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Government wakes up on mining deals

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Thabo Chakaka Nyirenda

Attorney General Thabo Chakaka Nyirenda has said the government has initiated the review of mining development agreements.

These agreements include double taxation agreements and the Exchange Control Act, among others, to deal with improper transfer pricing techniques in the mining sector.

This comes after analysts have expressed concern over the government’s delay in reviewing the 1960 laws that govern the extractive industry in the country and the discovery of rutile deposits at Kasiya in Lilongwe.

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At 1.8 billion tonnes, the deposits are said to be the largest in the world so far.

“We are initiating the review of the double taxation agreements that have reaped the country of the resources. We are also reviewing mining development agreements to seal loopholes. We will seek to contract out doubt taxation agreements and treaty shopping. We are relentlessly working on sealing loopholes in the Exchange Control Act,” Nyirenda said.

He said most of the mining companies are multinationals and are involved in trade mispricing and improper transfer pricing techniques to move capital out of Malawi.

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But chairperson for the Natural Resources Committee of Parliament, Werani Chilenga, argues that in as far as the mining sector is concerned in Malawi the problem is not with the law.

“We have got a very good Mines and Minerals Act that was passed by Parliament in 2019 and underwent consultations for several years before being enacted into law.

“The problem is the Ministry of Mining which is totally failing to implement this law which has led to illegal mining taking place all over the country,” Chilenga said.

On his part, Director of the Centre for Research and Consultancy Milward Tobias believes what Malawi needs is to establish its own mining company that can venture into partnerships with foreign firms.

“That is what Botswana has been doing. We can only maximise the benefit if Malawi can have its own mining company,” Tobias said.

Julian Stephens who is Managing Director of Sovereign Metals, a mining firm that is expected to undertake the rutile mining venture, said discovering the largest natural rutile deposit in just two years since initial identification is a ‘remarkable achievement’ in Malawi.

Stephens noted that Sovereign Metals is targeting a large-scale, low-carbon footprint and environmentally-sustainable natural rutile and graphite operation, which will also positively impact the environmental footprint of titanium pigment and other industries and provide a significant contribution to Malawi’s economy.

In his national address on government policies on May 2, 2021, President Lazarus Chakwera reiterated that Malawi is a mineral-rich country.

“What we have lacked for decades is the patriotism, leadership, discipline, organisation and collaboration to blend the natural resources under our feet with our human resources to create the developmental riches that will last and serve generations,” Chakwera said.

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