Mining & Trade News

By Modester Mwalija

ASX-listed Sovereign Metals says it has initiated a follow-up 400 metre spaced drill program at its tier one Kasiya Rutile-Graphite Project in Lilongwe.

Sovereign metals MD Frank Eagar says in a statement that the program will focus on determining the boundaries and extent of mineralisation north of the known Mineral Resource Estimate (MRE) area.

 “The 70+ hole hand-auger drill program has been designed to target areas where mineralisation was identified in earlier wide-spaced regional hand-auger drilling. The target area is up to 20km north of the current MRE boundary,” Eager states.

Eagar says that the drilling, currently underway, will be completed in the coming weeks and to ensure smooth operations, four hand-auger teams have been deployed under the supervision of Sovereign’s in-country technical team.

For sample analysis, Eagar states that samples will be initially processed in the Company’s Lilongwe laboratory facility and then shipped for final analysis at certified international laboratories.

“Results from the drill program are expected in the coming weeks,” he says.

Earlier this year, the Company released an announcement regarding the results of regional hand-auger drilling conducted south of the Kasiya MRE footprint. The results revealed significant strike extensions of approximately 8km across multiple parallel mineralised zones ranging from 400m to 2km in width.

Eager clarifies that all the newly defined mineralization in the south remains open at depth and represents the potential to expand the already significant high-grade Rutile and Graphite Mineral Resource Estimate (MRE) at Kasiya.

“All newly defined mineralisation in the south remains open at depth due to the limitations of the hand-auger drilling method but are expected to continue to the saprock boundary normally between 20 and 30 vertical metres from surface”, says Eager.

In September 2023, Sovereign released a Pre-Feasibility Study confirming that Kasiya has the potential to emerge as one of the world’s largest and lowest-cost producers of natural rutile and natural graphite, with a remarkably lower carbon footprint compared to current alternatives.

The findings of the Pre-feasibility study also confirmed Kasiya as a major critical minerals project, possessing a substantial low carbon footprint while delivering major volumes of natural rutile and graphite and generating significant economic returns.

The proposed large-scale operation in Kasiya aims to process soft, friable mineralisation mined from surface with its valuable location boasting excellent infrastructure, including bitumen roads, a high quality rail line connecting to the deep-water port of Nacala and access to hydro-sourced grid power.

Natural rutile is a genuinely scarce commodity, with no other known large rutile dominant deposits being discovered in over half a century. Kasiya is now shown to be the largest single rutile deposit in the world, with central Malawi now hosting the largest known rutile province in the world.

Rumphi based Mchenga Coal Mine (MCM) says it is working on increasing its production capacity from the current 1,200 metric tons per month to 4,500 metric tons.

Speaking in an interview on the sidelines of the Malawi Mining Investment Forum in Lilongwe, MCM Acting Mine Manager Assan Tembo said in order to meet the production target, the company plans to open new mining sites within the license areas which will be operating concurrently with the old mining sites.

Tembo said the company is also working on repairing machinery which stopped working resulting in low production.

 “Recently we were facing challenges due to very heavy rainfall which resulted in high water levels in the mines but we are now ready to resume production, and anytime soon maybe in the next two months our production will go up to 4500 per month after opening the new mines,” he said.

Tembo assured customers that Mchenga will continue providing coal of good quality despite increasing production.

 “If you remember, since we started mining, people have been saying Mchenga coal is of the best quality. It is the same coal we are mining. We promise to maintain the same quality of coal after opening the new mine. It is good quality coal, and industries like cement production, which needs quality coal, will like our coal,” said Tembo.  

Mchenga’s labour force currently comprises 285 employees, and they provide workers and their families amenities which include a clinic, a primary school, kindergarten, a subsidized shop, sporting facilities, electricity, a club with Digital Satellite Television, a maize mill and portable water.

The Company also provides industrial attachments to various students from technical colleges and universities in Malawi including interns from Malawi University of Science and Technology (MUST), Malawi University of Business and Applied Science (MUBAS) and University of Malawi – the Polytechnic.

Mchenga produces sub-bituminous coal of high calorific value of 5800-7400kcal/kg and low ash content of around 14-24% and its major customers include Limbe Leaf, Cement Products, Kanengo Tobacco Processors, CP Feeds Group, Castel Malawi, Alliance One, East Metals and Miscor.

The mine is located in Livingstonia Coalfield, which hosts a number of coal mines including Chombe, Jalawe and Kaziwiziwi.

A cross section of members of the Civil Society working in the extractive sector and the media now have the knowledge of how they can follow-up and help in curbing transnational corruption in green minerals thanks to the training workshop that was conducted by Perekezi ASM Consultants and Events in Lilongwe with funding from the United States Agency for International Development (USAID).

Perekezi organized the workshop in light of the increase in demand for the minerals which are important in the modern technological world.

The training came at an opportune time as Malawi has made a number of discoveries of green minerals including rare earths.

Under the Driving Just Resources Governance through open contracting and licensing project, Perekezi ASM Consultants and Events with funding from USAID is implementing the Powering a Just Energy Transition Minerals Challenge (JET Minerals change) project to promote transparency and accountability with the aim of curbing transnational corruption in green minerals.

Managing Partner for Perekezi Chikomeni Manda said though currently there is no corruption cases in Malawi as regards to green minerals they feel the high demand for the mineral can trigger corruption.

Manda said involvement of the CSO and media in the training is to ensure that they understand the significance of the green minerals and whenever the corruption case arises, they have to recognize it.  

He said: “We are looking at these green minerals because they are getting a lot of attention from the world technologies; defense and many other applications.”

“Since these minerals are in high demand, they can bring a lot of corruption in the system. We, therefore, conducted this training to civil society and the media to ensure that they know the significance of these minerals.”

Manda said corruption practices in extractives sector negatively impact the economy of any country as it retards development.

He said: “If these minerals are well managed with ample revenues generated, Malawi we can see a very big change in terms of development.”

“As Perekezi we understand that civil society and media’s oversight role on corruption issues,” he said.

Meanwhile, the study that Perekezi conducted has established that the country’s extractive sector is being challenged by delays in both licensing processing and finalization of Mining Development Agreements (MDAs).

“From the study that we conducted we have seen that licensing process is something that takes a very long time while right now we have MDAs among us which the government has been negotiating for quiet long and we do not see any hope that they will been finalized anytime soon.”

“These delays can be recipe for corruption because investors want to start working. And can think of going through a back door to influence authorities,” said Manda.

In his presentation, Technical Expert and Manager for Malawi Extractive Industry Transparency Initiative (MWEITI) Leornard Mushane said there is more MWEITI is doing to support the anti-corruption drive which requires media support.

Mushane explained that the MWEITI secretariat requires support from the media in areas including dissemination of EITI reports whose main purpose is to disclose Information for all stakeholders to use.

He also disclosed that MWEITI has developed MWEITI Anti-Corruption Strategy as one way of fighting corruption practices in the extractives sector.

Mushane said the development of the strategy was prompted by the last corruption case that happened in the sector over license renewal for Ilomba Granite Mine in Mzimba district.

“MWEITI Anti-Corruption Strategy is the tool that we have developed through the support of the European Union sunder Chuma Cha Dziko project. The tool simply provides guidance on what to do to fight corruption in the mining sector,” he said.

The presenters at the workshop included Head of Mineral Rights Division, Mphatso Chikoti from the Department of Mines who was invited to tackle issues of Legal and Regulatory framework governing the extractives sector.

The Malawi Government has signed a charter securing membership in the Africa Minerals Strategy Group (AMSG) as one way of facilitating international cooperation in the minerals and mining sector among member African nations.

AMSG is an African body which promotes exploration, extraction, production, local beneficiation (value addition) and commercialization to ensure a sustainable, transparent and secure supply of critical minerals, while protecting the environment and improving the quality of life of the population, to spur the socio-economic transformation and prosperity of Africa, and support the energy transition.

Speaking at the signing ceremony in Lilongwe, Minister of Mining Monica Chang’anamuno commended the move saying it will spearhead the mission to safeguard African minerals including Malawi’s.

Chang’anamuno said the development will, among others, help in job creation and in local beneficiation as raw materials will be processed within Africa. 

She said: “We have today signed this charter to officially become members of the group in order to safeguard minerals of Africa.”

“For long time, we have been doing this as individual countries so others have taken advantage of that but this time, we have said no let us come together.”

“This will also help to create jobs for ourselves unlike in the past where people were taking our raw materials to utilize in creating job opportunities in their countries.”

“For instance, if we have a refinery for specific minerals in Malawi, other countries will be able to use that refinery. Likewise, Malawi will also be using refineries for other minerals that cannot be refined here in another African country, maybe in Tanzania.”

Malawi has joined the bandwagon of 16 AMSG founding member nations including Nigeria, Uganda, Democratic Republic of Congo, Tanzania, Botswana, Burundi, South Sudan, Zambia, South Africa, Sierra Leone, Guinea-Bissau, Chad, Somalia, Zimbabwe and Liberia.

In his remarks, Secretary General for AMSG Moses Micheal Engadu hailed the move by Malawi Government saying it has joined at an opportune time when the country has started developing its mineral sector.

Engadu said the country has vast unexploited key minerals that the Group is interested to protect and ensure that they benefit and improve African communities. 

He said: “What we signed today was a charter for the establishment of Africa Minerals Strategy Group. This is the intergovernmental coding established to facilitate international cooperation in the minerals and mining sector among African countries and also work with interested nations and strategic partners to explore opportunities to grow our mining sector.

“Our role is to promote local beneficiation and also to get fair deals for Africa for minerals. As you know we have vast mineral wealth across the continent but for the past years we have not benefited from these minerals as continent.”

“So our duty is to become a voice for the African continent and be able to negotiate better deals and also foster collaboration among our countries as some countries have experiences in mining and we want to bring those experiences to countries like Malawi which is just starting mining.”

Endagu further explained that currently, there is scramble for minerals used to produce electromagnets and Malawi has a number of those minerals yet to be exploited hence the need to join hands.

AMSG objectives centers on collaboration, resource sharing, investment opportunities, technological advancement, capacity building and, strategic partnership.  

In January this year, the Kingdom of Saudi Arabia became AMSG founding partner promising to invest in the African mineral assets through their newly launched $15-billion Manara Minerals Fund which is targeting four commodities namely copper, lithium, iron ore and nickel.

Civil Society Organisations (CSOs) working in Malawi’s extractive sector and the Chamber of Mines and Energy in Malawi say there is need for government to implement drastic reforms in order to ensure growth of the mining sector whose contribution to gross domestic product (GDP) remains stuck at less than one percent.

Coordinator for Natural Resources Justice Network (NRJN) Kennedy Rashid said for the sector to grow Government needs to fast-track the development of sector regulations, operationalize the Mining Regulatory Authority and the state owned mining company, review the existing concessions with mining companies to ascertain whether fair deals were negotiated, strengthen the legal framework for the fiscal regime rather than only relying on negotiated agreements and strengthen the capacity of Ministry of Mining and Malawi Revenue Authority in mineral commodity valuation .

Rashid said: “The sector has maintained the trend of contributing a very tiny percentage to the national economy for some years so it indeed requires some soul searching as a country to ascertain why despite all the steps taken, contribution of the sector to the economy is still very minimal.”

“We need to operationalize the state-owned company in order for Government to start directly participating in the mining sector. The lack of a formal vehicle for state equity in mining in Malawi has affected the general economic benefits from the sector.”

He said the country also needs to invest in various infrastructure for energy, transport and local value addition of various minerals.

Rashid said: “There is a need to work on country systems and infrastructure including technical infrastructure like industrial level mining laboratories, transport infrastructure and even energy.”

“Corruption is another vice that should not be condoned. As mining is a heavy investment sector it is always prone to corruption which can affect the general economic output of the sector through Illicit financial flows and tax evasion.”

Rashid said the contribution of the sector to the economy can increase through value realization, enabling environment for investment and prudent revenue management.

He said: “The weak licensing regime has been affecting the sector’s contribution to GDP for some time now and there is still a highly bureaucratic licensing system that delays the process due to political controls.”

 “The fiscal regime is still not reformed to be practical. Though the Mines and Minerals Act, the Taxation Act and other relevant laws that establish revenue streams in mining do exist in Malawi, concessions depend on negotiations and not the law as has been evidenced in the tax incentives that are negotiated in concessions.”

On the revenue collection systems, Rashid said that it is not clear how technically Government ascertains to some of the payments as it depends on the reports from the mining company to determine the amount of revenue to collect from a particular mining venture.

In a separate interview, Coordinator for Chamber of Mines and Energy Grain Malunga told Mining and Trade Review that the sector is not growing because it is sidelined as it is not given specific investment incentives.  

Malunga said the delay to conclude Mining Development Agreements (MDAs) is also frustrating large- scale mining companies.

 He said: “Malawi is promoting Agriculture, Tourism and Mining for wealth creation but mining has not been given specific investment incentives.”

“Those negotiating mining development agreements with companies seem to have preconceived ideas and look to mining companies as not negotiating in good faith.”

Artisanal and Small-scale Miners (ASMs) who export gemstones to overseas markets through the country’s airports have expressed concern over the conduct of the Malawi Defence Force (MDF)saying its officers at the airports are demanding too many documents in order to allow them export the minerals, which is detrimental to their trade.

The ASMs alleged in separate interviews that MDF officers are demanding that an exporter submits a copy of a Reserved Mineral Licence, Small Scale Mining Licence, an Export Permit, Certificate of Inspection from the Ministry of Mining and the Malawi Revenue Authority [MRA] clearance copy for the shipment to leave Malawi.

The mineral dealers claim that this trend is common at Chileka and Kamuzu International Airports such that a number of shipments are being held by MDF.

The ASMs are demanding that the Ministry of Mining comes out in the open to report to the industry whether this is a new requirement for exporting mining products other than being silent as those involved are being ‘victimised’.

In an interview, Chikomeni Manda a Small-Scale Mining consultant and Managing Partner for Perekezi ASM Consultants said what is happening is retrogressive and ought to stop at any cost.

Manda said: “In the long term, this practice will be a recipe for corruption.”

“The Ministry of Mining should engage MDF on this, as it is demotivating those who are exporting legally. The government is promoting formality of the mining sector and at the same time giving a few people doing things in the right way a hard time; you tend to wonder what does government really wants?” questioned Manda.

MDF Spokesperson Major Emmanuel Kelvin Mlelemba said the military body is not aware of the said allegations.

“We have not received any information to that effect. You may cross-check with the Ministry of Mining on requirements for mineral exporters,” he said.

Ministry of Mining Spokesperson, Tiwonge Kampondeni said she needed to cross-check with diverse stakeholders before officially responding to the allegations.

ASX-listed Lotus Resources, which is advancing preparations to resume production at the Kayelekera Uranium Mine in Karonga, says the mine will provide plenty of benefits to Malawians through employment and training, local business development, goods and services procurement and community development.

MD for Lotus Keith Bowes said in his presentation at the Malawi Investment Forum that the mine will directly employ 450 Malawians, recruit 250 local contractors and potentially indirectly employ 5,000 people through new and existing business opportunities.

“On local business development, Lotus will continue  working with local and regional businesses to build their capacity as future suppliers to the Kayelekera mine, which is in tandem with the Company’s sustainability principles,” said Bowes.

He said the Company will endeavour to maximise procurement of goods and services from the national suppliers in order to economically empower Malawians.

“Lotus expects to spend up to US$50-million per year with local business, generating significant amounts of foreign currency some of which will need to be converted into Kwacha creating significant demand for the local currency thereby supporting the local currency,” Bowes said.

Lotus has also finalised a community development agreement which it expects to sign with the qualified Kayelekera communities once the Mine Development Agreement has been finalised.

The agreement empowers the local community to receive a minimum of 0.45% of the proceeds from the mine for development projects of their choice.

Bowes also said when production resumes, the Company will scale up its corporate social responsibility programme which includes supporting the clinics and schools in the area through various initiatives including provision of water and electricity.

“When Kayelekera reopens, it will also enormously contribute to the skills development of locals as the demand for both local employees and interns from local universities will rise,” said Bowes.

Malawi current laws provide for the mining company to pay to government various taxes including royalties charged at 5% of mine gate gross revenue, corporate tax charged at 30% of net profit after tax, various import duties, withholding taxes and resource rent tax calculated at 15% of net profit after tax. 

With all of these, Lotus regards the tax base in Malawi as uncompetitive and Bowes said the Company is negotiating for a Mine Development Agreement (MDA) with the Malawi Government to create a win-win situation between the investor and the nation by reviewing these taxes which include the resource rent tax that does not exist in other mining jurisdictions such as Namibia where the previous tenement holder for Kayelekera, Paladin Energy, has resumed production in light of a competitive tax base and a favourable market dynamics for uranium.

Paladin Energy put the Kayelekera Uranium Mine on care and maintenance in February 2014 following a slump in the prices of yellow cake in the aftermath of the Fukushima Nuclear Disaster in Japan which led to closure of a number of nuclear power plants globally.

However, in its quarterly activities report ending March 31, Lotus indicated that uranium spot price peaked at over US$100/lb during the quarter, and term price, which informs long-term contracts with utilities, reached US$80/lb.

In light of the favourable market conditions, Lotus said in the report that it has initiated a Front-End Engineering Design (FEED) program to validate and update costs and timelines determined in the Restart Feasibility Study, identify critical long lead items and early works, and complete detailed design to prepare Kayelekera for restart.

While it continues negotiating for the MDA, Lotus said in the report that it has also appointed a debt advisor to facilitate debt for the Kayelekera Mine restart.

The Ministry of Mining is courting global investors to take advantage of the ongoing reforms in Malawi’s sector and invest in the sector, which offers abundant opportunities.

Director for Mines in the Ministry of Mining Samuel Sakhuta said in his presentation at the Malawi Mining Investment Forum that Malawi has untapped mineral wealth including critical minerals essential for global energy transition and industrial development.

Sakhuta said: “Malawi offers a compelling case for investment due to its abundant mineral resources, stable political environment, and a range of incentives.”

“Investors are encouraged to take advantage of the global energy transition to explore opportunities in critical minerals such as rare earths whose deposits are in abundance and also development minerals such as limestone vital for infrastructure development projects like road construction and cement production.”

“The transition to clean energy necessitates the exploitation of critical minerals, positioning Malawi as a key player in the global energy landscape.”

In addition to mineral exploration, Sakhuta emphasized the potential for leveraging mining to enhance agricultural productivity through the local production of fertilizers.

 “Mining can play a pivotal role in supporting agricultural growth by providing the raw materials needed for fertilizer production, thereby reducing dependency on imports,” he said.

Sakhuta explained that the Malawi Government is carrying out various reforms and offering several incentives aimed at attracting and retaining investors.

 “Malawi offers a conducive investment climate with measures such as security of tenure, transparent contract negotiations, and tax incentives,” he said.

Sakhuta said as part of the reforms, the government has established the state-owned mining company to partner the private sector in pursuing strategic mining projects.

He said the government has also established the Malawi Mining and Minerals Regulatory Authority to streamline licensing processes and enhance regulatory oversight.

In his address, CEO for Standard Bank Philip Madinga called for collaboration among stakeholders to ensure sustainable growth of Malawi’s mining sector.

“If we are to reach our goal of raising the Gross Domestic Product (GDP) from 0.8 % to 10 % then we must not underestimate the power of collaboration between the public and private sector, as through strategic partnerships and innovative financing mechanisms, we can pave way for transformative growth and prosperity,” he said.

Madinga also urged stakeholders to prioritize infrastructure development, particularly in energy and transportation as essential enablers for mining sector growth.

“Investment in infrastructure is not just a necessity, it is a catalyst for unlocking Malawi’s mining potential,” he said.

Commenting on the delays in finalizing Mining Development Agreements (MDAs), Madinga called for streamlined processes and proactive engagement to expedite investment decisions urging government to consider the importance of balancing regulatory requirements with the urgency of attracting investment to the sector.

Years are elapsing while the Malawi Government continues negotiating for a Mine Development Agreements (MDA) with Australian firm Lotus Resources to resume uranium mining at Kayelekera in Karonga

As reported in our article on Page 6, mining at Kayelekera will come with plenty of benefits to Malawians through employment and training, local business development, goods and services procurement and community development.

Lotus expects to spend up to US$50-million per year with local businesses generating a significant amount and in addition, the Company will execute community development projects having finalised a community development agreement, and also scale up corporate social responsibility projects in the area including assisting schools and clinics.

But all these benefits meant for Malawians are awaiting the finalisation of the MDA for Kayelekera. We, therefore, believe the negotiating parties are being unfair to the expectant beneficiaries in delaying conclusion of the negotiations.

Lotus MD Keith Bowes is quoted in our article as saying the bone of contention is Malawi’s fiscal regime which he has described as uncompetitive in comparison to those of other countries such as Namibia, where another Australian firm Paladin Energy which previously owned the rights for Kayelekera has resumed uranium mining at its Langer Heinrich Mine.

We agree with Bowes that there should be a problem with Malawi’s fiscal regime which is leading to failure by investors to venture into large scale mining.

We, therefore, appeal to the Malawi Government to undertake an independent survey of the fiscal regime of other countries mining industrial minerals like uranium and come up with a competitive fiscal regime that should attract investors to start mining.

We believe if the country develops a competitive fiscal regime, there will be no need for investors to negotiate MDAs as they will just apply what is in the country’s laws.

It is high time, Malawi started reaping from its mineral potential to address problems such as high rate of unemployment and shortage of foreign exchange for importing essential commodities.

Mining is a business and any mining company requires a return on investment. We, therefore, believe that such being the case Malawi can host dozens of investment fora but no foreign mining investor will venture into large scale mining if the fiscal regime is not competitive. Our leaders will only continue singing the same song that Malawi is rich in minerals at high profile functions without any mine to show.