Mining & Trade News

There are mounting calls from mining industry commentators for Australian Lindian Resources to consider processing of monazite it wants to start mining from Kangankunde in Balaka within Malawi.

Lindian, which is mobilising machinery to start mining this year, has planned to export monazite concentrate from Kangankunde to Iluka Resources’ refinery in Australia.

The company signed a 15-year binding offtake agreement with Iluka for 6,000 tonnes per annum of rare earth concentrate and a US$20-million loan facility from Iluka to support project construction.

But our local readers continue to react to the Kangankunde Project development articles in our social media channels where there are calling on the Malawi Government to ensure that the Kangankunde product is fully processed locally into high value rare earth elements.

Mineral Sector analyst Felix Ngamanya Sapao explains that using current world market prices in calculations, Malawi will gain US$6,500 per metric tonne if the country exports concentrate from Kangankunde compared to US$65,000 per tonne if it is refined locally.

Sapao says: “Government needs to investigate the economic advantages and disadvantages for Malawi regarding the export of monazite concentrate versus domestically refined rare earth products focusing on tax revenue, royalties and job creation.”

“There is also a need to evaluate whether exporting concentrate is ideal for Malawi comparing the trade-offs between immediate economic returns and higher value-add retention.”

He explains that rare earth is a globally strategic mineral hence Malawi risks losing it cheaply if it fails to control its exports in order to realise whole value of the resource hinting that without restricting raw exports, international investors will consider Malawi as only a source of cheap raw materials other than a viable investment destination.

Seasoned geologist Ignatius Kamwanje commented that full processing of the ,monazite within Malawi can enhance technology transfer and skills development saying if this process is conducted in a foreign country, Malawi is denied such benefits.

Kamwanje says; “With full scale processing, Government can collect increased revenues from taxes and royalties. It can also facilitate diverse value-added products in a country hence fetching increased revenue through the sale of finished products.”

“Full scale production facilitates employment creation, building of the local supply chain through purchase outlets that enhance economic activities in so doing may facilitate economic diversification and infrastructure development.”

“All in all, investing in processing facilities drives infrastructure development including energy sources, roads, banking and market facilities.”

State President Arthur Peter Mutharika issued an Executive Order banning exportation of raw minerals from Malawi.

Mutharika states in the Executive Order that it is aimed at ensuring the sustainable development and utilization of the country’s mineral resources, and to promote the growth of the national economy through value addition and industrialization.

“The purpose of the Executive Order is to prohibit the exportation of raw minerals, promote local value addition, and ensure that our mineral resources contribute to the economic development and prosperity of our Malawi, “he says.

He explains that the order, which came into effect on October 21 this year shall apply to all minerals extracted in Malawi including but not limited to uranium, rare earth elements, niobium, graphite, tantalum, bauxite, coal, limestone, gemstones, heavy mineral sands, vermiculite, phosphate, pyriterutile, gold, diamonds and copper.

The provisions shall not apply to minerals that have been processed, refined or value added in Malawi in accordance with the laws and regulations governing the mining sector,” states the Executive Order.

Lindian responded that it will not be affected by the ban as it will process the ore to concentrate form, which is the highest level of beneficiation that is possible in Malawi.

Kangankunde Rare Earth Project in Balaka is one of the largest rare earth deposits in the world. Lindian is operating the globally significant prospect using a medium scale mining licence that it bought from a local company Rift Valley Resource Developments.

Rift Valley acquired the licence following protracted court wrangling that pitted the Malawi Government and various investors who were interested to develop the globally significant asset.

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