Mining & Trade News

Value addition is the enhancement added to minerals by a company/miners before selling to customers. It is a secured scenario whereby one obtains the highest rewards from a mining or related mining entity and it may be from mining practice to the finished product, in short enhancing the quality and quantity of the chain of production. There are numerous aspects related to value addition when it comes to mining. The higher value added products mostly fetch high prices and these prices tend to be more stable and value addition is also pursued further.

Processing of raw materials is the solution to African economies. Africa is especially vulnerable to global economic shocks because primary products account for more than 50% of the value of exports. It is therefore apparent that Malawi needs to be able to process its minerals into high value products for exportation and local consumption and this will translate into economic growth.

Mineral wealth should be a source for equitable growth and poverty reduction. Malawi has wealth in minerals and most of these are not yet fully exploited and utilised. A case in point is China which has experienced rapid transformation economically. All this phenomenal growth hinges on the availability of cheap raw materials from Africa. In value addition of minerals, suppliers of mining inputs and markets are also important to the enhancement of high quality and increased quantity mineral production. In anticipation of greater returns miners must also be aware that opportunities of accessing the incentives more than once is possible and may be achieved, by carrying out value addition activities where applicable, as valuable by products can be reclaimed, and further processed for export, meaning more foreign currency inflows to the nation and more money to the miner respectively to say the least.

Economic growth is a result of value addition that creates wealth for nations. Nations utilise the gifts of nature which are the raw materials to manufacturing. Africa has abundancy of these natural resources but lacks appropriate economic development due to lack of scientific knowledge. In the worst case, raw materials are extracted from Africa and exported in their raw state at very low prices. Value addition or processing is done outside the countries of origin and the finished goods or processed materials imported as finished products that attract more money. The importation at high prices opens the gap between poverty and wealthy nations. This unavailability of such technologies is quickly capitalized by rich nations who already have the technology but do not have adequate raw materials in their nations. Such a scenario creates exploitation of natural resources from African nations such as Malawi.

In Malawi the most minerals that have the potential to add value are;

1. Dimension Stones

Dimension Stone is produced from quarrying operations that typically involve isolating a mass of stone by cutting it free from the parent mass on all sides but one. The isolated mass is then lifted or separated from the parent mass by breaking it free or by undercutting it with a wire or chain saw. The cut stones are usually of larger block size. Quarry operations thus involve cutting the stone, breaking the stone, and removing the stone from the quarry.

• Uses of dimension stones

In Malawi, rough block production represents a very small percentage if at all it is being done. Dimension stone blocks are used mostly in construction and to make monuments, tombstones. On the other hand dressed stone is used to make other decorations such as carvings, statues flower vases but this is very rare in Malawi.

Dimension stones can also add value by shaping them into desirable use.  Examples in Malawi are the black/ pink granites, sodalites, syenites, amazonite,gabbros that are used to make floor, wall tiles by means of lapidary processes not forgetting limestones for terrazzo making for use in monuments and tombstones.

• Gemstones

Gemstone dealing is a multibillion dollar industry but it is usually underestimated in Malawi. This may be probably due to lack of understanding of the potential of extracting these gems, inability to identify ready markets, lack of machinery and also the skills to deal with it etc. It is a rewarding business that has the potential to create huge job opportunities, non-bulky, foreign currency generation, stimulates other economic sectors; such as tourism and also provide safe investment.

In Malawi, efforts have been made to mine gemstones like sapphire, ruby, amethyst, rose quartz, garnets, aquamarines, beryl, corundum , tourmaline etc. and are shaped into different forms for jewellery, cabochons, sculpture, and ornaments inorder to add value but unfortunately it is done only to a smaller, unrecognised extent.

• Problems faced by the gemstone Industry in Malawi
• Gemstone buyers often offer very low prices
• Lack of systematic approach to description and evaluation of gemstones in order to buy, sell and appraise coloured gemstones appropriately and profitably.
•  Lack of capacity to process the stones into jewellery.
• Lack of capacity to grade, evaluate and negotiate the right price for stones.
•  Lack of a well-coordinated system of buying and marketing gemstones from the miners, hence the sector suffers from smugglers from neighbouring countries and beyond.

• Unavailability of gemologists as the most competent experts in undertaking gem valuation. Malawi has only but one or two.
• There is some hostility in gemstone mining between villagers and operators. Sometimes customary land owners or ordinary villagers do not want to give access to operators even if they possess the necessary permits from the Mines Department.

• Industrial Minerals

These are a variety of minerals such as, gypsum, limestone, graphite, quartz and vermiculite that have a wide range of applications in ceramics, pottery, and brick and tile-making, phosphates, mica and glass manufacture rutile, quartz, feldspar, graphite, kaolinitic clays, dolomitic limestones mica, and silica. These are economically of high quality and can add value to the nation. However, it still remains of very low use in Malawi both industrially as local and for export.

In addition, there are some metallic/industrial minerals that are brought into various shapes for sale thereby also adding value. Of late, the emergence of gold in Malawi is a big potential and a boost to add value to the industry by making jewellery, electroplating, house decorations etc.

• Malawis’ mineral resources are finding it hard to add value in the supply chain due to among others;
• Poor quality of minerals like gemstones, 
• Knowledge, skill gap in exercising expertise e.g faceting, lapidary.
•  Inadequate quantity of minerals
• The role of middlemen and also buyers
•  Undervaluation of the minerals
• Smuggling
• Lack of machinery and equipment for both mining and mineral processing

• What needs to be done to Malawi as a Nation to boost value addition to minerals?

•  Robust government recognition of the sector’s potential
• Export of rough gemstone in large quantity
• Quality control
• Attain knowledge in mining, sorting and grading
• Create investment opportunities in mining
• Local Artisanal miners should have easy access to capital and land for mining
•  Support  lapidary shops/factories for their establishment
• Adequate laboratories for mineral testing are needed
• Train more gemologists, stone cutters.
• Adopt mineral added value policies from other countries

Mineral resources that add value are not only considered as the source of national income, but also as national asset to boost national economic growth. Implementation of sustainable mining can be translated by conducting good mining practices with emphasises to carry out an environmentally sound mine operation and also mineral beneficiation is an effort to improve the sustainable use of mineral resources. Most of the minerals in Malawi remain untouched and this also hinders advancement for value addition. If this scenario remain stagnant, value addition shall not succeed in the current and near future as well.

Manesi Kapeni Village in the area of Senior Chief Kapeni in the south-western part of Blantyre is located almost 5-minutes’ drive off the M1 road. There is almost an air of tranquility as one passes through trees which form part of the surrounding and the chirping sounds of birds and insects. The sight of many people working in the farms clearly demonstrates that it is a predominantly agricultural area.

But this area, in September, experienced acts of violence. The community members blocked a Chinese company which is constructing a bypass road in Blantyre from mining quarry stones in the area. What followed later were a series of meetings between government officials, the community and local leaders. No resolution has been reached so far.

Village head Manesi Kapeni said the initiative to start mining quarry in his area came as a surprise. So do his subjects who were shocked to see the Chinese coming into the area to start testing the rock quarry for construction of Blantyre By-Pass Road. Most of the information the village head had about the project then was through grapevine.

“They just came with their machines and this surprised my subjects. Consequently,  some of them started rioting,” he told Mining and Trade Review in an interview, adding; “I told them [contractors] to go back as some of my subjects accused me that I had sold part of the village where the rock was.”

But later, the contractors came and took samples of the rock and assessed the surrounding area to determine how much land will be affected. Those within the vicinity of the affected area were to be compensated.

“When the officers from the District Council visited the area there was riot. People insisted they would not relocate since some of their relatives were buried there. I sat down with Traditional Authority Kapeni and the District Council officials after engaging the community but up to now there is no resolution to the wrangle. The Chinese came again and did some testing, I am told, but we do not know what will happen next.”

Not isolated incident

What happened in Manase Kapeni Village is growing into a familiar phenomenon in Malawi’s minerals sector as recently a vehicle belonging to a Chinese firm carrying gemstones was detained in Mzimba following a row which erupted between community members and the firm with the latter being accused of smuggling gemstones out of the area.

Senior Chief Pherembe of Mzimba said in an interview: “We have noticed that there is an influx of these Chinese operators in the district that are conducting mining activities without proper procedures.”

“They are doing that on customary land which belongs to us and therefore we have to be informed of their presence.”

 The chiefs threatened to shut down the gemstone mines.

Members of parliament and councilors in Dowa district also called for suspension of all mining activities in their areas until the Ministry of Natural Resources, Energy and Mining gives an explanation on how it is dealing with illegal mining in the district.

Unanswered questions

According to Consulting Geologist, john Nkhoma, there is need for proper community sensitisation before the inception of any mining project in the country.

“The company should inform the community through the District Council and Mines department of what their activities are and if there is any compensation, people must know who will do the property evaluation and modes of payment,” said Nkhoma, a veteran Geologist, who is Managing Director of Chiwandama GeoConsultants.

He said in the case of the quarry mining wrangle in Blantyre, there should have been consultation for the company to be awarded an Environmental and Social Impact Assessment (ESIA) certificate.

The question is; “Did the company do that. When they were mobilising did they inform all the relevant stakeholders?”

Reacting to the events, Deputy Director for Mines Department in the Ministry of Natural Resources, Energy and Mining Peter Chilumanga said in order to deal away with wrangles between mining company’s and members of the community in mining areas, government has proposed that all artisanal and small scale miners (ASMs) using equipment should get medium scale mining licenses.

 “In that way, issues of CSR as complained by communities will be a thing of the past as all medium scale miners are mandated to execute CSR activities signed by all interested and affected parties,” Chilumanga said.

 Surely, if the government and the quarry mining contractor in Manesa Kapeni Village had followed such well knitted arrangements as unveiled by Chilumanga, things could not reached such a boiling point in this beautiful village.

Mchenga Coal Mines Limited (MCM), which is one of the oldest mines in the country, has unveiled plans to extend and open new mining sites in its license area to increase its annual coal production from the current 12000 tonnes to 48000 by 2021.

MCM Mining Manager Munashe Dicha disclosed the plans in an interview with Mining & Trade Review during a media tour of the mine organised by the Ministry of Natural Resources, Energy and Mining.

Dicha said the planned increase in production is aimed at meeting the demand of coal from its local customers.

He said: “It has been a long time since our customers started complaining that we, the local coal producers, are failing to meet their demands. We have located new sites that we plan to open as soon as possible to up production,”

“The sites include Phoka Mine, office block thus near our offices, and we also we want to extend the existing Mwandira mine.”

Dicha said the office block prospect has a huge reserve to support development of three mines.

He said the planned production increase will reduce the importation of coal from neighboring countries including Zimbabwe and Mozambique.

Mchenga customers are spread across Malawi and include Limbe Leaf Tobacco Company, Cement Products, Kanengo Tobacco Processors, Central Poultry Feeds Group, East Metals, and Malawi Iron and Steel Corporation (Miscor).

Regional Mining Engineer for the Northern Region George Maneya commended Mchenga for its plans to increase production.

Maneya said: “Mchenga lies within the Livingstonia Coalfield where coal is of highest quality compared to the Sub Sahara coal.”

“So the idea for the company to increase production implies Malawi will produce more quality coal to meet the demands of the local market.”

He said if local companies increase their production to meet the domestic demand, the government will map out ways to reduce importation of coal from other countries, which is creating unfair competition with the local industry hence threatening the survival of local investments.

Mchenga also updated the journalists on its plans to kick-start construction works for the 100 MW Rukuru Power Plant by 2021.

“We already conducted a feasibility study which proved the viability of the project. We are currently working out agreements with other stakeholders to solicit funds for the project,” Dicha said.

Dicha said the plant will be connected to the national grid and the company will only tap 5MW for its operations.

Meanwhile, Mchenga is executing a corporate social responsibility programme in the area which   includes provision of free health facilities and drugs to surrounding communities; provision of free portable water and; construction of school blocks and teachers’ houses; chief’s houses; playing fields; and renovation of roads.

MCM has also employed a bulk of its 236 employees from the surrounding community and has provided the employees and their families social amenities including a clinic, a primary school, kindergarten, a subsidized shop, sporting facilities, electricity, a club with pay television (DSTV), a maize mill and portable water.

Dicha said the company is also providing internship opportunities to students from Polytechnic University and technical colleges, and in-house training in Mining Engineering.

Mchenga has also embarked on an environmental rehabilitation exercise where by it is planting trees in worked out areas.

The company approximately planted 12000 tree seedlings in eroded areas and estimates that within 2-years, it will be able to start harvesting mine support timbers from its own rehabilitation plantations.

Coal at Mchenga Mine is extracted using Room and Pillar method, which involves the application of underground working variation of Board and Pillar configurations, a competitive method in ground control measures for stability and safety.

Coal Mining at Mchenga started in 1987 and a state owned mining company, the defunct Mining Investment and Development Corporation (MIDCOR), operated the Mine to May 1995 when it was privatised.

The Reserve Bank of Malawi (RBM) says access to credit facilities is one of the key fundamentals required for Malawi to transform to a private sector driven economy.

RBM Governor Dalitso Kabambe said this in Blantyre during the launch of the Credit Awareness Week which runs from December 9 to 15, 2019.

During the week the Central Bank conducts an awareness campaign on the benefits of following effective credit management practices and use of credit history reports from Credit Reference Bureaus.

Kabambe said the awareness campaign will result in increased understanding of credit access and usage by many Malawians for their economic empowerment and development.

He pointed out that for three consecutive years the country’s economy has stabilized with inflation currently at 9.3%, hence it is an opportune time for local citizens to access credit facilities to boost their capital.

“This week is of paramount importance to local citizens as Malawians will gain knowledge on merits of borrowing money from licensed or registered lending institutions including banks, microfinance institutions and savings and credit cooperatives (SACCOs) as opposed to borrowing from informal lending institutions,” he said.

Currently, only 3% of the Malawi population has access to credit from formal lending institutions, as the rest opt for informal institutions including village banks, a fact that Kabambe attributed to financial illiteracy.

In his remarks, Executive Director for Consumers Association of Malawi (CAMA) John Kapito urged financial institutions to uphold better customer care services.

Kapito said, among others, banks should ensure that customers are conversant with consumer rights and obligations when accessing loans.

He said: “During the recent years we have seen informal lending institutions growing drastically as opposed to formal institutions due to fair packages that the facilities offer to borrowers hence the need for commercial banks to borrow a leaf from such institutions”.

“Formal sector must invest much in understating credit terms and conditions among others interest rate, repayment period, short term or long term loan and consequences of default before signing a credit agreement between a lending institution and a borrower.”

Other sponsors for the awareness campaign include Bankers Association of Malawi, Malawi Microfinance Network, and Malawi Union of Savings and Credit Cooperatives.

In order to disseminate the core financial literacy messages within the week, RBM is among other things running financial literacy clinics and conducting credit awareness workshops with some of the major stakeholders.

Facebook has challenged local businesses to embrace social media in their marketing strategies in order to extend their markets. 

The Company is implementing a Community Leadership Circles (CLC) Program to bring together digital marketers and Community leaders to connect and share experiences on updated features it has introduced to fast-track communication processes on the social platform.

CLC Blantyre lead Frank Kamanga said that social media platforms have proven to be an efficient and cost effective means of disseminating business information due to their connectivity power which enables businesses to reach out to the global audience.

He said: “Whether you have an offline business or online, you can promote your business to the largest audience through social media.”

“The whole world is open for you through social media which makes the businesses profitable as marketing through social media is not expensive as other platforms and is very efficient in terms of reaching out to the wider audience.”

Kamanga, however, said there is more to be done in Malawi to ensure full utilization of the social media in this digital era.

He advised the government to come up with sound policies to increase Internet accessibility and lower prices for data usage.

“Social media is important as it creates awareness and innovates the way people live. It is the social media which has helped people discover new and innovative stuffs that can enhance personal lives. From farmers to teachers, students to lawyers, every individual of the society can benefit from the social media and its awareness factor,” he said.

Meanwhile, Facebook has launched a tool that will enable members to transfer photos and videos they have uploaded to the platform to Google Photos.

British Broadcasting Corporation reported that the service will initially roll out in Ireland and then in 2020 across the world, and it is designed to include other services in future as part of the Company’s commitment to “data portability”.

Facebook’s Google Photos tool is part of the Data Transfer Project, which aims to provide an open-source platform anyone will be able to use to move data between online services.

Apple, Google, Microsoft and Twitter are also involved in the collaboration.

The Malawi Government is preparing to develop an automated business registration system at the Registrar of Business Names Offices in Blantyre. 

The assignment will be financed by the World Bank as part of the US$95-million Agricultural Commercialization (AGCOM) project.

The Ministry of Agriculture, Irrigation and Water Development is, meanwhile, inviting sealed bids from eligible bidders for designing, supplying, Installing and commissioning of the Business Registration System (MBRS) within an implementation period of 6 months.

“Bidding will be conducted through international competitive procurement using Request for Bids (RFB) as specified in the World Bank’s procurement regulations of July 2016 revised in November 2017 and is open to all eligible bidders as defined in the procurement regulations,” states the Ministry.

Bidders are required to pay a non-refundable fee of MWK40, 000 or USD$50 payable by cash or direct deposit to purchase bidding document in English to be sent by courier or email.

The deadline for submission of bids is January 17, 2020.

In another development, the Ministry is expected to hold its 12th Joint Sector Review (JSR) workshop at Crossroads Hotel in Lilongwe.

The JSR will be conducted under the theme of ‘Creating a sustainable and resilient Malawi through irrigation, water and sanitation.’

In a statement, Principal Secretary in the Ministry, Grey Nyandule Phiri says the JSR provides a platform and mechanism for harmonization and improved sector policy dialogue and coherence.

Phiri says: “The annual review is aimed at reaching a common view among key stakeholders on important achievements in the sector in the preceding year, key implementation challenges, and progress against strategic policies.”

“Achieving consensus on priorities is a key in informing the future plans and budgets which provides focus for development partner support.”

Phiri further says the JSR has been organized to assess progress towards the achievement of the agreed headline indictor for the irrigation, water and sanitation sector.

He says the review will bring together pertinent issues hindering irrigation, water and sanitation development with the view to making recommendations for institutional and policy reforms to feed into the medium term planning and budgeting exercises.

Annual sector performance report for 2018/19 financial year will form the basis for the assessment and discussions at the event.

Minister of Agriculture, Irrigation and Water Development Kondwani Nankhumwa (MP) is expected to be the guest of honour.  

The Malawi Government is seeking to prequalify contractors for construction of Olympic Sports Village at Kamuzu Institute of Sports in         Lilongwe.

The Ministry of Youth, Sports and Culture says in a statement the facility, which will be used to host 2022 Africa Olympics Sports games, will include a swimming pool complex (50m competitive 25 learners’ pools) and ancillary facilities.

“Identification of interested and potential bidders for the construction of the facility shall follow the prequalification procedure used under the two-stage tendering method as an important phase in the procurement strategy being employed,” says the Ministry.

The Ministry is inviting eligible bidders who are currently registered in the unlimited category for building contractors with the National Construction Industry Council of Malawi and any interested international contractors that are registered in the equivalent category in their respective countries to collect prequalification questionnaire documents from its offices in Lilongwe.

It says prequalification documents should be returned to its internal procurement committee by Thursday, December 5 and interested contractors or their representatives and members of the general public may attend the opening of bids on Tuesday, December 24, 2019.

“It is the responsibility of each interested contractor to ensure that documents are submitted in accordance with ‘The pre-qualification requirements’ in the documents, as non-compliance will lead to disqualification and rejection of the contractor.

Bids shall be valid for 30 days.

Experts have advised the Malawi Government to improve its domestication of its obligations under Regional Trade Agreements (RTAs) to seal gaps between its domestic legislation and its obligations in terms of its RTA commitments.

International Trade Law Consultant George Naphambo said currently Malawi does not have necessary legislation in place required for the imposition of trade remedies such as Anti-dumping duties, Countervailing duties and Safeguard measures in terms of the relevant World Trade Organisation Agreements.

He was speaking during the closing session of validation workshops on studies conducted on Malawi’s Bilateral and Regional Trade Agreements at Ryalls Hotel in Blantyre.

The studies were executed by Zimbabwean Firm Trade and Development Studies Centers, under the European Union (EU) Technical Assistance initiative aimed at supporting Malawi government in Bilateral, Regional and Multilateral Trade Agreements.

Naphambo said the trade pacts require important safety valves for dealing with unfair trade and increasing imports as a result of trade liberalisation which calls for the need for Malawi to draft the required laws and regulations to domesticate its World Trade Organisation (WTO) obligations and RTA commitments in line with trade remedies and establish a competent authority to initiate and investigate applications for the use of trade remedies.

“This will also entail the drafting of the necessary legislation and regulations to domesticate the WTO provisions on trade remedies. Malawi as a Least Developed Country (LDC) should also push for trade remedy provisions in RTAs that are less stringent than the requirements of the WTO trade remedy provisions,” he said

Naphambo also recommended that “Malawi needs to enter into mutual recognition agreements with regard to standards and technical regulations and domesticate such agreements in order to ensure that Malawi exporters have access to markets of other RTA Member States without having to also comply with the standards and technical regulations of other Member States.”

Meanwhile, Malawi is in violation of its obligations under the Southern African Development Community (SADC) Free Trade Area (FTA) due to its failure to liberalise its tariffs on South African imports of sensitive products in accordance with its schedules of commitment under the SADC Trade Protocol.

“As this failure to implement its obligations does not qualify for a derogation under the SADC Trade Protocol and is not covered by the available legal exceptions in the Trade Protocol, Malawi will have to address this issue through consultations with South Africa and other SADC Member States.”-He explained

Naphambo said “as part of such consultations Malawi should explore alternative funding mechanisms for its revenue shortfall from continued liberalisation under RTAs, which is the main reason behind its failure to timely implement its SADC tariff reduction obligations.”

Public Relations Officer for Paramount Holdings Limited Dick Juma recommended to the private players to be more proactive in their operations to position Malawi on positive side as regards to trade agreements at both bilateral, regional and multinational level.

Juma also urged the policy makers to address Non-Tariff Barriers (NTB) that exporters in Malawi are currently encountering which is in violation of the relevant RTAs’ legal provisions on NTBs.

He said “Malawi should focus on implementing and strengthening the mechanisms for reporting and resolving NTBs available under existing RTAs and the Tripartite Free Trade Area (TFTA) and Africa Continental Free Trade Area (AfCFTA) agreements.”

Minister of Natural Resources, Energy and Mining Bintony Kutsaira is set to launch the new National Energy Policy 2018 on Wednesday, November 27 at Bingu International Convention Centre (BICC) in Lilongwe.

Secretary for National Resources, Energy and Mining Patrick Matanda says in a press statement that the new policy, which is a culmination of a wide consultation process that took into account a variety of views from various stakeholders, is a revision of the 2003 national energy policy.

He explains that the new policy emphasizes on the importance of private sector participation in the energy sector and provides an environment conducive for such participation in the energy sector in the form of direct investment, public and private partnership.

Matanda says: “The policy also emphasizes on sustainable and clean energy which is accessible to all.”

“Energy efficiency is another priority area of this policy which also recognizes the importance of security of energy supply systems.”

“Mitigating environmental, social safety and health impacts of energy production and utilization is a key part of the policy.”

Government has reviewed the 2003 policy because in spite of its success, it had a number of shortfalls and challenges which needed to be rectified,

“The 2003 policy was driven by the vision 2020 and the Millennium Development Goals ( MDGs), and the  development agenda has since moved on and the MDGs have given way to Sustainable  Development Goals (SDGs) and  the main development agenda for Malawi now is Malawi  Growth and Development Strategy lll, both of which  have put energy as a high priority area”, he says.

The other factor that necessitated the revision of the 2003 policy is that in 2015 the government of Malawi (GoM) adopted a power marketing policy as well as an oil importation policy and both needed to be factored into the new energy policy.

“The United Nations Sustainable Energy for all initiative of 2011 also emphasizes on issues of access to energy for all agenda which again needed to be reflected in the new policy,” says Matanda.

The Malawi Government has adopted a public sector reform program that is aimed at ensuring efficiency, transparency and accountability in the delivery of public services of which energy is a part.

The goal of the new policy is “Access to affordable, reliable, sustainable, efficient and modern energy for all Malawians by 2030.”