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Formulate competitive fiscal regime for minerals sector

May 23, 2024 / Marcel Chimwala
Marcel Chimwala

Years are elapsing while the Malawi Government continues negotiating for a Mine Development Agreements (MDA) with Australian firm Lotus Resources to resume uranium mining at Kayelekera in Karonga

As reported in our article on Page 6, mining at Kayelekera will come with plenty of benefits to Malawians through employment and training, local business development, goods and services procurement and community development.

Lotus expects to spend up to US$50-million per year with local businesses generating a significant amount and in addition, the Company will execute community development projects having finalised a community development agreement, and also scale up corporate social responsibility projects in the area including assisting schools and clinics.

But all these benefits meant for Malawians are awaiting the finalisation of the MDA for Kayelekera. We, therefore, believe the negotiating parties are being unfair to the expectant beneficiaries in delaying conclusion of the negotiations.

Lotus MD Keith Bowes is quoted in our article as saying the bone of contention is Malawi’s fiscal regime which he has described as uncompetitive in comparison to those of other countries such as Namibia, where another Australian firm Paladin Energy which previously owned the rights for Kayelekera has resumed uranium mining at its Langer Heinrich Mine.

We agree with Bowes that there should be a problem with Malawi’s fiscal regime which is leading to failure by investors to venture into large scale mining.

We, therefore, appeal to the Malawi Government to undertake an independent survey of the fiscal regime of other countries mining industrial minerals like uranium and come up with a competitive fiscal regime that should attract investors to start mining.

We believe if the country develops a competitive fiscal regime, there will be no need for investors to negotiate MDAs as they will just apply what is in the country’s laws.

It is high time, Malawi started reaping from its mineral potential to address problems such as high rate of unemployment and shortage of foreign exchange for importing essential commodities.

Mining is a business and any mining company requires a return on investment. We, therefore, believe that such being the case Malawi can host dozens of investment fora but no foreign mining investor will venture into large scale mining if the fiscal regime is not competitive. Our leaders will only continue singing the same song that Malawi is rich in minerals at high profile functions without any mine to show.

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