Mining & Trade News

The Parliamentary Committee on Natural Resources and Climate Change has accused the Ministry of Forestry and Natural Resources and; Lilongwe Water Board (LWB) of not being open on their position on Salima-Lilongwe water project.

Over three years have elapsed since the Government and the awarded contractor Khato Civils started negotiations over the project amidst various controversies.

Chairperson for the Committee Werani Chilenga made the accusation when the committee engaged the Ministry of Forestry and Natural Resources; LWB; Ministry of Finance and; Khato Civils to hear the progress of the project.

Chilenga said the committee suspects that the Ministry and LWB are not being open on the project because their interest is not on the multimillion-dollar project but rather the Diamphwe Water Project.

He said: “As a committee we are recommending that due to scarcity of water in Lilongwe, the project is the best for the city.”

“We are failing to manage the Dzalanyama Forest Reserve. Both Diamphwe and Lilongwe Rivers are coming from Dzalanyama.”

“At the rate deforestation is taking place now, we can do Diamphwe but just few years later we will go back to Lilongwe-Salima project which by then will be too costly.”

Meanwhile, there is fresh controversy on the project as in the original design, Khato proposed the use of ductile iron pipes but following recommendation by the Government to consider reducing the price for the project, the contractor has proposed mild steel pipes which the government is not satisfied with.

The change of the project material has reduced the cost of the project from a tune of $400-million to $315-million.

Mild steel pipe is made of rust corrosion measures while Ductile iron pipes are made of ductile cast iron commonly used for potable water transmission and distribution.

During the meeting, the Ministry of Forestry and Natural Resources admitted that it finished reviewing the technical side of the revised design for the project and handed over to Ministry of Finance for final recommendations.

Director of Economic Affairs in the Ministry of Finance who represented Secretary to the Treasury MacDonald Mwale said the Ministry has not yet started working on the project as they are still waiting for a final financial proposal.

Mwale said negotiations for the project are taking a long time following changing of type of pipes by Khato in the requested design.

“Of course we received the design from the Ministry of Forestry and Natural Resources and we are about to look into it later. We are currently waiting for Khato Civils to submit full financial proposal,” said Mwale.

Khato Civils Group Chief Executive Officer Mongesi Mnyani said firstly they opted for ductile iron pipe after considering factors of purchase, logistics, installation and maintenance. 

Mnyani said now the situation has changed following the reduced cost as the mild steel are cheaper than ductile iron.

He also said the outbreak of the novel coronavirus (Covid-19) pandemic has also influenced the change of the pipes considering that logistics to acquire ductile iron will not be easy as initially suggested.

“We understand that the Malawi Government still insists on ductile iron pipes not the mild steel we proposed. But the Government has to know that ductile iron pipes can still hike the cost back to over $400-million which will not satisfy them,” Mnyani said.

The Lilongwe-Salima water project is expected to pump water from Lake Malawi to Lilongwe City, a distance of 120 kilometers.

Government already spent $17-million on the project which will be pumping an estimated 50,000 cubic meters of raw water per day through a 50 centimeter diameter pipeline.

Khato Civils is owned by South African based Malawian business guru Simbi Phiri.

During the presentation of 2020/21 National Fiscal Budget, Finance Minister Felix Mlusu pegged expenditure for the project at K2.2 trillion.

Adventures with Colby (AwC) a local tourism-sector excursion firm specialized in promoting hiking, says tourism is an integral ingredient in uplifting Malawi’s economic status.

AwC founder and Director Colby Mughogho tells Mining and Trade Review that by attracting tourists from all over the world to visit different places in Malawi, the company contributes to generating revenue and boosting the country’s foreign exchange cover.

This year, AwC has lined up a number of activities including 4-peaks-challenge where participants are expected to conquer Michiru Mountain, Ndirande Mountain, Nthawila and Soche Hills in the commercial city of Blantyre.

“Anyone is welcome to join us on any of the mountains or better still on all of them,” he says.

Following his passion for adventure and tourism, which saw him engage in a 13-year-old career in wild camping, trekking, hiking and off-road cycling, Colby Mughogho founded Adventures with Colby in 2017.

Through the adventures, the firm has also been boarding on numerous life changing community projects such as the 2 wheels 2 schools project carried out in 2020 and many other programs under the Hike with Heart, which he also founded.

“The 2 wheels 2 schools project focuses on getting back less privileged secondary students back to school by assisting them with school fees, bags, bicycles for those who walk long distance to school as well as bicycle spare parts,” he explains.

Mughogho, however, laments that the novel coronavirus (Covid-19) pandemic has negatively impacted on their projects. He observes that some international clients continue to fail to travel to Malawi due to travel restrictions because of the pandemic.

“Covid-19 has negatively affected the tourism industry as a whole and our firm has not been spared. We are experiencing less clientele as some of our international clients have moved back to their homes hence we have started promoting local tourism,” he says.

In 2021, AwC plans to take its escapades to the northern region of Malawi having noted that the region has not experienced adequate tourism interventions and investments.

“People should expect great adventure trips up the northern region this year,” he says.

As the tree planting season is still underway, Minister of Energy Newton Kambala took part in a tree planting exercise at Chitukula Community Day Secondary School in Area 25, Lilongwe.

This year’s tree planting season runs from December 15, 2020 to April 15, 2021, according to Ministry of Forestry and Natural Resources.

Kambala said in an interview he is interested in tree regeneration understanding that trees play a major role in conservation of water which is the main source of energy in the country.

He said: “That is why I was interested to encourage people to plant trees. We have planned to plant about 500 trees today and this is the beginning. We want to be doing this every year.”

“We want to encourage people in the country to participate in planting trees as illustrated by our President that we need to replace trees lost through firewood and charcoal.”

The Minister urged the members of the community to take care of the trees and ensure that no trees are lost due to poor management.

“We have engaged the Senior Chief to lead his subjects in taking care of the trees,” he said.

Kambala also announced that his Ministry has organised a series of tree planting exercises in Kasungu District this month.

In his remarks, Senior Chief Chitukula hailed the Minister for leading in the tree planting exercise in the area saying this will encourage the people to take care of the trees.

 “These trees will help the entire community in various ways including as a source of firewood and also protect the school blocks and houses from heavy winds,” said Chitukula.

Malawi loses nearly 30,000 hectares of forests annually while average national soil loss rate hovers at around 29 tonnes per hectare each year mostly due to increasing forest degradation, according to the Ministry of Forestry and Natural Resources.

Players in Malawi’s mining sector have expressed mixed reactions over African Development Bank’s (AfDB) stand against coal fired power generation.

AfDB President Akinwunmi Adesina this week called for a stop in the use of coal power across the continent and recommended a switch to renewable energy sources.

Speaking during United Nations (UN) climate talks on Monday during the Climate Change Summit (CCS) in Manhattan, India, Adesina called for a halt in operations of coal fired power plants and said AfDB will support the building of the largest solar zone in the world in the Arid Sahel belt.

He said renewable energy is sustainable and has the potential to benefit future generations.

He said in 2020 AfDB rolled out a US$500 million green baseload scheme which will assist African countries to shift from coal and fossil fuel to renewable energy.

But Minerals, Geology, Environment and Corporate Affairs Consultant Grain Malunga said the development would not affect the local coal mining industry, which is dominated by the private investors.

“AfDB’s wish to stop the use of coal as energy source will not have any impact to Malawi considering that local coal mines are not government owned, but are owned by private investors whose incomes do not go into government purse,” said Malunga.

While admitting that the coal industry is among the main atmospheric pollutants, MD for Rukuru Coal Mine Bruno kloser said while considering an outright shift to renewable sources, Malawi will still need coal in its energy mix in the short to medium term to power industries.

“Malawi just like many developing countries will still need coal for some time, while investing in alternative forms of energy like solar and wind,” said Kloser.

Ministry of Mining spokesperson Sangwani Phri said AfDB’s ban on the use of coal as energy source which was imposed in 2013 to fight global warming is not bearing fruits since the Bank is failing to assist poor countries to successfully develop to middle income status through adequate investment in renewable sources of power such as wind and solar.

He, therefore, said it could be helpful if the Bank had adequately invested in the alternative sources before the ban was affected.

“There are roughly 1.6 million people in developing countries and about 7 million in Africa with the remaining 500 million in South Asia who are keenly looking for cheaper energy sources. Local restrictions on blocking companies from mining coal will be a big blow to them, as well as their economies,” said Phiri.

The Public Private Partnership Commission (PPPC) says Kenyan firm Webtribe will start construction of modern minibus parking terminals at Mibawa in Blantyre Central Business District and Limbe in April, 2021.

Acting Executive Director for PPPC Audrey Mwala said this at an inspection tour of the construction sites by the Commission and Webtribe officials.

Mwala said PPPC settled for the Kenyan company to execute the project and manage the facilities through a competitive bidding process.

“In October this year, we signed an agreement with the company to construct and manage the facilities for a period of 10 years in a Build, Operate and Transfer arrangement. We came up with the agreement because minibus parking sites in Blantyre are not in good shape, according to the standards of modern cities,” she said.

 Construction of the facilities will take almost 12 months and structures will include offices, shops, bathrooms, waiting bays for passengers and automated entry bars.

The PPP arrangement includes that the developer will be providing security to the facilities in the 10 year lease period.

In his remarks, Executive Director for Webtribe Danson Mucheni said the exercise is in-line with his company’s goals of digitalizing various operations which can be achieved through modern infrastructures.

He says they want to introduce an automated revenue system in transport sector for Blantyre City Council.

“We are planning to roll out implementation of this next year. We are 11 years old in digital payments and we have implemented this in several places including city of Nairobi so we are sure this will work here as well,” he said.

Chairperson for Mibawa Minibus Drivers and Conductors Evans Galasi expressed gratitude towards the initiative saying the digital ticketing system will simplify their operations and also the project will improve sanity at the site.

“We have people who are even afraid of visiting that area to board a minibus due to how the surrounding looks but we are quite sure that this initiative will address the challenge,” said Galasi.

The construction exercise is expected to cost US$2-million and after the 10 years, Webtribe will hand over ownership to Blantyre City Council.

Malawi’s tea is making positive strides on the world market as the Caduceus Cellars, owned by winemaker Maynard James Keenan, a Grammy award-winning vocalist for Tool, A Perfect Circle, and Puscifer, will feature five hand-crafted Malawian teas at his Jerome, Arizona Tasting Room in USA on December 28, 2020.

The teas to be featured include; Masala Chai, Lost Malawi English Breakfast, Earl Grey, Green Tea and Mint, as well as Lemon Blend tea,  and it is curated and blended by the United Kingdom’s Rare Tea Company and grown by Malawi’s Satemwa Tea and Coffee Estate.

According to Jordan Price, Malawi’s Honorary Consul in Texas –USA, the beverages are to be incorporated having perfectly complimented Caduceus’ award winning wines.

Price said: “As an Ambassador, I am excited Arizonans and international visitors to the historic mining town of Jerome, will experience the passion and dedication of Malawians through these delicious teas.”

He also disclosed that the sale of these teas will help fund school scholarships through the Rare Tea Company’s nonprofit arm, Rare Charity.

Caduceus Cellars Tasting Room Manager Brian Sullivan thanked Jordan Price Malawi’s Honorary Consul, for providing an enthusiastic introduction to Malawi.

Sullivan said: “I was fascinated by the information Hon. Consul Price shared about Malawi and tea farming. Later I researched the country on the internet and learnt that Malawi was the first country in Africa to grow tea commercially. Pointing me in the direction of the Rare Tea Company has also been a positive experience. They have been quite professional in their interactions and I am looking forward to continuing working with them going forward.”

Founder of Rare Tea Company, Henrietta Lovell, said, “Everything you know about wine is true of tea. The effects of the terroir are every bit as crucial, as is the harvesting and the crafting.  Great tea comes from great producers, in the same way that fine wine does. We source the best to bring you the greatest flavors.”

Alexander Cathcart Kay, owner of Satemwa Tea and Coffee Estate noted that high value teas have a direct impact on Satemwa’s ability to sustain its vision of improving the living standards of their employees and neighboring farmers.

The teas available at Caduceus Tasting Room include black teas grown on the estate and Fair Trade Spearmint and Lemon Verbena, grown by adjacent independent farmers.

He said, “It is exciting and gratifying to see Satemwa specialty teas find their way into high quality establishments like Caduceus. Satemwa has struggled to make progress in the US market over the years and the support received from the Malawi Embassy, through their Honorary Consul and the commitment of the Rare Tea Company makes an enormous difference.”

Founded in 1923, Satemwa is a third generation family owned tea and coffee estate in Malawi’s Shire Highlands which contributes to improved Malawian standards of living by crafting a unique line up of white, green, oolong, black, dark, and herbal teas. 

Price fluctuations are the major setback to the advancement of pigeon pea farming in Malawi, a representative group of the crop’s farmers the Nandolo Farmers Association of Malawi (NFAM) has said.

Speaking in an exclusive interview with Mining and Trade Review, NFAM Chairperson Susan Chimbayo said that lack of profitable and reliable markets, insufficient finances and high interest rates are among the factors that derail the capacity of the crop to contribute enormously to the country’s economic growth.

Chimbayo explained that the marketing performance of the crop was greatly affected by import restriction cap set by the Indian government in 2018. With the cap in place, prices dropped to as low as MK30/kg until the Malawi government intervened, a development which saw prices rising to as high as MK230/kg in the 2019-2020 season.

 “Prices of pigeon peas from 2019 to 2020 have ranged from MK250 to MK365/kg. this has renewed farmers’ interest to grow the crop,” she said adding that the market condition has generated high demand on the market and thus makes prospects for 2021 lucrative.

She said farmers under the association benefit from a deliberate policy where registered members attract a premium of MK20-MK30 above market prices. “This means farmers under the association get better rewards compared to non-members.”

However, she said there is a need to put in place deliberate policies to encourage production of pigeon peas as well as protecting farmers from vendor exploitation through licensing and monitoring buyers.

“So far we are lobbying for an exporting quota to India so that Malawi can export raw and value-added pigeon peas as other countries like Tanzania and Mozambique do,” she said pointing out that the association and government can partner to promote value addition using processing plants which are currently lying idle across the country.

NFAM plans to establish a factory under Nandolo Trading Company. The company will be responsible for procurement and marketing of pigeon peas on behalf of farmers.

Chimbayo commended the market linkage the association has with Mozambique based Royal Group of Companies which has improved purchase prices of pigeon peas from MK50 to MK230.

The association is composed of pigeon pea growers aiming at achieving increased production as well as maximizing returns from pigeon pea production. It has about 10,682 members working in 33 member cooperatives in Southern Region of Malawi.

The Malawi Communications Regulatory Authority(MACRA) says there is need for thorough understanding by consumers on usage of mobile data in the fast paced digital era.

MACRA Deputy Director Thokozani Chimbe made this observation during a panel discussion the institution organised to address consumer concerns on mobile data user experience in the country.

Chimbe said:  “We have been receiving complaints from members of the general public over poor service quality of mobile data from the country’s mobile network providers.”

“In most scenarios, we established that there is information gap between consumers and service providers on how to efficiently utilize some of the mobile handsets among others tools and settings applied to minimize external applications from consuming data.”

She said MACRA will liaise with its technical and economic units to come up with necessary regulatory interventions to address the issue.

Digital Experience Manager at AIRTEL Michael Mang’anda said in its efforts to ensure Internet affordability by many Malawians, the company has recently slashed pay-as-go data pricing by 50% from K30 per megabyte to K15 per megabyte.

Internet remains unaffordable for a majority of Malawians, and studies reveal that even though there has been an improvement on Internet access, from 9.6% in 2016 to 13.1% in 2018, the Internet speed is slow as compared to the global average.

In 2015, the International Telecommunications Union (ITU) findings indicated that on average Malawians use more than $12 (about K8 760) a month on mobile phones, the primary means of accessing the Internet. The report indicated that [at the time] the $12 was more than half of what an ordinary Malawian earned in a month with the minimum wage standing at K15 000.

The latest Malawi Economic Monitor by the World Bank has faulted high taxation as one of the major factors behind exorbitant internet charges in the country.

The oil exploration and production subsector is considered as one of the industries with the potential to uplift Malawi’s economy. Mining & Trade Review’s Wahard Betha engaged Minister of Mining Rashid Gaffar to seek clarification on topical issues in the subsector. Excerpts:

1. There are concerns by some stakeholders on the size of Oil and Gas exploration blocks saying they are too big, and that they need to be re-demarcated. What is the government’s position?  Will you demarcate them?

Firstly, let me acknowledge that the Blocks are indeed big. However, this is the case because when the Blocks were being demarcated in 2009, the country did not have a substantial bank of data on the prospects of Oil and Gas. As a result of this, Malawi had to demarcate large Blocks which would help prospecting companies to study Geology of the country at large whilst trying to identify potential areas for Oil and Gas discovery.

Now that there has been exploration work going on with acquisition of some geological information and data, Government will consider re-demarcating the Blocks. You might also wish to know that during consultation meetings for review of Petroleum (Exploration and Production) Act of 1983, such issues were being raised and best international practices were being proposed by key stakeholders to be adopted in order to have sizable Blocks rather than what we currently have.

Should Government wish to re-demarcate the Blocks today, the process will only be applicable to the vacant Blocks and not those with active licences.

2. Following the relinquishment of oil and gas blocks 1 and 6, when should we expect the ministry to release advertisements of the blocks for investors to acquire the tenements?

You might be aware that the Ministry is working on revision and formulation of a number legal and regulatory frameworks. One of the key instruments is the Petroleum Exploration and Production Policy which had already gone through a number of review processes. It is the wish of Government to call for interested investors to make applications once the Policy is approved.

There are a number of issues that are outlined in the draft Policy designed to benefit local Malawians which Government is willing to implement. In this regard it is considered very important to wait for approval of the Policy which is expected to be done very soon then advertisement of the Blocks will be made.

3. I remember under the previous administration, there was an arrangement to review the Petroleum Sharing Agreement signed with Rak Gas because the existing agreement did not present a win-win situation between the investor and the nation. What is the position of the current administration? Are you going ahead with the review position?

It is the Government’s wish that all mining and petroleum contracts are anchored at the interests of Malawians at large. Re-negotiation of the signed Petroleum Sharing Agreement (PSA) started some years ago but it was put on hold pending finalisation of the draft model PSA. This was done so to ensure that the outcome of the re-negotiation should reflect the interests of Malawians as captured in the model PSA.

Currently, there is a draft model Petroleum Sharing Agreement (PSA) which the Ministry is working on with the Ministry of Justice and Constitutional Affairs to have it finalised. Once this is completed, Government will fast-track re-negotiation of all contracts that are deemed not properly signed.

4. There was also an arrangement to develop a standard petroleum sharing agreement for Malawi. How far have you gone with the process?

As alluded to in the above statement, there is a draft model PSA which was developed in consultation with the Ministry of Justice and Constitutional Affairs. There are also international development partners that are helping to review the draft model PSA to provide relevant expertise from international best practice perspective. Currently, the Ministry has planned a number of activities to have the model PSA finalised as soon as possible.

5. All in all, what is the position of the new government on oil exploration? Do you support oil exploration ventures?

The Tonse Government has total support for Oil and Gas exploration. As you are aware that currently, there is no any Oil and Gas discovery made. However, the sector has huge potential to boost economic status of the country if well managed when discovery of deposits of economic value is made. This is one of the sectors that many Malawians can be actively involved in their socio-economic activities ranging from businesses to employment.

Considering all economic benefits that the country can realise from the sector, Government is rendering all support it can in order to create an enabling environment for investment of both multinational Oil and Gas companies and local entrepreneurs.

6. Please provide any information you feel is important to enlighten Malawians on the reforms that government is undertaking in the upstream petroleum subsector. You may also provide any information that shades more light on the issue of oil prospecting in Malawi.

In preparation for the future Oil and Gas discoveries, Government is in support of the major reform areas in the sector. These include review of the Petroleum (Exploration and Production) Act of 1983, formulation of the Petroleum Exploration and Production Policy, formulation of model PSA and review of relevant laws such as Taxation Act to create a conducive environment for investors whilst ensuring maximum benefits to Malawians.

Malawians may also wish to note that the companies that have been operating in the country have been reporting good progress in terms of the Geology of the country in relation to Oil and Gas occurrence. There are target areas with high potentials which have been identified for further studies. Such developments are giving hope in search for Oil and Gas from the time the country did not have such information and data to present. Government is willing to support the investors until such a time breakthrough is achieved in the upstream petroleum sector.

Let all Malawians be assured that the Ministry is striving hard to have up to date legal and regulatory frameworks which aim at ensuring that Malawians are involved in the Oil and Gas cycle and they are benefiting from activities happening in the sector.