Stakeholders in the mining sector fear that the amended Mines and Minerals Act of 2023 does not guarantee full benefit for Malawi from the mining activity and possible deals with private companies.
Parliament amended the Mines and Minerals Act of 2019 and President Lazarus Chakwera passed it recently.
Addressing Parliament last week, Minister of Mining Monica Chang’anamuno said, in the new law, the 10 percent free carry equity for the government has been removed.
She said this means the government can negotiate a percentage of ownership with an investor without a threshold.
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Chang’anamuno was responding to a question from Dowa West legislator Abel Kayembe who asked for an amendment to allow 50-50 investment options between the government and private investors.
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Section 269 (1) of the Mines and Minerals Act number 8 of 2019 stipulates that the government has the right to acquire directly or through a government nominee, without cost, a free carry equity ownership interest of up to 10 percent in any mining project subject to a large-scale mining project.
“However, it has to be noted that the companies who invest in a country come with a profit-making mindset, just like any other businessperson. If a country does not put its shares into mining operations and demands more shares, there is a threat that many companies can pull out of such contracts.
“This means that if Malawi wants to have more shares in any mining investment, we should be ready to take from the Treasury and invest into the mining operation of any company,” Chang’anamuno said.
She said the government will remain cautious when signing contract agreements in the best interest of the country.
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But in an interview, Natural Resources Justice Network Executive Director Kennedy Rashid said the situation may disadvantage the country further.
“The current arrangement is not clear as to what we want to achieve in the end. The challenge we have had is that we still don’t have the capacity to negotiate contracts as we have allegedly been hiring external experts to support us in negotiations.
“If we are indeed hiring external negotiators, we might end up getting more raw deals as we are already not in control,” he said.
Mining sector is seen as the country’s next big thing.
To make a fortune out of the sector, the government said it was committed to reviewing strengthening the enforcement of mining laws and regulations.
Its contribution to the country’s gross domestic product registered no growth, stalling at 0.7 percent in the past five years.
But the government plans to increase this contribution to GDP to 10 percent, in line with provisions of the Malawi 2063, the country’s long-term development blueprint.
