Malawi expects the minerals sector to continue growing despite the suspension of production at Paladin’s Kayelekera uranium mine, the country’s largest mining investment to date.
Australia’s Paladin suspended production at Kayelekera owing to low uranium prices on the global market in the wake of the Fukushima nuclear disaster, in Japan, which led to the closure of several nuclear plants in the Asian country. Paladin has pledged to reopen the mine, currently on care and maintenance, if uranium prices rise to at least $75/lb.
Charles Kaphwiyo, a director at the Ministry of Natural Resources, Energy and Mining, says that, besides the prospects of Kayelekera reopening, the country will witness other significant mining ventures taking off in the near future. He cites, besides others, the Kanyika niobium mining project, whose development is expected to start as soon as Australia’s Globe Metals & Mining completes ongoing discussions with the Malawi government.
“We expect Malawi to witness the mining of more minerals than just uranium on a large scale since the mineral resource base is very diverse.”
Mining used to account for a meagre 3% of Malawi’s gross domestic product (GDP) but the contribution jumped to 10% when the Kayelekera mine came on stream in 2009.
Kaphwiyo says the Malawi government’s projection is that the contribution of the sector to GDP will rise to 20% when all the upcoming mining projects are in full operation.
Also being planned is the Kangankunde rare earths project, which is estimated to be worth over $1-billion and for which a mining licence was granted to local firm Rare Earths, which later transferred it to Australia’s Lynas Corporation.
However, the project has been dragging, owing to legal wrangling between government and the original owner of the exclusive prospecting licence for the project area, South Africa’s Rift Valley Resources.
Another promising project is the Songwe Hill rare earths project, to be developed by Mkango Resources.
Malawi also has large-scale coal and limestone mines as well as small-scale mines producing a range of minerals, including gemstones, iron-ore, clay and sand.
“The performance of the mining sector has generally been satisfactory, with most of the major minerals mined and processed registering upward trends. The upward trend in production is a reflection of increased demand by the consuming industries and the export market,” says Kaphwiyo.
He, however, comments that the sector is encountering a number of challenges, including outdated legislation, insufficient budgetary allocations to institutions responsible for fulfilling regulatory functions, a shortage of trained and skilled personnel and inadequate support infrastructure.
Kaphwiyo says government has put in place a number of measures to address the challenges, including the launch of the new Mines and Minerals Policy in April 2013.
“The policy advocates a paradigm shift in the country’s economy from being agrobased to being mineral based,” he says.
It is also reviewing the Mines and Minerals Act of 1981 and the Petroleum (Exploration and Production) Act.
“In addition, government has introduced mining-related courses at institutions of higher learning,” says Kaphwiyo.
Malawi is pursuing the reforms in the minerals sector under the auspices of the Mining Governance and Growth Support Project, which is financed by the World Bank’s International Development Association and the European Union.
The activities being undertaken in terms of the project include institutional and governance strengthening, long- and short-term capacity building, the updating of the geological database, the acquisition of high-density airborne geophysical data, the updating of geological maps, modernising the mineral cadastre and setting up a geodata centre for ease of data access.
The airborne geophysical survey will be followed by a geological remapping project to be financed by the French government.
Using modern technology will provide a better understanding of Malawi’s mineral potential.
Malawi has also granted all its six blocks demarcated for oil exploration to international firms with a proven record of working in environmentally sensitive environments. Block 1 has been granted to South Africa’s SacOil, Block 2 and Block 3 to Hamra Oil, Block 4 and Block 5 to Rakgas and Block 6 to Pacific Oil & Gas.