Malawi is raking in slightly over K600 million from mining royalties per year, the government has confirmed.
Speaking in an interview, Director of Mines Burnett Msika said the amount excludes other taxes, including these that go to the Malawi Revenue Authority (MRA) for instance.
According to Msika, this signifies that the country is on a good trajectory of making economic gains from the sector, which he described as the smallest in the region.
“We are collecting over K600 million in royalties from mining companies. This does not include withholding taxes or corporate income taxes which are channeled to MRA. This is just the five percent that we charge from production sales,” Msika said.
He trashed sentiments by other stakeholders that the figures are on the lower side compared with other countries within the region, saying government is doing its best not to scare away potential investors.
Giving an example of cement companies who have mining licences, Msika said the charging system is dependent on what is obtaining on the international market.
“The commodity price is another crucial factor, because the companies also have to make profits. You do not want to make the business environment unconducive to them, there are issues of insurance, all those are factored in. So, it is unfair to claim that we are undercharging,” he explained.
He stressed that the royalty calculation model that the country is using is ideal, was in compliance with the law and also aimed at stimulating growth of the sector.
Msika then disclosed that they have of late intensified mining inspections and surveys to ensure that the royalties being paid to government are commensurate with the volumes of minerals being excavated.
“We are out here conducting performance audits of all license holders. We have suspended some, revoked some while we continue to issue new ones, all this because we want to grow the sector but also ensure sanity and compliance,” he added.
But Natural Resources Justice Network Chairperson Kossam Munthali said there was nothing to celebrate about in the amount as it remained very low.
He said, with such a figure, the future of mining in the country remains bleak, attributing the development to among other reasons, the lack of a national mining vision.
He said government was failing to account for all the mining activities taking place in the country and ensuring that they bring in the much needed revenue.
“Those are just peanuts. Government has a lot to do and we know there is so much revenue that we are losing, which only requires vigilance and proper policies,” he said.
This comes few months after President Lazarus Chakwera announced plans to reform the country’s mining sector to boost the economy and crack down on illegal mining and mineral smuggling.