Stakeholders in the mining sector are divided in opinion on the equity shareholding percentage that the government should acquire in mining investments in the country.
This follows revelations that the government completed a Mining Development Agreement with Globe Metals and Mining Limited in March 2023 which shows that the latter will get 10 percent free carry equity.
Clause 4.1 of the agreement, which Times Business has seen, indicates that on the grant of the mining licence the government was deemed to have exercised its option under Section 269(3) of the Mines and Minerals Act and the company shall forthwith issue to the government fully paid shares representing 10 percent of the capital of the company.
Clause 4.2 provides that in addition to the issue of fully paid shares, the company will ensure that the shareholders (other than the government as a shareholder) grant the government an option to purchase from those shareholders for fair market value up to a further 10 percent of the capital of the company.
Minister of Mining Monica Chang’anamuno asked for more time before she could divulge whether the government intends to invest in the 10 percent equity buy.
- Advertisement -
But in an interview, Chairperson for the Natural Resources Justice Network (NRJN) Kossam Munthali said the 10 percent free carry equity and 10 percent buy option are a raw deal to Malawi for its mineral resources.
“Although the industry is in its infancy stage, we need a share that befits Malawi as the owners of the minerals; so, we need a 50-50 arrangement and that is not negotiable,” Munthali said.
In a separate interview, Coordinator for the Malawi Chamber of Mines and Energy Grain Malunga said the investing companies spend a lot to explore the minerals, let alone mine them, when the government does not.
“This is not realistic because the companies are using their own resources look for the minerals and establish what quantities and what technology to use to discover such minerals, which the government has not done in the past. They cannot justify the 50-50 arrangement because they have not done anything to bring mineral resources production,” he said.
- Advertisement -
- Advertisement -
Responding to a question on the same in Parliament recently, Chang’anamuno said the government is cautious of scaring away investors.
