Mining

New mines law does not provide adequate benefits to MW – NRJN

March 1, 2019
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By Gloria Mbwana

The Natural Resources Justice Network (NRJN) says the new Mines and Minerals Act, which has a provision for the Malawi government to decide to have at least 10% shareholding in large scale mining ventures, is far from meeting the expectations of Malawians as the rightful beneficiaries of mining projects.

Chairperson of NRJN KossamMunthali told Mining & Trade Review in an interview that it is unfortunate that parliament passed the Mines and Minerals Bill with such a provision for free government equity when the civil society made it clear that this is on the lower side.

Munthali said: “We already made it clear to government that this is a non-starter and have been wondering what are the basis like and from which model are we trying to borrow.”

“We feel the government is failing to be sincere to Malawians by dangling almost all the proceeds of mining projects to companies at the expense of the nation including impoverished communities in mining areas. In crafting this law, we would have used models of countries in the region which are reaping substantial benefits from the mining sector such as Botswana.”

In Botswana, the Mines and Minerals Act gives government an option to own 15% shares in new mines but the Act calls for negotiations with regard to shares in diamond mining companies.

Consequently, the government has a 50% stake in Debswana with a private company, De Beers, holding the rest, and the Botswana government fully owns other diamond investments including the Okavango Diamond Company and Morupule Colliery.

Munthali explains that though Community Development Agreements (CDA) have been included in the law as advocated by the civil society groups, the law is far from maximizing community benefits from mining projects citing that despite civil society groups advocating for 3 to 4% of mine revenue to be channeled to community projects, the law is only talking of about 0.45% of the annual growth sales revenue.

“Government should not forget that mining is not agriculture because you do not grow uranium like trees. You mine for now or you extract for now, and then it is gone for good.”

He also urges the government to amend the law on community development agreements to take on board medium scale mines which are many in the country as compared to large scale mines.

Munthali also laments the omission of the issue of “free, prior and informed consent” in the Act saying the absence of such a provision is denying the community the right to access information about mining projects taking place in their areas.

“Government enacted the Access to Information law and joined the Extractive Industry Transparency Initiative (EITI) to ensure that information on   mining issues is available to the country’s citizens including communities affected by mining activities. It would have, therefore, been another progressive step on the issue of transparency and accountability on mining activities to include the issue of ‘free, prior and informed consent’ in the new law,” he says.

He explains that in absence of such a provision, mining companies will not be obliged to sensitise communities on the projects taking place in their respective areas.

Malawi government holds 15% shareholding in Kayelekera Mine in Karonga, the country’s largest mining investment, with the rest of the shares owned by Australia’s Paladin Africa.

Despite collecting royalties and taxes from the mine, the Malawi government has not been successful in earning dividends from its shares as Kayelekera, now on care and maintenance, has remained a loss making entity due to low uranium prices on the world market.

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