Mining & Trade News

Members of the community in Mulanje have written the Malawi Government protesting its intention to declare Mulanje Mountain cultural landscape as a protected monument saying the move will disturb the rare earth and bauxite prospecting project that local firm Akatswiri  Mineral Resources is conducting in the area in so doing depriving the local community of potential benefits from mining.

The Mulanje Concerned Citizens are objecting the government’s decision in a letter signed by Chairperson Albert Muloma, Secretary Robert Patrick and Treasurer Robson Mpondo.

The letter has also endorsements by 10 traditional leaders from the area including Group Village Head Kazembe; and Village Heads Nkawera, Muhiyo, Kathumba, Mangombo, Namkwakwala, Chilanga, Gelegele, Harneri and Joseph.

The letter reads: “We want Government to rescind this decision because it will disturb the mining project underway in the mountain.”

“We are informed that the mining project will employ over 1,200 members of the local community and rake in foreign exchange in excess of US$200-millioon. This is a very significant amount as our country is struggling with the problem of lack of foreign exchange.”

“We will continue protesting on this issue until our grievances are addressed.” In its statement published in the local press on July 2, the Ministry of Local Government, Unity and Culture through the Department of Museums and Monuments announced its intention to declare the Mount Mulanje Cultural Landscape a protected monument.

The statement issued by order of the responsible Minister Honourable Richard Chimwendo Banda reads: “The Mount Mulanje Cultural Landscape located in Mulanje and Phalombe Districts is recognised for its outstanding cultural, historical and spiritual significance. It contains sacred rain shrines, ancestral ritual sites, and cultural features of national and international importance and is currently undergoing evaluation for inscription as a United Nations Scientific and Cultural Organisation (UNESCO) world heritage site.”

“Pursuant to Section 11 (2) of the Monuments and Relics Act 1991: 1. Notice is hereby given to all persons or bodies with an interest in the said monument to submit written representations with respect to this proposal. 2. Representations must be submitted within one (1) month from the date of publication of this notice.”

The statement says that after due consideration of any representations received within the prescribed period, the Minister may proceed with formal declaration of the Mulanje Mountain Cultural Landscape as a protected monument.

But the Concerned Mulanje citizens state in their letter that they fear that the declaration will disturb the prospecting activities since UNESCO comes with its own regulations for managing a heritage site.

“Declaration of heritage sites distract development projects, for example a water project was impacted in Mangochi following the same declaration on Lake Malawi National Park. We, natives of Mulanje, are not happy with the decision which authorities have made without any local consultations,” reads the letter addressed to the Office of President and Cabinet, Ministry of Local Government, Ministry of Mining and Mulanje District Commissioner.

In a separate letter addressed to the Secretary for Ministry of Local Government, Culture and National Unity, Group Chairman for Akatswiri Hilton Banda described the timing of the declaration, without clear indications of specific areas of interest over the Mt Mulanje cultural landscape to members of the general public including his company, as unreasonable and questionable.

He states that he finds it surprising that the decision has not been done in full consultations with the Ministry of Mining that issued his company with mineral rights over part of the area. Banda says:

“We feel the declaration may result in stifling and depriving the significant progress our mining project has made over the last seven years.”

“I therefore, wish to emphasize to your Ministry that as a Malawian owned company we are open to engage in any agreements with all relevant stakeholders without sterilising the mineral resource of the project area where we have already made progress in terms of both financial and technical terms where the company has so far invested and achieved a lot.”

The Chambe basin and Lichenya plateau located on western part of Mulanje Mountain are historically, one of the best high valued mineral potential areas that holds significant and major bauxite and rare earth elements deposits based on current and past feasibility studies.

Akatswiri has been carrying out detailed exploration of bauxite and rare earth elements over the Chambe basin and Lichenya plateau areas since 2018 that led to technical feasibility studies and eventually an application for an initial 15-year mining licence that has since been granted by the board of the Mining and Minerals Regulatory Authority upon approval of an Environmental and Social Impact Assessment report by the Malawi Environment and Protection Authority (MEPA).

The bauxite and rare earth project is expected to generate a minimum of US$260-Million annually,  significantly resolving Malawi’s forex crisis, reduce aluminium product imports; create at least 2,265 direct jobs to local Malawians; and contribute to at least 7% of royalties to Monument and Relic Conservation endeavours, as it uses zero-blasting techniques and aerial transport to minimise impacts.

Sovereign Services has successfully completed the first year of a two-year pilot mining and soil rehabilitation test programme at its Kasiya Rutile and Graphite Project. 

This test programme and its outcomes are an important milestone in the company’s progress to determine the economic and technical feasibility of the project and its future implementation timelines. 

The farmers near Kasiya who are directly impacted and disturbed by the pilot mining and soil rehabilitation test programme have received benefits in-kind and in monetary form equalling an average of four times their annual household income in return for allowing the company to use their land during this two-year test period.

The amounts, which has been fully paid to the 35 affected households, are considerably more than the amount they would have earned from their usual crop cultivation, if Sovereign had not undertaken the test programme.  The disturbance allowances paid are in addition to the significant in-kind benefits received in the form of agricultural input loans, training, mentorship and financial literacy support. In addition to this, farmers were employed as part of the test programme in support of the company’s feasibility studies. All disturbance compensation amounts were calculated by valuers from Ministry of Lands based on full replacement value of potential losses, and disbursed with the approval and agreement from the relevant government ministries.

Importantly, all farmers were able to harvest their 2024 crops, so incurred no actual crop losses, and no single farmer lost a planting season since all disturbed land was rehabilitated prior to the 2025 planting season. Farmers were able to harvest their crops during May 2025 and achieved yield increases of five times the harvests in the previous year. No farmer or household was left without the means to support their livelihoods.

 
The disturbance payments are for the potential losses and disturbance associated with temporary use of land over the two-year test period. The same affected farmers and households will participate in the second year of the rehabilitation test programme, which is expected to conclude in June 2026. This second year will not involve any excavation or soil disturbance activities, only planting of maize, monitoring and harvesting under the guidance of the company’s agricultural experts. Fully rehabilitated and restored land will be returned to the affected farmers at the end of the test programme.

 
Test results from this programme will inform the design and implementation of the Kasiya project. 

“Based on the average yield and land area impacted (3,000m² per household), the potential lost value of crops on this area would have been approximately US$200 per household at conventional yields. Considering the average annual household income in the Kasiya area is around US$600, the benefits received by the farmers are substantial, equivalent in value to about four times their total annual household income. The relationship with the landowners is positive, through continued communication during the process to ensure the farmers fully understand and have input into the decisions that affect them” said Sovereign Services Social Performance Manager Garth Lappeman.

 
“We are deeply committed to transparency, accountability, and building long-term partnerships with communities. Our goal is to ensure that local communities benefit meaningfully from the Kasiya project; the total value of cash and in-kind benefits provided to affected households far exceeds any potential losses, reflecting our commitment to good social practice and sustainable community development,” he added. 

In addition to direct payments, Sovereign Services has implemented a comprehensive package of livelihood-enhancing initiatives that continue to enhance the company’s strong relations with local communities. These include conservation farming programmes on land not affected by the test program to boost crop yields; a vulnerable household vegetable project that supports nutrition and income diversification; precautionary food support for vulnerable households, and local hiring opportunities for exploration and rehabilitation activities. By providing these multifaceted benefits, Sovereign is demonstrating its commitment to supporting the well-being and economic resilience of local communities.

 
These efforts have produced tangible results, with farmers successfully harvesting their land in 2024 and 2025. The 2025 harvest significantly exceeded conventional yields, thanks to the company's technical support and conservation farming training. More importantly, compensation for crop losses was calculated at 2.2 tonnes per hectare, exceeding the actual average conventional yield of approximately 1.3 tonnes per hectare. This generous calculation provided a substantial financial cushion for all affected farmers and ensures that no farmers are under-compensated for potential losses, considering of course that no potential losses were realised and so these payments were in excess of full improved harvests. 

“As the Kasiya project advances, our focus remains on ensuring that development is inclusive, sustainable, and aligned with the aspirations of the people of Malawi,” Mr Lappeman stated. 

The Kasiya project, one of the world's largest undeveloped natural rutile and graphite deposits, is progressing steadily towards development, with community engagement and environmental stewardship at its forefront. It is in an exploration and study phase, and no mining or selling of minerals has yet taken place. 

ASX-listed Globe Metals & Mining has announced the appointment of Dr. Joseph C.N. Mkandawire as a Non-Executive Director of its wholly owned subsidiary, Globe Metals & Mining Africa Limited, based in Lilongwe, Malawi; which is pursing the Kanyika Niobium Mining Project in Mzimba.

Dr. Mkandawire retired in June 2025 after over 35 years of exemplary public service within the Government of Malawi.

His career culminated in his appointment as Principal Secretary (PS) in the Ministry of Mining, where he was entrusted with establishing and leading the ministry.

Under his stewardship, the Ministry was successfully structured and implemented key reforms to align Malawi’s mining sector with national development goals as outlined in Malawi Vision 2063.

Dr Mkandawire has extensive experience in senior roles in Malawi Government across key ministries, including Trade and Industry, Homeland Security, Education, Natural Resources, and the Office of the Vice President.

MD for Globe Metals and Mining Africa Lisungu Chirwa says in a statement that Dr. Mkandawire is widely recognised for his strategic leadership, institutional reform capabilities, and ability to build consensus across sectors.

Chirwa comments: “I am delighted with the appointment of Dr. Mkandawire to the Board of Globe Metals & Mining Africa. His wealth of experience across various ministries within the Government of Malawi makes him an invaluable asset to our company.”

“His profound understanding of public sector operations and strategic leadership will undoubtedly enhance our organisation and contribute to the successful development of our project.”

Charles Altshuler, Interim CEO & CFO of Globe Metals & Mining, says Dr. Mkandawire’s appointment underscores the Company’s long-term commitment to establishing Globe as a trusted development partner in Malawi.

Altshuler says: “His leadership and insights are instrumental as we advance the Kanyika Niobium Project into development. With his guidance, we are better positioned to align with national development goals and unlock the project’s full potential for Malawi and its people and for our shareholders.”

He says the Board warmly welcomes Dr. Mkandawire and looks forward to his contribution as the Company enters a critical phase of engagement and execution at Kanyika.

Dr. Mkandawire’s appointment completes the Board’s strategic capabilities, particularly in government relations and policy alignment, ensuring the Board is fully equipped to guide the Kanyika Project through its development phase.

Globe Metals is preparing to start mine construction at Kanyika where it is targeting niobium and tantalum mineralization.

The company completed feasibility studies and signed a Mine Development Agreement with the Malawi Government and a Community Development Agreement with the local community.

Globe identified niobium and tantalum mineralisation in 2007 at Kanyika and has been undertaking exploration and resource development activities since.  

Drilling programs totalling 33.8 kilometres of percussion and core drilling have confirmed the extent of mineralisation.

In addition, Globe has undertaken substantial metallurgical optimisation work and commissioned a pilot plant to demonstrate and further optimise metallurgical processes. Metallurgical optimisations studies have improved recoveries from 62% in 2012 to 75% today, through simple novel patented metallurgical processes. 

The ruling Malawi Congress Party (MCP) has unveiled its 2025 manifesto that intends to increase the mining sector’s contribution to Gross Domestic Product (GDP) from the current less than 1% to between 10% and 15% by 2030.

Through the manifesto, MCP leader Lazarus Chakwera says this will be possible through harnessing the numerous resources that the country has and creating a conducive environment for the projects that are in pipeline.

Chakwera says: “This is possible because Malawi is richly endowed with a wide range of mineral resources, including gemstones, gold, coal, limestone, rare earth elements, platinum group minerals, and diamonds.”

“We see the Kasiya rutile and graphite project, touted as the largest known rutile deposit in the world, with its potential for significant annual revenues, as a major opportunity for Malawi.”

“The MCP led government has taken several significant steps to create a conducive environment for the progressive development of the mining sector in Malawi.”

“Since ascending to power in June 2020, the MCP government has modernized the policy legal framework for the mining sector including; established the Mining Authority; and constituted the Malawi Mining Company (MAMICO) to safeguard national interest in the mining sector.”

He explains that Malawi can leverage its natural resources to drive economic growth, create jobs, and improve the livelihoods of its citizens while ensuring sustainable and responsible development.

The Kasiya Rutile-Graphite Project is on track to become a global leader in critical minerals, with projections of $645 million (K1.2 trillion) in annual revenues over 25 years as compared to about $350 million annual forex earning from tobacco.

Malawi is also mining uranium at Kayelekera in Karonga.

With off take agreements of up to 1.5 million pounds of uranium already secured by the miner ASX-listed Lotus Resources from 2026 to 2029, the mine is expected to contribute significantly to the national economy.

To harness the sector’s potential to power inclusive growth, industrial transformation and generational prosperity, the MCP led government commits to undertake developments including: strengthening the Minerals and Mining Regulatory Authority to make the regulatory framework of the sector more efficient, transparent and accountable: increase the capacity of Malawi Mining Company (MAMICO) to spearhead the mining of industrial minerals and manage government shareholding including monitoring the progression of existing mining agreements and secure new ones with potential investors as well as negotiating community benefits from mining agreements.

He says: “We intend to promote beneficiation as a condition for investment in the sector to guarantee that a substantial proportion of wealth from minerals remain in the country.”

“We want to intensify efforts to monetize some of the minerals in order to generate resources necessary for front-loading the development of supporting infrastructure for wealth creation, and to provide stability to exchange rate movements.”

“We also plan to implement systems for accurately recording and managing mineral sector revenues to ensure they are used effectively for public goods and: strengthen the roles of Parliament and oversight institutions in natural resource governance, including increased information sharing and capacity building.”

Chakwera also promises to champion community engagement especially in the planning and implementation of mining projects to ensure their well-being and address potential development issues. He also plans to invest in training and education to build the capacity of the mining sector including support to the artisanal and small-scale miners (ASMs).

Chakwera says: “We will establish a structured market for gemstones and other minerals, particularly from ASMS while in the interim banks will start buying the minerals directly from the miners.”

“We will also transform the Department of Mining Engineering into a School of Mining at Malawi University of Business and Applied Sciences (MUBAS), accelerate skills development in the sector and; actively promote Malawi’s mineral sector to attract investment and stimulate growth, by targeting only serious investors with a global reputation for credible dealings in order to maximize benefits from the mining sector.”

“My government will champion sustainable, environmentally conscious mining that protects our ecosystems while delivering jobs and infrastructure as well as establishing a Sovereign Wealth Fund to secure the proceeds from mining for all Malawians while strategically investing in schools, clinics, roads and skills to further power the country’s transformation.”

MCP is also promising to undertake a comprehensive valuation of Malawi’s mineral wealth and other natural resources to hedge against loans such as Debt for Nature Swaps, to finance strategic national projects.  

ASX-listed Iluka Resources has entered into an agreement with Lindian Resources for the long-term supply of rare earth concentrate from its Kangankunde project in Malawi’s Balaka District.

Iluka says in a Press Statement posted on Australian Stock Exchange that under the agreement, Lindian will supply Iluka with 6ktpa of rare earth concentrate for 15 years. This material would be complimentary feedstock for Iluka’s Eneabba rare earths refinery, and would represent approximately 10% of the refinery’s capacity.

Eneabba will be Australia’s first fully integrated rare earths refinery to produce separated light and heavy rare earth oxides.

The refinery is currently under construction; scheduled for commissioning in 2027; and being built through a strategic partnership between Iluka and the Australian Government.

To support Lindian’s development of Kangankunde, Iluka says in the statement that it has entered into a US$20-million loan facility agreement with a five-year term.

It says the loan will be made available subject to Iluka completing due diligence, Kangankunde being fully funded and after other construction funding had been spent.

Iluka’s General Manager for Investor Relations and Corporate Affairs Luke Woodgate states: “Our agreement with Lindian is a further step towards delivering on the significant industry building opportunities presented by Iluka’s development of the Eneabba rare earths refinery.”

“Against a backdrop of heightened emphasis on diversifying the supply of rare earths globally, this is an example of Iluka catalysing a new mine into production as its Australian refining customer.”

“This is part of our focus on securing complimentary Australian and international feedstocks for Eneabba, both from Iluka’s own portfolio and from third party suppliers like Lindian. Construction of the refinery is progressing well, with concrete works advancing and equipment now arriving at the site. In parallel, we are active in discussions with several potential feedstock suppliers.”  

“The Kangankunde deposit has the potential to support a large, low cost and simple mining operation. I am delighted that our discussions have culminated in a binding agreement, including the potential to further expand feedstock in the future.”

“Iluka looks forward to Lindian bringing Kangankunde into production  and the positive contribution our cooperation will make to a sustainable rare earth industry.”

In a separate press statement, Lindian Executive Chairman Robert Martin describes the binding strategic partnership with Iluka as a defining milestone for Lindian providing a credible pathway forward for the development of the world class Kangankunde Project, while delivering long-term contracted revenue.

Lindian’s flagship Kangankunde Project will produce a premium monazite concentrate over a long initial life of mine of 45 years.

Martin explains that the project’s high-grade deposit will produce a premium sealable monazite concentrate at 55% total Rare Earth Ore (TREO) grade, with no material deleterious elements and low levels of radionuclides (uranium and thorium).

He says: “We are delighted to have entered a long-term strategic partnership with Iluka, encompassing both cornerstone project funding and project offtake on binding terms. This is a pivotal milestone for Lindian and is a major step towards accelerating the development of Lindian’s globally significant Kangakunde rare earths project in Malawi.”

“These agreements will provide a multi-decade source of feed for Iluka’s Eneabba refinery facility in Western Australia, backed by the Australian Government. The floor price protection, no financial ratio covenants, and off-take linked terms are fit-for-purpose for the company, ensuring the long-term interests of shareholders are enhanced.”

“The funding and off-take agreements represent a major de-risking milestone for stage 1 of our Kangankunde Rare Earths Project, providing increased confidence for all our stakeholders by showing a clear pathway to production. The large stage 2 production expansion has also been significantly de-risked with Iluka having a Right of First Refusal (ROFR) for up to an extra 25,000 tonnes per annum of product if it makes an offer to fund 50% of capital cost.”

Rare earths are essential to modern economies with key applications across the automotive, robotics, energy and defence industry. There is currently a scramble for critical minerals such as rare earths globally with many countries encouraging local value addition to export high value minerals produced from the rare earth concentrate.

The Malawi Women in Mining Association (MAWIMA) has raised the alarm over the lack of clarity surrounding the country’s ongoing mining reforms, saying women miners remain in the dark about policies that are directly affecting their livelihoods.

“We heard there are reforms happening in the mining sector but when we visited mining districts and spoke to women, they said they have no idea what these reforms are about. That is why we decided to organize this workshop to get answers and ensure women are not left behind,” said outgoing president Emma Adam during a meeting MAWIMA organized in Lilongwe,

Adam also expressed concern about government ban on gemstone exports, which she said has affected many women-led mining businesses.

“This is our business. It is our bread and butter, and right now it is at a standstill because of issues that have not been clearly communicated to us,” she said.

The meeting brought together key stakeholders, including officials from the Ministry of Mining, the Malawi Mining Investment Company (MAMICO), and he Chamber of Mines and Energy. The discussions also highlighted critical issues such as illegal gold smuggling, market accessibility, and the role of women and youth in mining. Acting Director of Mines in the Ministry of Mining Mphatso Chikoti said the government has revised the Mines and Minerals Act to address many of the concerns raised, including those from women miners.

“This workshop came at the right time as we want to ensure the sector  reflects inclusivity. There are already legal frameworks that ensure women’s participation and we are strengthening them,” said Chikoti.

To address the rampant smuggling of gold and gemstones where an estimated 90% of Malawi’s gold is sold illegally leading to a loss of over $700 million annually, he said the Ministry is working with institutions such as the Export Development Fund (EDF) and Malawi Mining Investment Company (MAMICO) to create legal and accessible mineral markets across the country.

CEO of MAMICO Leornard Kalindakafe emphasized the importance of decentralizing gold-buying centers to curb smuggling and increase government revenue.

“It is not practical for someone from Karonga or Mzimba to travel all the way to Lilongwe just to sell gold. That is why we are setting up strategic markets countrywide to close these loopholes”, he said.

He said currently MAMICO is operating in four places as it investigates Malawi’s primary gold sources and it is also advocating for a more inclusive sector since 30% of miners are women and 48% are youth.

“It is a important that women and youth dominate the sector as women think of developing their households first so that is how we build the nation.”

Coordinator of the Chamber of Mines and Energy Grain Malunga said while the establishment of MAMICO is a step in the right direction, its focus needs to be in medium to large scale mining.

“The company should focus on medium- to large-scale mining where returns on investment are more visible. It also needs the financial muscle to acquire up to 40% or even 50% equity in mining ventures if we are to see meaningful national development.”

The workshop highlighted the urgent need for clear communication and inclusive policies in Malawi’s mining sector. Stakeholders agreed that empowering women and addressing illegal trade are key to unlocking the industry’s full potential.

Civil Society Organization (CSO) operating in the extractives sector under the banner of Natural Resources Justice Network (NRJN) convened a district alternative mining indaba in Balaka aimed at giving local and affected communities an opportunity to appreciate mining processes, laws and benefits in the mining sector.

The meeting which was organized under the theme of ‘Promoting Unity and Collaboration to Safeguard Mining Benefits’ attracted officials from the Ministry of Mining, Malawi Extractives Industry Transparency Initiative (MWEITI) Secretariat, Civil Society Networks, Traditional Leaders and members of the local community including women and youth.

Coordinator for Natural Resources Justice Network (NRJN) Kennedy Rashid said the meeting was organized upon realizing the community engagement gap in the districts, which hosts a number of mining projects.  

Rashid said: “The meeting was organized to give an opportunity to communities that have not been able to engage with duty bearers. Basically, also to give them a chance to appreciate the benefits and illicit financial flows that are happening within their areas.”

“There are so many mining activities that are happening within their areas but they are not benefitting.”

Director General for Mining and Minerals Regulatory Authority (MMRA) Samuel Sakhuta lauded the meeting saying it is essential in ensuring that mining activities benefits the locals.

Sakhuta also said the meeting has exposed him to some of the challenges that the communities are facing and pledged to address them as soon as possible.

He said: “The importance of this meeting cannot be overemphasized. It has managed to put together thoughts of the government, the people and even the CSOs themselves on how mining is supposed to be done.”

“It has clearly shown that many companies here are not in good relationship with the communities and there is lack of intervention from us, government.”

Sakhuta said some of the disputes are minor but by taking too long to address them, government has made the situation worse.

“My commitment is to address those issues very soon as mining is not there to victimize people,” he said.

Representative for Malawi Extractives Industry Transparency Initiative (MWEITI) Secretariat, Leonard Mushani, applauded the organizers for the meeting saying it acted as a platform for sensitizing the communities on EITI standards and achievements made by the body.

Mushani said: “This meeting is very significant to MWEITI because for the very first time we have seen people and CSOs going through and analyzing our reports in different ways telling us the challenges, and what we have done well which is very encouraging.”

“Since we became a member of EITI in 2015, it has been difficult for us to reach out to communities with our reports, and we feel such indaba has come at an opportune time as we have just finalized the seventh report. Representing Senior Chief Chanthunya, Scale Mose said the indaba is an eye opener to the entire community.

There are exciting features in the Mine Development Agreement (MDA) that the Malawi Government signed with Lancaster Exploration a subsidiary of UK firm Mkango Resources for the Songwe Hill Rare Earth Mining Project in Phalombe, which symbolises hope that Malawians including the local community will enjoy ample benefits from the future mining operation in accordance with the country’s laws.

Going through the MDA, it is clear that the mining company is respecting the Malawi laws as it has committed to conduct its operations and pay taxes and royalties as prescribed in the laws, and has not raised any issues of tax exemptions that dwindle amounts of revenue collected by government.

“The two parties agreed that the provision of the tax legislation shall apply,” reads the MDA.

It also states that the Company will pay according to the Malawi tax legislation a royalty of 5% of the Gross Revenue at Mine-Gate.  

“The Royalty base will be calculated as the proceeds that the Company receives through the sale of Mine Product into the spot market or contract as appropriate for each sale, net of post Mine-Gate costs.”

The MDA states that the company will pay Capital Gains taxes which shall be charged where a gain has been realised by the company which is the reporting company in Malawi.

The agreement also gives the State the right to acquire up to 10% free equity in the mine, which will permit the State to exercise 10% of the voting rights for the mining project.

Community, employment and procurement

In the MDA, the Company agrees to implement a Community Engagement Plan that complies with the Law and to the extent practicable, embraces the concepts outlined in Malawi’s Community Engagement protocol.

In addition, above and beyond Malawi legislation during the first five years of normal operations the Company agrees to a minimum employment guarantee to engage not less than 150 Malawian citizens It should be noted that there are also guarantees for all unskilled labour to be a minimum 100% Malawian citizens, 75% Skilled and Highly Skilled during production and 90% after 10 years commercial production.

The Company shall also train its Malawian employees for the purpose of improving their skills and knowledge consistent with the Mines and Minerals Act.

“The Company shall establish and update an employment and training plan that is consistent with the Mines and Minerals Act,” reads the MDA.

Tender criteria

  The Agreement says the Company shall develop a goods and services procurement plan and a business development assistance plan consistent with the Mines and Minerals Act.

“These plans shall address how to engage local businesses in the supply of goods and services where competitive,” the MDA reads.

Public response

In views sought from our readers including taxation experts; while commending the MDA for Songwe Hill, they also express some concerns regarding the royalty based on the net earnings after deducting costs including transport expenses from the gross sum realised from the sales of the minerals.

The commentators say such a method of collecting royalties may result in government earning reduced as well as the potential risk of cost inflation and difficulties for tax administrators to verify the costs arguing that the best arrangement is to calculate the royalties based on the sales contract.

In a written response, National Coordinator for the Natural Resources Justice Network (NRJN) Mr. Kennedy Rashid also hailed the Songwe Hill agreement on issues of taxation and levies saying it has been aligned with national laws. He describes the deal as a win-win situation if the parties adhere to the agreed terms.

Rashid said: “On a positive note while looking at the agreement and considering the model that was used, if the agreement can be adhered to, it gives assurance to the country in retaining a direct share in Songwe Hill revenues. “ “The corporate income tax has remained at a standard rate which aligns with national taxation laws, ensuring consistent government revenue generation.”

 “These terms show promise but several elements such as the royalty rate, community development agreement, and environmental safeguards warrant public scrutiny in their implementation.”

In terms of value realization, Rashid said that the MDA lacks obligations for on-site beneficiation, risking that Malawi will export raw concentrate. However, we have learnt that this is not an issue as the Songwe Rare Earth Mine, a ~ 400 million USD investment will have on site beneficiation as well as a Hydro-Metallurgical plant which will be producing a value add, high value Mixed Rare Earth Chemical Carbonate which can be exported and sold into international markets and provide significant FOREX revenues into Malawi.

He also said NRJN remains concerned about government enforcement capacity and transparency of the environmental management plan saying there is no clarity on environmental bonds requirement. However, the MDA clearly states that the company shall comply with all the Environmental Laws of Malawi and it should be noted that Mkango has gone above and beyond these and has already completed a full Environmental Social Health Impact Assessment (ESHIA) to World bank equator standard, which is signed off and approved by the Malawi Environmental Regulatory Authority (MEPA). It should also be noted that there is actually clarity with regards to the Environmental Performance Bond which shall be equal to the greater amount specified as being necessary for reclamation works in the Bankable Feasibility Study and the Rehabilitation and Mine Closure plan.

Rashid felt that state equity is low at 10% and as a country Malawi seems to have offered a low royalty rate without consideration of the type of mineral that will be mined which can potentially affect value realization and deprive Malawi of revenue gains.

To ensure further long-lasting benefit to Malawi, NRJN has made a number of recommendations including: tying royalties to the market performance to ensure that Malawi captures more value if rare-earth prices rise; review government equity in the project; introduce Community Development Agreement (CDA) independent oversight mechanisms; and strengthen environmental governance through pollution mitigation bonds managed by regulatory bodies.

However, Coordinator for Chamber of Mines and Energy Dr. Grain Malunga, who is a leading Malawian Mining Specialist and a former Minister of Natural Resources, Energy and Mining said in an interview that Malawians do not have to worry on benefits from the future Songwe mining operation to the Malawi economy since the country’s royalty rate is very much internationally competitive and rightly calculated on mine gate price.

“Please let all stakeholders be investor friendly and reasonable on benefit sharing with the intention of attracting mining investment and continuously attracting exploration capital,” said Malunga.

But NRJN urges the Government to take a proactive stance in implementing and supporting the Mining Development Agreement to ensure that the agreement transitions into a truly transformative project, catalyzing industrial growth, community empowerment, and sustainable mineral wealth for generations. 

As Malawi votes in general electios to elect President, Members of Parliament and Ward Councillors on September 16, election fever has gripped the minerals sector with many players hoping that the newly elected administration will address numerous bottlenecks hindering the growth of the sector.

State President Lazarus McCarthy Chakwera who will lead the governing Malawi Congress Party in the polls is facing strong challenge from immediate past President Peter Mutharika who is leading the main opposition Democratic Progressive Party (DPP), former Reserve Bank Governor Dalitso Kabambe representing UTM Party, former President Joyce Banda of People’s Party and former cabinet minister Atupele Muluzi of the United Democratic Front in an election where a total of 22 presidential hopefuls collected nomination papers from the Electoral Commission.

 Malawi’s political party manifestos are aligned to the national vision Malawi 2063 which has agriculture, mining and tourism as the main enablers of economic development implying that all the political administrations that have the chance to take over government through the polls will prioritise mineral sector development to spur industrial development alongside agriculture.

Malawi has no large scale mine in operation with the only large scale mine that opened after the country’s attained Independence from the British Colonialists in 1964, the Kayelekera Uranium Mine in Karonga, set to resume operations this month.

ASX-listed Lotus Resources is at an advanced stage to resume yellow cake production from the mine which previous owner Paladin opened in 2009 but put it under care and maintenance in 2014 following a sharp decline in the prices of the energy mineral on the world market in light of the Fukushima Nuclear disaster which resulted in the closure of a number of nuclear reactors mostly in Asia.

The minerals sector expects the coming administration to support the opening of Kayelekera and other large-scale mines in pipeline such as Kasiya Rutile-Graphite in Lilongwe, Kangankunde Rare Earth in Balaka, Songwe Hill Rare Earth in Phalombe and Kanyika Niobium in Mzimba.

Investors in these large-scale mining projects have mostly complained of delays by the Government to issue important documents such as licenses, permits and conclude negotiations on mining development agreements.

There have also been complaints from medium scale miners in cement and coal production who seek protection from government from unfair competition from imports that are threatening survival of their businesses.

The other main concern for the oncoming political administration to look at in order to develop the minerals sector is the issue of power supply disruptions which has remained a thorn in the flesh for the industry for many years.

There are also expectations that Government will support development of the Artisanal and Small-Scale Mining (ASM) by formalising the sector, offering business and marketing training to the miners, and setting up a development fund to provide financial support to the ASMs in form of loans so that they are able to use advanced equipment for extraction and value addition of minerals.