Power capacity puts mining in the dark

By Deogratias Mmana

President Lazarus Chakwera’s flagship Agriculture, Tourism and Mining (ATM) strategy faces a formidable and familiar foe: energy capacity.

While multiple surveys have proven that Malawi is, indeed, rich in mineral resources, the country is significantly short on power, let alone reliable one, for a sector that is inherently energy intensive.

According to Electricity Generation Company (Egenco) website, overall, Malawi has a total installed generation capacity of 441.95 Megawatts (MW), with 390.55MW from hydro power plants and 51.4MW from thermal power plants.

Officials hint that at the current capacity, Malawi’s mining agenda could be challenged.

Last year, Malawi, through the Electricity Supply Corporation of Malawi (Escom), signed a 50 megawatts agreement with Mozambique at an inter-ministerial level.

It was agreed to increase the capacity by 70MW to make it 120MW. However, Secretary to Treasury Betchani Tchereni stopped officials from Escom and the Ministry of Energy from travelling to Mozambique to sign the agreement.

Secretary for Energy Alfonso Chikuni told The Daily Times recently that the cancellation of the signing agreement was due to the question of forex.

“Once the deal is signed, Malawi will be obliged to pay for the fees to the nation where we will be getting the power, whether we use the power or not. So we thought it was important that we work with the 50MW that we already signed so as to pave the way for proper stabilisation of the forex.

“As it stands, our electricity has stabilised with the solar power in place and the fixing of Kapichira. But when it comes to mining, we will be challenged as the current power won’t be enough. That is why we needed the 70MW,” Chikuni said.

Escom Chief Executive Officer Kamkwamba Kumwenda also told The Daily Times that the monthly invoice for 120MW would be about $10 million.

“The question is whether, as a country, we have enough forex exchange reserves for such an obligation. Bear in mind that our tariffs are in Malawi Kwacha. Even if Escom will have the Kwacha, the source of the forex is critical. We cannot afford to default and embarrass the government.

“The policy holder and shareholder who is the Treasury has decided that we need to review the arrangement, hence the directive that the addendum should not be signed this week until advised,” Kumwenda said.

This suggests that it may not be soon that the country could meaningfully improve its power capacity to power mining activities in keeping with the ATM objectives.

However, in an interview on Thursday, Director of Mines in the Ministry of Mining Sam Sakhuta said the country cannot do things beyond its means although it wants to develop.

He suggested that not all is lost on mining in Malawi.

“Failure of this deal does not necessarily mean the failure of all things in the mining sector. We still have the hope as a mining sector that we will grow and contribute significantly to the economy of Malawi.

“Some companies such as Mawei and Sovereign Services among others will use solar energy for their operations,” Sakhuta said.

Sovereign Services Limited, an Australian company, has been licensed to conduct graphite mining exploration in Lilongwe.

In 2017, Mawei, a Chinese firm, obtained licence for mining of ore containing monazite, rutile and zircon in Makanjira. Early this year, we reported that the firm was yet start mining as the site was not yet connected to the power grid.

In his State of the Nation Address (Sona) for this year, Chakwera committed to boost power generation so that wealth can be created.

“That electricity means wealth creation for the young people running salons and printing shops, and the ones selling refrigerated goods. And now that we are here, we will not stop, for our target has always been to increase our power generation capacity to 1000 Megawatts.

“We will proceed to add 120 Megawatts through the Malawi-Mozambique Interconnector Project following further negotiations and revision of the Power Purchasing Agreement to increase the importation of electricity from the initial 50 megawatts,” Chakwera said.

Reacting to Chakwera’s 2024 Sona especially on mining, Standard Bank Chief Executive Phillip Madinga welcomed what he termed as the government’s renewed focus on mining development.

He said the sector is key to the government’s recently adopted ATM strategy, as mining seeks to complement the role that the agriculture sector has played over many decades as the key earner of foreign exchange and growth for Malawi.

“Mining can become one of the alternative economic growth drivers for the country. Mining and Tourism form part of the ATM strategy as they offer alternative sources of foreign currency generation and receipts by maximizing Malawi’s intrinsic natural endowments and creating a conducive environment for their exploitation,” Madinga said.