Mining & Trade News

Transfer pricing is the general term for the pricing of cross-border, intra-firm transactions between related parties. “Transfer pricing” therefore refers to the setting of prices at which transactions occur involving the transfer of property or services between associated enterprises. Transfer pricing occurs when one company sells a product or service to another related company. Because these transactions are internal, they are not subject to market pricing and can be used by multinationals to shift profits to low-tax jurisdictions.

                     1. Objectives of Transfer Pricing

Companies use transfer pricing to reduce the overall tax burden of the parent company. Companies charge a higher price to divisions in high-tax countries (reducing profit) while charging a lower price (increasing profits) for divisions in low-tax countries.

                    2.  Transfer Pricing and Tax avoidance issues identified

Like other sectors of the economy, profit shifting pose risks in the mining sector.The IGF (Intergovernmental Forum on Mining) and OECD (Organization for Economic Co-operation and Development) has released guidance for source countries on transfer pricing in the mining sector. The transfer pricing and tax avoidance issues identified in the sector are:

                  (a) Abusive Transfer pricing

May occur during the sale of minerals and/or mineral rights to related parties. Under such circumstances, developing countries may require expertise to detect and mitigate transfer mispricing in the mining sector.

                  (b) Undervaluation of Mineral Exports
Profit shifting through the pricing of mineral products sold to related parties is a major concern for many mineral exporting countries. For developing countries, these risks are elevated where government agencies lack the mineral-testing facilities required to verify the grade and quality of mineral exports, as well as technical knowledge of the mining and mineral product pricing.

                  (c) International Tax Treaties
Most developing countries consistently raise concerns about tax treaty abuses. It is envisaged that countries with abundant mineral resources may be assisted in this area, considering how treaty provisions might have a significant impact on taxes imposed in the mining sector.

                 (d) Debt shifting

This is particularly significant for mining projects that require high levels of capital investment not directly obtainable from third parties and this makes substantial related-party borrowing a frequent practice. This creates excessive interest deductions thereby causing profits shifted to offshore via excessive interest payments.

                (e).Tax Stabilisation Clauses and harmful tax incentives.
Fiscal stabilization clauses create problems in terms of taxes because they can freeze the fiscal terms in the contract such that changes in tax law may not be applicable to existing mines. While tax incentives could encourage expansion of the sector, they may also lead to excess transfers of the gains from countries. It is on record that developing countries expect that that they will forego incentives entirely due to the pressures of attracting investment. However, it is important that countries should preposition themselves to understand how mining companies are likely to respond to those incentives.

                (i) Malawi Scenario-Kayelekera Uranium Mine.

In the Development Agreement, one of the tax incentive clauses was 10 year tax holiday.Though the mine life was beyond 10 years, it was unexpectedly put to a halt just after a 5 year production due to uranium price downturn.

The danger here was that the mine could even exhaust its mineral before the life of mine. In this regard it means the company could have mined for 10 years with a tax holiday.In the unforeseen circumstances, the mine could have been at liberty to transfer the profits to overseas so easily which means a 10 year tax holiday was likely able to make huge profits.

               (f) Offshore Indirect Transfers of Mining Assets
Transfers of ownership of company assets can generate significant income, which many countries seek to tax as capital gains. Transactions may be structured to fall outside the mining country’s tax base by selling shares in an offshore company holding the asset, without notifying tax authorities in the country where the asset/company is located.

                 (g). Abusive Hedging Arrangements
Hedging is a legitimate business practice in many commodity markets. It consists of locking in a future-selling price in order for both parties to the transaction to plan their commercial operations with predictability. A problem arises when companies engage in abusive hedging with related parties. They use hedging contracts to set an artificially low sale price for production and therefore record systematic hedging losses, reducing their taxable income.

  (i). Zambia vs Mopani Copper Mines Plc., May 2020, Supreme Court of Zambia, Case No 2017/24

Following an audit of Mopani Copper Mines Plc. the Zambian Revenue Authority found that the price of copper sold to related party Glencore International AG had been significantly lower than the price of copper sold to third parties.

A tax assessment was issued where the ZRA concluded that the internal pricing had not been determined in accordance with the arm’s length principle, and further that one of the main purposes for the mis-pricing had been to reduce tax liabilities.

This form of transfer pricing between multinational corporations and their African subsidiaries is typical of the tax avoidance practices employed by corporate taxpayers primarily to reduce their tax liabilities, as Zambia’s Supreme Court made clear in the opening paragraph of its judgement:

The ruling ordered that Mopani pay a total of 240 million Zambian Kwacha in taxes assessed for the 2006/07, 2007/08 and 2009/10 tax years within 30 days, bringing to an end a dispute that has been running since 2010.

Mopani Copper Mines Plc. first appealed the decision to Zambia’s Tax Appeal Tribunal, and after a decision was handed down by the Tribunal in favor of the ZRA, a new appeal was filed with the Supreme Court.

The Supreme Court dismissed Mopani’s appeal and ruled in favor of the Zambia Revenue Authority.

                   (h). Inadequate Ring-Fencing
It is possible that mining companies will have multiple activities within a country, creating opportunities to use losses incurred in one project (e.g., during exploration for a new mine), to offset profits earned in another project, thereby delaying payment of corporate income tax. Ring-fencing is one way of limiting income consolidation for tax purposes; however, getting the design right is critical to securing tax revenues while attracting further investment

The Ministry of Mining has pledged to continue supporting the Artisanal and Small scale Mining (ASM) sub-sector in the country to ensure that it adequately contributes to social economic development.

In her speech during the ASM Annual Mining Indaba in Lilongwe, Minister of Mining Monica Chang’anamuno said ASMs in the country play a major role of exploiting resources that would otherwise not have been commercially exploited by the medium and large scale mining investors. 

She said Government wants to address the challenges that the ASMs are facing including; low meaningful participation: Illegal mining operations and inadequate financial support.

“As part of the efforts of promoting local participation in the ASM sub sector, my Ministry has and is implementing a number of initiatives including formalisation of the ASMs into cooperatives. This financial year alone, the target is to train six groups and currently we have managed to train four groups out of six in good mining practices.”

“We worked hand in hand with Export Development Fund (EDF) to establish the structured market for buying gold and gemstones from small-scale miners, thereby providing readily available market.”

“We are also facilitating the construction of a salt production facility in Ngabu, Chikwawa district, however, inadequate financing and the recent tropical Cyclone Freddy are the main challenges to this initiative.”

Chang’anamuno said her Ministry is also working with the Technical Entrepreneurial and Vocational Training Authority (TEVETA) to develop a curriculum which will be used to train the ASMs in the country’s technical colleges; and sought technical assistance from the Canadian Government, for development of the ASM policy.

She said the Ministry has also taken a stand in ensuring that there is transparency and accountability in the process of issuing licences.

Chang’anamuno said the Ministry is giving equal opportunities to all Malawians who are interested in investing in the mining sector including the women and youth and also ensuring that the system employs a first come- first serve policy.

She said: “All Malawians are eligible to apply for a licence for mining, exploration or buying and selling of minerals and all the applications for licences are scrutinized by a committee which recommends either to grant or not.

“My Ministry has a web-portal, known as mining cadastral portal, where everyone including all applicants or holders of licences are able to see the category of application, type of mineral(s) being applied for, location of the licence, size of the area of the licence, date of grant and expiry of a licence. This web-portal is accessible by everyone, for free, at any time and any place.”

“You may also wish to know that my Ministry is ascribed to Extractive Industries Transparency Initiative (EITI) standard through the Malawi EITI as a key reporting entity in the extractive sector, and I am proud to indicate that compliance by mining companies in terms of data disclosure on production and revenue has increased.”

“Additionally, the validation score for 2022 for the extractive sector reporting was at 80%. This achievement is an indication that the Ministry of mining is now being recognized as one of the most transparent and accountable Ministries.” 

Meanwhile, ASM licences can be accessed at an application fee ranging from K10,000 to K50,000 for Malawians and as one way of easing long distance traveling, all clients seeking to access payable services can pay their fees for various services through direct bank deposits at their location of convenience. 

However, the Minister expressed concern over the spreading of false information about mining in the country and asked the masses to consult the Ministry for verification of information before dissemination.

She said: “My Ministry has noted with great concern that some people spread only bad news about mining activities in the country.”

“I am not disputing the fact that there are instances where some people are involved in illegal mining operations. However, our concern is that many people do not take their time to ask for and obtain correct information from my Ministry on issues concerning mining operations.”

“Instead they spread false information through various communication platforms especially social media.”

“There have been instances where by my Ministry has come across a lot of information on the media and used public resources to carry out investigations based on what has been circulating in the social media only to find out that it is not true.”

“Surprisingly, many people take pleasure in spreading such false information but do not take an initiative to find out the truth of the matter from my Ministry.”

In his address, Coordinator for Chamber of Mines and Energy, Grain Malunga said the efforts to promote and develop the ASM sub-sector do not only depend on the Ministry but require multi-stakeholder approach.  

Malunga said to put to an end to some challenges being faced in the sub-sector, there is a need for proper coordination between Ministry of Mining, Ministry of Trade, Chamber of Mines and Energy and financial institutions.

The ASMs Mining Indaba was organized under the theme of ‘Promoting Local Participation and Investment in Mining.’

Artisanal and small scale miners (ASMs) have urged authorities to put in place measures that will facilitate that they develop their businesses in order to graduate into mechanized medium or large scale mining.

Mining & Trade Review established in random interviews with ASMs that despite continued discovery of minerals in many parts of the country, local miners are not substantially benefiting because of lack of expertise, proper equipment and start-up capital.

Mylord Jere, a gold miner at Chimbiya Village in Traditional Authority Wimbe’s area in Kasungu, laments that despite that the area has potential for gold mining, he is failing to expand his business due to limited capital.

Jere, who runs a firm called Angoni Mining Company, also urged the Ministry of Mining to expedite processing of mineral licenses so that ASMs are able to easily acquire licences.

Said Jere: “It is through empowerment of local miners that Malawi can develop other than only relying on foreign investors.”

“If we, small scale miners, access capital and develop our operations, we will employ more Malawians hence contribute significantly to the government’s job creation agenda besides generating foreign exchange through the sale of minerals.”

“With the potential that the mineral sector has, it is sad that we are complaining of lack of forex. What is needed is to empower locals through provision of training opportunities and start-up capital to develop their businesses.”

Jere said with adequate capital, gold miners can benefit by procuring gold detectors which can help in identifying the minerals and mine other than just panning ignorantly as is the current scenario where by the process is labour intensive with minimal gains.

He said: “If Malawians can get machines and adequate start-up capital, they can go deeper in search of minerals rather than waiting for the stones to be washed to the surface by water. We are losing a lot because we do not go deep enough. To make matters worse we are not even aware of the real origins of the gold so it is like we are just groping in the dark.”

Administration and Marketing Manager at Maleta Gems and Jewels Ashley Simbeye commented in a separate interview that there is need for government to lobby cooperating partners and the financial sector to support small scale mining activities like it is doing in other economic sectors such as agriculture where by government is implementing the Agricultural Commercialization project to facilitate that small scale subsistence farmers graduate into commercial farmers.

“Many ASMs live a hand to mouth life. This needs to change if the country is to develop with mining as one of the key economic drivers as stipulated in Malawi 2063. If ASMs can get proper financing and expertise, I believe mining can compete with agriculture in raking in forex,” said Simbeye.

Simbeye also advised the ASMs to acquire relevant training on the trade from her institution in order to understand the true value of gemstones so that they are able to sell at a profit. 

“At Maleta Gems, we train artisanal miners on how to cut, polish, grade and know the value of each gemstone just by looking at it. Minerals come in different forms and colours and if you are not careful you can lose precious resources through wrong identification,” she said.

Minister of Mining Monica Changa’namuno said during the opening of the ASM Indaba in Lilongwe in December last year that government is doing all it can to empower ASMs as one way of taking many Malawians out of the poverty.

“The fact that we have minerals all over the country should be good news to all because we cannot just be relying on agriculture to bring in forex. We will continue engaging all stakeholders involved in the mining sector including banks to see how ASMs can get financing easily.” said Chang’anamuno.

Malawian banks shy away from lending money to ASMs because they consider the mining sector as risky.

Ministry of Mining

The Ministry is responsible for the overall administration of the mining sector in Malawi. It has two departments; the Department of Mines and Geological Survey.  The Department of Mines’ duties include issuance of licenses, inspection of mining activities to ensure that they are being carried out in accordance with relevant laws and regulations, and sensitisation of the general public on mining issues.

The duties of the Geological Survey Department include grass-root exploration and provision of exploration data to interested mining investors. Malawi has carried out a number of surveys over the past years to obtain data that investors can use to follow up on mineral occurrences and the latest surveys include the Geophysical Survey dubbed Kauniuni, which was conducted under the auspices of Mining Governance and Growth Support Project and its follow up the Geological Mapping and Mineral Assessment Project (GEMMAP). The data that can be accessed at the Geological Survey Department head office in Zomba include geological, mineral occurrence, mineral potential and geohazard maps

Contact address:

Private Bag 350

Lilongwe 3

Tel: +265(0) 789492

Mining Review Publications

Based in Prepa Complex in Biwi Triangle Industrial Area in Lilongwe, Mining Review Publications is specialised in providing Media and Public Relations Consulting Services to the mining industry in Malawi. It publishes a monthly newspaper called Mining & Trade Review in print, which has been circulating on the Malawi market since 2009. The publication also appears online on www.miningtradenews.net and social media platforms.

Contact address:

P.O. Box 206,

Lilongwe

Tell: +265 (0) 888 356 536/993 252 656

Export Development Fund

Export Development Fund (EDF) is a subsidiary of the Reserve Bank of Malawi. In the minerals sector, EDF buys gold and valuable gemstones from Artisanal and Small-scale Miners (ASMS). EDF’s head office is in City Centre, Lilongwe.

Contact Address;

P.O. Box 30063

Capital City

Lilongwe 3

Malawi

Tel: +265 (0) 1 772 720

Fax: +265 (0) 1 772 219

Essential Tours & Travel

Essential Tours and Travel Bureau are experts in domestic and international air ticket bookings, travel consultancy and visa processing support.

They are located at Golden Peacock Shopping Centre in City Centre, Lilongwe in ground floor room B2.

Contact address:

P.O Box 206

Lilongwe, Malawi

Tel: +265 1 770 709/659/694

Mobile: +265 999 308 436/888 300 133/995 645 749

Email: info@essentialtravelmw.com

MINERAL SECTOR CONSULTANTS

Chiwandama Geo-Consultants

Headed by veteran geologist John Nkhoma, who has experience working in government and private mining companies, Chiwandama is a top consulting firm in Malawi’s mining sector. The consulting firm is specialised in geological mapping, mineral exploration and evaluation, geotechnical assessments, mine design and environmental and social impact assessments for mining and quarrying projects. The Company’s headquarters is in Lilongwe.

Contact address:

Cell; 08888825277/0999288441

Email; johnnkhoma@yahoo.com

Akatswiri Mineral Resources

Akatswiri is a key player in Malawi’s minerals sector offering Geology, Geotechnical, Environmental and Social Impact Assessment, Mining and Construction services. The company which is managed by seasoned geologists Hilton and Josephine Banda has its headquarters in Pijo House, Zomba City.

Contact address;

contact@akatswiri.com

Beyond Consulting

Beyond Consulting are experts in strategy development, team building facilitation, organisation development, motivational speeches, conference/workshop facilitation and customer care services.

Contact address:

Eng. C.K Zulu

P.O Box 1620

Lilongwe, Malawi

Tel: +265 992 855 737

GEOCONSULT LIMITED

GEOCONSULT provides geotechnical services to the minerals sector in Malawi. They are specialists in a number of disciplines including; Geotechnical design which includes foundation design, work on soil and rock strength characteristics, borehole investigations, and technical work on slope stability.

They are also experts in material testing including triaxial testing used in excavations, shallow foundations, piles and deep foundations, earth retaining structures, diaphragm walls, anchors, slope stability, ground improvement, and design of embankments and earth dams.

GEOCONSULT also conducts one-dimensional consolidation of soil samples to enable engineers to ascertain the settlement characteristic of the soil over a given period.

Contact address:

Michael Sabelli-MSc

Managing Director

sabelli@geoconsult.cc

Conquest Geo-consulting

Conquest Geo-consulting are consulting geoscientists with experience in mineral exploration, mining, geology, environmental and social impact assessment, ground water resources, and occupational safety, health and environment.

Contact address:

Tel: +265 999 216 869

Email: igkamz@yahoo.com

Geomine Services

Geomine Services is specialised in minerals, geology, environment and corporate affairs consultancy.

Contact address;

Cell: +265 991019196

Email: geomineservices15@gmail.com

Marcs Media

Marcs Media is the leading media consulting firm serving Malawi’s mineral sector. They are experts in public relations, event organisation, marketing services, production of advertorials, editing, graphic design, social media promotion and printing services.

Cell: + 265 888 356536/993252656

Email: marcsmediamw@gmail.com

Equipment Suppliers

Farming & Engineering Services

Farming & Engineering Services (FES) are suppliers of heavy earth moving equipment used across various sectors including mining, agriculture, and construction.

Contact Address:

Kaohsiung Road,

Mandala,

Blantyre

Tel: +265 1 812 070/061

Equipment & Parts Suppliers

Equipment & Parts Suppliers (EPS) is the distributor of industrial mining, construction equipment and spare parts. The Company located in Area 4, Lilongwe is also specialised in irrigation and industrial diesel engines.

Contact address:

P.O Box 553

Lilongwe

Tel: +265 1 753 806/1 753 867

BrightMarg Engineering (PTY) Limited (BME)

BME are suppliers of industrial spares and equipment including butterfly valves, knife gate valves, slurry and multistage pumps, pressure gauges and transmitters, bearings and pillow blocks, electrical equipment, conveyor belts and rollers, HDPE and industrial rubber hoses, vilton and natural rubber sheets, hydraulic hoses, valves and pumps, stabiliser split sets, and resin anchored roof belts.

Contact address:

Ibrahim Pandor

Country Sales Representative – Malawi

Tel: +265 (0) 999 81 3724

Whatsapp: +265 (0) 88 385 6685

Email: sales@brightmarg.co.za

CAMCO Equipment Limited

CAMCO is a supplier of various equipment including generators, block making machines, concrete mixers, wheel front loaders, vibratory roadrollers and tippers. The Company’s headquarters and main shop is in Area 17 in Lilongwe and its Blantyre Branch is in Mkulumdzi House in Limbe Blantyre.

Contact address:

Lilongwe Head Office

Plot No. 338, along M1 Road, Area 47, P.0. Box 2646, Cell: 09999888678 0999737783

Blantyre Branch: L/C 13 Mkulumadzi House, Churchill Road, Limbe. Cell: 0996913737 or 0882160513

Atlas Copco

With its headquarters in Ginnery Corner, Blantyre, Atlas Copco offers complete compressed air system solutions. The Company also offers mining and rock drilling equipment at ex-factory prices.

Contact address:

Atlas Compressors and Tools Limited

P.O. Box 578

Blantyre, Malawi

Cell; +2659999 96 39 44

Select Agrispare Company

Based in Lilongwe, Select Agrispare Company supplies assorted equipment used in construction and agricultural processing.

Contact Address:

P.O Box 654,

Lilongwe

Email: bhavin84@gmail.com

Cell: +265 888033333/988033333

Tata Zambia Limited – Malawi Branch

Tata is a major supplier of tippers to Malawi’s minerals sector. They also supply a range of vehicles and offer back up support.

Contact:

Paul Kagame Road, Plot number 4/407, Bwaila, Lilongwe

Tel; +265 1 750 646

TK Motors

TK Motors are dealers in earth moving equipment parts and components.

Contact Address:

Off Malangalanga Road

Opposite Crown Lodge

P.O Box 1123

Lilongwe

Cell: +265 999912413

Email: kagwahelton@gmail.com

Thames Commercials

Thames Commercials are specialists in all drilling services with various sized holes ranging from small to large sizes up to 100mm, and blasting services. They also deal in jackhammer hiring, borehole drilling and flushing, concrete demolition services, and all other demolition and mining services.

Contact address:

Gibson M. Makutu (Managing Director)

Cell: +265993911570/+265888121519

Bearing Centre

With shops in both Blantyre and Lilongwe, Bearing Centre are suppliers of a large range of products used in the mining industry in Malawi.

Contact:

Blantyre: +265983705154

Lilongwe: +265983705153

Email: sales@bearingcentre.net

CEMENT SUPPLIERS

Shayona Cement Corporation

Shayona is a giant cement manufacturer whose brands include Akshar (32.5N), Thanthwe (42.5R) and Buildplast (MC 22.5x). These are specialty brands for different construction projects. The company also manufactures concrete blocks. Its headquarters is in Lilongwe and its state of the art cement manufacturing plant is in Kasungu.

Contact address:

P.O. Box 679

Lilongwe

Malawi

Tel: +265 1 752 791/752792

Email: sm@shayonacement.com

Cement Products Limited

Cement Products produces a range of popular cement brands including Tarzan – 42.5 MPA, Njati – 32.5 MPA and NKope – 24 MPA. These are speciality brands for different construction projects. The company has a modern cement plant at Njereza in Mangochi while its headquarters in in Chirimba, Blantyre.

Contact address:

Tel: Blantyre +265 999260

Mangochi/Monkey Bay +265994535133

Lilongwe/Mzuzu +265991024383

Coal Suppliers

Rukuru Mining Limited

Rukuru Mining Limited which owns Chombe Coal Mine in Chiweta in Eastern Rumphi is the largest producer and supplier of coal in Malawi.

The miner supplies coal in form of nuts (20-45mm), which is ideal for manually fed boilers;  peas (6-25mm) which is predominantly used in chain-fed boilers for steam production to power industrial processes; and grain/duff mix (0-6mm), which is used in pulverized coal fired boilers.

Production at Chombe Mine stands at an average of 15 thousand tonnes per year with the mine life pegged at over 25 years.

The uranium market looks promising for Malawi which hosts the Kayelekera Uranium Mine in Karonga currently on care and maintenance.

The former tenement holder Paladin Africa put the mine on care and maintenance following a drop in market prices for uranium due to the Fukushima Nuclear Disaster in Japan which resulted in the closure of many nuclear power plants in Asia reducing demand for the yellow cake.

But as reported in our lead article, Trading Economics indicates that uranium prices were at $91 per pound in early January, holding the surge from late 2023 that took prices to 16-year highs amid strong demand and risks to supply.

Volatile fossil fuel prices and ambitious de-carbonization goals drove the US and 20 other countries to announce that their nuclear power will be tripled by 2050.

The large bets on nuclear energy are led by China, which is building 22 out of 58 global reactors, while Japan restarted projects to increase nuclear power output, and a new reactor in Finland marked Europe’s first new facility in 16 years.

But currently the Malawi Government is negotiating a Mine Development Agreement (MDA) with the present tenement holder Lotus Africa to reopen the mine.

We agree with a mining expert and MD for Chiwandama Geo-Consultants John Nkhoma that with these positive developments on the uranium market, there is need for the Government and Lotus to agree that work to refurbish the plant at Kayelekera starts in readiness for production while the MDA is being finalised.

With such high prices, chances are very high that Lotus will make an investment decision to mine uranium at the site.

Just as Coordinator for Chamber of Mines and Energy Grain Malunga says in the article, the high uranium price is advantageous to both Government and Lotus implying both parties would like to see production resuming at the mine to rake in revenue.

It is sad that Malawi is currently struggling with foreign exchange shortages while it hosts this asset which can rake in millions of dollars through uranium sales.

By delaying production at Kayelekera, Malawi is also denying prospective employees an opportunity to work at the mine.

Besides, reopening the mine will have plenty of other benefits including offering business opportunities to locals including farmers who will be selling their produce to employees at the mine.

As a large scale miner, Lotus will also sign a Community Development Agreement which will ensure that it executes development projects proposed by the community.

The Lilongwe City Council has expressed concern over illegal sand and quarry mining within the city, which is leading to environmental degradation.

The Council’s Director of Parks, Recreation, and Environment Allan Kwanjana in an interview advised construction companies and individuals working on building projects to desist from sourcing the materials from illegal miners.

“The public is hereby informed that carrying out of sand and stone mining activities within the City boundaries is a serious offence punishable by law,” Kwanjana said citing relevant sections in Environmental Management Act and Mines and Minerals Act.

Kwanjana warned the miners to stop the operations immediately saying failure to comply will result in prosecution and heavy penalties.

“The government, through the Council, is dedicated to safeguarding the environment and the well-being of its citizens,” he said.

Kwanjana said the Council is undertaking proactive measures against the situation including identifying mining sites, issuing prohibition notices, deploying enforcement teams, and continuous monitoring to ensure compliance.

He said: “However, challenges persist, with resistance from miners leading to confrontations and confiscation of tools. The City Council has designated areas where mining is permissible, but some operators defy regulations, prompting forceful eviction.”

“Currently we are doing this in a number of sites along Lingadzi and Lilongwe rivers. We end up confiscating their working tools and where possible apprehend the culprits and take them to Police for prosecution,” he said.

Kwanjana lamented that small-scale miners involved in the malpractice operate without oversight leading to uncontrolled sand and rock mining along riverbanks, streams, and dambo land, causing land degradation and posing threats to infrastructure such as roads and bridges.

He said attempts to form committees for a coordinated solution have faced setbacks, as key stakeholders like the Ministry of Lands and the Ministry of Mining have been hesitant to address the issue.

“The environmental impact is evident, with land rendered undevelopable, mosquito breeding grounds formed, river courses diverted, and public infrastructure endangered. Current efforts targeting miners have proven ineffective due to their widespread presence in the city,” he said.

Kwanjana, therefore, said the Council is contemplating a shift in strategy to target buyers and customers in restricted areas.

“The impounding of trucks transporting materials from these zones and leveraging existing legislation to impose penalties and fees are suggested measures to cover enforcement expenses,”Kwanjana said adding that the situation calls for urgent collaborative efforts to curb unsustainable mining practices and preserve Lilongwe’s environment for sustainable development.

However, small scale quarry miners plying their trade in the City told Mining & Trade Review that Government needs to give them licenses and identify appropriate areas where they should be doing their trade.

“We need to be empowered with loans to procure machines and compete with mechanized miners. It is sad that foreigners who have adequate capital including Chinese have dominated the industry putting us out of business,” said a female miner.

Stakeholders in the extractive sector have urged the Malawi Government to finalize the Mine Development Agreement (MDA) for Kayerekera Uranium Mine with tenement holder ASX-listed Lotus Resources following soaring of uranium prices on the global market.

Trading Economics reports that uranium prices were at $91 per pound in early January, holding the surge from late 2023 that took prices to 16-year highs amid strong demand and risks to supply.

Volatile fossil fuel prices and ambitious de-carbonization goals drove the US and 20 other countries to announce that their nuclear power will be tripled by 2050.

The large bets on nuclear energy are led by China, which is building 22 of 58 global reactors, while Japan restarted projects to increase nuclear power output, and a new reactor in Finland marked Europe’s first new facility in 16 years.

“The developments were met with increasing threats to supply. Western utilities continued to voluntarily shun Russian uranium imports due to its invasion of Ukraine, while US officials moved closer to outright banning imports from the world’s top producer of nuclear fuel. Additionally, supply was also pressured by the military coup in Niger and troubles in Canadian mines.”

Commenting on the development, Mining expert John Nkhoma asked both the Malawi Government and Lotus Resources to allow the project to resume with preliminary works including refurbishing the plant though the MDA is yet to be finalized.

Nkhoma, a seasoned geologist and MD for a leading consultancy group Chiwandama GeoConsultants, said he is optimistic that what have remained in the agreement are just few steps that can be finalized in few days.  

He said: “To tell you something, the prices are very succulent. From my perspective, I think preparatory works for mining resumption should commence even though discussions for the MDA are in progress.”

“After all I do not think there are many issues to look into. Maybe they can start warming up the equipment and hiring the company that will be doing mining like Paladin did last time.”

Lotus Resources reported recently that if the MDA is signed by December 2023 as promised by the Ministry of Mining, the company will be able to identify off-takers, secure finances, commence plant refurbishment this year and resume production in 2025.

In a separate interview, Coordinator for Chamber of Mines and Energy in Malawi Grain Malunga said the uranium price hike is advantageous to both Government and Lotus, hence the call to respond to few issues remained in the MDA.

“It is to the advantage of both Lotus and Government. There are few issues for Government to respond to and move on with MDA conclusion,” said Malunga.

Programs Coordinator for Natural Resources Justice Network (NRJN) Joy Chabwera concurred with Malunga but asked Lotus to ensure that they negotiate a fair deal with the Malawi Government to avoid mistakes made with the previous company.

“It is to the advantage of the government to conclude the MDA for Lotus but it is also important for the company to negotiate a fair deal for Malawi since the Paladin background,” Chabwera said.

The Ministry of Mining indicated recently that the outstanding issues for Lotus’s MDA include; loss carry forward from Paladin; waiver on interest on loans, non-resident tax and dividends; application on resource rent tax about to be concluded and; Lotus’s request of equity share to be at 10% and not at 15% as it was the case with Paladin.

In August 2022, Lotus Resources Limited released a Re-start Definitive Feasibility Study (DFS) that highlighted that Kayelekera ranks as one of the lowest capital costs uranium projects globally whilst also having the ability to quickly recommence production once a Final Investment Decision (FID) has been made.

The Kayelekera Uranium Project is the fourth largest uranium asset globally by historical annual production.

The mine, currently on care and maintenance, produced ~11MIbs U3O8 equivalent over five-years between 2009-2014 before the asset was shutdown to preserve its longevity due to a sustained low uranium prices in the aftermath of the Fukushima Nuclear Disaster which resulted in the closure of several nuclear power plants in Asia.

The Kayelekera deposit hosted a total mineral endowment of approximately 60Mlbs U3O8 equivalent when historical production (11Mlbs) and the current resource (46.3Mt at 500ppm U3O8 for 46.3Mlbs U3O8) are accounted for. 

The Company also owns the Livingstonia Uranium deposit (6.9Mt at 320 ppm U3O8) in Malawi. Combined Kayelekera and Livingstonia account for a total global Mineral Resource Estimate for the Company in Malawi to 49.4Mt at 475ppm U3O8 for 51.1Mlbs U3O8.

Kayelekera is a sandstone-hosted uranium deposit associated with the Permian Karoo sediments and is hosted by the Kayelekera member of the North Rukuru sediments of the Karoo. The mineralisation is associated with seven variably oxidised course-grained arkose units, separated by shales and chocolate-coloured mudstones.

Uranium mineralisation occurs as lenses primarily within the arkose units and, to a lesser extent, in the mudstone units. The lowest level of known mineralisation currently is at a depth of approximately 160m below surface. 

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Malawi Women in Mining (MAWIMA) and Women in Energy, Extractives and Mining (WEEM) have merged to form the Malawi Federation of Women and Youth in Mining (MFWYM), Mining & Trade Review has learnt.

Vice President of MAFWYM Ashley Simbeye Maleta said in an interview that the newly formed federation commences its operations this month.

Maleta said the Federation has been formed to fulfill the conditions set by the Southern African Development Community (Sadc) Women in Mining that require women in mining in a country to speak with one voice.

“MAFWYM has been formed so that MAWIMA and WEEMA should speak with one voice regarding issues of mining in Malawi. Though we have different strategic plans, we are all Malawian women and secondly we are in the same sector and it was just imperative that we have one body representing the country at any SADC fora or event,” she said.

Maleta, who was speaking on behalf of MAFWYM President Annie Kamanga, disclosed that the leadership of the new body comes from the merged associations and that there is balance of power though the new body is being treated as an independent registered institution.

“For its smooth growth, MAFWYM will incorporate cooperatives in the mining sector apart from individuals. Those looking for broader markets are free to join but there will be a fee. This will help in easy monitoring of the association and we are encouraging people who are self-driven and result oriented to join us,” said Maleta.

The vison for the new body is to create a platform for its members to achieve professional development and economic empowerment for accomplishments of entrepreneurial exploits, initiatives and development endeavours.

The new body also wants to forge a partnership with relevant stakeholders for women to achieve their optimal participation in the mining sector as well as increase women and youth representation in the mining industry as they help in the contribution of the SADC economic growth agenda.

“MAFWYM will help us speak with one voice in terms of identifying opportunities in a coordinated manner and facilitate integration, empowerment and success of African labourers and women and youth entrepreneurs in and around the mining sector,” reads a statement from MAFWYM.

It explains that the objectives of the new body include: provision of support, care and healing interventions to women and youth infected and affected by HIV/AIDS and to victims of gender based violence around mines through capacity building.

The body will also take a leading role in promoting and supporting the advancement of women in the mining sector, enhancing the entrepreneurial development of women and youth owned enterprises in mining as well as increasing members’ awareness of the legislative process and legislation relating to the mining industry.

The new body will also be involved in raising empowerment funds and funding for women and youth in the mining sector.

With just two weeks to go before the Investing in Africa annual mining indaba starts, Malawi’s Ministry of Mining is yet to solicit funds to attend the Indaba that takes place in Cape Town, South Africa.

This year’s indaba which will be held from February 5 to 8, 2024, aims to celebrate Mining Indaba’s 30th anniversary by taking a new direction and purpose under the theme of ‘Embracing the power of positive disruption: A bold new future for African mining.’

The indaba outlines the need for Africa’s mining industry to embrace a solution and a path towards positive change in order to become a meaningful global competitor as key minerals are required to drive a sustainable future for the planet.

For Malawi, the indaba serves as platform to market its mineral potential to potential mining investors around the global.

But in an interview, Public Relations Officer for the Ministry Tiwonge Kampondeni told Mining & Trade Review that the Ministry is still looking for funds to attend the event.

“We are expected to participate and at the moment we are looking for resources to enable us to attend the meeting this year,” said Kampondeni.

Last year, the Ministry failed to have a pavilion at the indaba similarly due to lack of financial resources.

Commenting on the development, National Coordinator for Natural Resources Justice Network (NRJN) Kennedy Rashid blamed the Ministry of Finance for not being serious in funding some of the priority sectors highlighted in Malawi 2063 economic agenda such as mining.

Rashid said the country has huge mineral potential that requires marketing and that the mining indaba is a huge opportunity to woe investors into the country.

He said: “The challenge we have is that the Ministry of Finance has not been serious in financing the priority sectors that are expected to generate revenue and transform the economy.”

“Our Ministry of Finance, to be honest, has never stepped up to support the sector as other countries in the region have been doing.”

“The expectation that the private sector is going to develop the country is good but also the regulation and development of the sector require investment.”

“Attending international conferences like the mining indaba to at least market the country is what we need for companies out there to know what we have.”

Rashid said the Ministry is supposed to have a pavilion with all the Information, Education and Communication Materials (IEC Materials) on Malawi’s minerals sector.

He said: “We need to be serious with the sector and the Ministry of Mining should not be lacking resources to attend important events.”

“The lack of resources in the Ministry only shows that our government is not serious about mining,” said Rashid.

Apart from solid mineral potential, Malawi has petroleum and gas blocks that are vacant up to date that require to be marketed to investors.

Despite the absence of a government pavilion at the Indaba, multinational exploration companies working in Malawi such as Lindian Resources, Mkango Resources, Sovereign Metals and Lotus Resources always attend the Investing in Africa Mining Indaba.