Natural Resources and Climate Change, first Principal Secretary for Ministry of Mining Joseph Mkandawire told the Committee that the Ministry through Mineral Resources Committee (MRC) deferred to extend mining terms for the company due to the outstanding arrears they are yet to settle.

The outstanding issues include: payment of all outstanding mineral royalties amounting to over MK120 million; submission of a Tax Clearance Certificate from the Malawi Revenue Authority; submission of an approved Environmental Clearance from the Malawi Environmental Protection Agency (MEPA) and; submission of detailed plans in accordance with the Mines and Minerals Act.  

Mkandawire said: “On March 16, 2023, the application for a term extension was rejected during the Mineral Resource Committee meeting on the grounds that the company failed to comply with the requirements.”

“Again, on March 25, 2023, the company was notified of the decision on rejection of the application for the term extension and the company has not provided any response.”

“Considering that the company has not been forthcoming, the Ministry, recently commenced steps to seize all mining operations at Mchenga Coal Mine.”

“As at October 2, 2023, our Ministry received notification that Mchenga Coal Mines Limited has sold the shares in the mine and that management of the company has changed.”

Mkandawire said the notification showed that the Mchenga owner has sold all shares with all obligations and liabilities to Lynx Investment Limited.

He said: “The decision to consider whether to grant them a licence will depend on how the new Company will structure payment of the arrears, payment of the capital gains tax and other outstanding conditions.”

“We are sure that the new company is aware of the conditions that are there when you are occupying ownership of a mine. This means all the outstanding issues that the old company has will be settled by the new company.”

Mkandawire warned to proceed with the idea of completely seizing all mining activities at the site this month if the new company or Mchenga fails to comply with the requirements.

Commenting on the issue, Chairperson for the Committee Werani Chilenga advised the Ministry to stick to the laws and not to allow Mchenga or the new Company to resume production before settling issues with the Ministry.

Chilenga said: “We are not surprised that Mchenga officials did not show up at the meeting despite being informed and them confirming to make a presentation about the situation before us.”

“We suspect that they know they are to blame on this, and the behavior of unsettled arrears for years, we feel, is what is retarding the economic contribution of the mining sector in the country.”

However, on October 10, 2023 Mchenga presented to the Ministry a bank cheque amounting to MK11 million covering arrears of the first nine months of 2023 but the Ministry rejected saying the Company needs to settle the previous arrears first.  

Lynx Investment Limited is a private limited company with its head office in United Kingdom.

Though it is failing to meet taxation obligations, Mchenga Coal Mines carries out a number of Corporate Social Responsibility projects in the surrounding area including provision of free portable water, electricity and health services to the community.

The company provides free safe and portable treated water to the community from its dams through a piped water scheme that it constructed in the area.

The mining company also constructed Mchenga Health Centre at the site, which is providing free health services to mine workers and the local community. In addition it provides free transport to all patients that need referral to Rumphi District Hospital.

The company also assisted the Ministry of Health in the construction of Jalawe Health Centre which incorporates a maternity wing by providing labour, transportation of sand and bricks, and other building materials.

In the area of education, Mchenga managed to construct three school blocks and five teachers’ houses at Mchenga Primary School whose construction was initiated by the miner, which later handed it over to the Malawi Government.

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