Malawi is failing to cash in on mineral resources it is endowed with on the back of never-ending negotiations on mining development agreements (MDAs) between the government and companies.
Since 2020, the government has not concluded an MDA despite President Lazarus Chakwera hinting, at the time, at having his government working on diversifying the economic base and incorporating the industry among main anchors.
When asked on progress of the MDAs on the anticipated projects such as Kanyika Niobium, Rare Earth Project in Phalombe, Kasiya Rutile and resumption of Kayelekera mine in Karonga, Director of Mining Samuel Sakhuta said discussions were still ongoing.
“Currently, we are in the process of discussing a number of issues that need to be agreed upon between the government and companies managing the projects before the mining licences are issued
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“The discussions have to do with royalties, taxes, community development agreements, government incentives, free carry equity participation and value addition, among others. Once these are agreed upon, the mining licences will be issued,” Sakhuta said.
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Mining expert Grain Malunga said further delays entail that Malawi is losing forex, especially in energy transition minerals such as uranium and rare earths.
“The government negotiating team should be readily available and be able to understand capital markets,” Malunga said.
A recent analysis by Times Business found that by delaying mining projects, the country has forfeited huge sums of foreign exchange.
For example, for the three projects that are Songwe rare earth, Kanyika Niobium and Kayelekera Uranium to set operations in motion, the initial capital injection would amount to $588 million (Songwe $250 million, Kanyika $250 million and Kayelekera $88 million).
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Furthermore, if all the four projects were in motion, Malawi could be getting $901 million annually ($415 million from Kasiya, $243 million from Kanyika, $127 million from Kayelekera and $116 million from Songwe hill).
A recent Financial and Economic Review of the Reserve Bank of Malawi estimated that the mining and quarrying subsector would grow to 3.5 in 2023 from 2.6 percent in 2022.
