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Paladin Energy has announced today that is selling its stake in Malawi’s Kayelekera uranium mine to Lotus Resources. Lotus Resources is a joint venture company between Hylea Metals (76.5% stake in Lotus) and Chichewa Resources (23.5% stake in Lotus).

ASX-listed Hylea Metals is a junior exploration company founded in 2006 that has its primary exploration projects in Australia. Chichewa Resources is controlled by Grant Davey and Hylea Metals’ director Tim Kestell has a beneficial interest of 17.5% in Chichewa, which means he holds approximately 3.5% beneficial interest in Paladin Africa and the mine.

This means Hylea Metals will hold an indirect interest of 65% in Kayelekera, Chichewa Resources an indirect interest of 20% and the Government of Malawi will continue to hold 15% (through free carry equity). Hylea Metals will fully fund payments in relation to the US$10 million environmental bond.

The full acquisition details and conditions are available in Appendix 1 of Hylea Metals’ announcement.

Paladin’s announcement made today (24 June 2019) is copied below. See here for Hylea Metals’ announcement.

PALADIN TO SELL KAYELEKERA INTEREST

Highlights

  • Paladin has agreed to sell its 85% interest in Kayelekera to Hylea Metals Limited (Hylea) (ASX: HCO) led joint venture
  • Paladin to receive A$10M value plus return of US$10M previously advanced to Kayelekera as security for its environmental performance bond
  • Significant reduction in ongoing care and maintenance costs of circa US$5M per annum associated with Kayelekera
  • Completion of the sale is expected to be finalised by late 2019

Paladin Energy Limited (Paladin or the Company) (ASX: PDN) is pleased to announce that it has entered into an agreement to sell its 85% interest in the Kayelekera uranium mine (Kayelekera) in Malawi to Hylea’s subsidiary, Lotus Resources Pty Ltd, a joint venture with Chichewa Resources Pty Ltd.

The consideration for the sale of Paladin’s 85% shareholding in Kayelekera is A$5M, comprising A$200k cash, A$4.8M in Hylea shares to be issued to Paladin (A$1.8M on completion, subject to a 12-month voluntary escrow, and A$3M on the third anniversary of completion). The issue price will be based on the lower of the 30-day VWAP at the time of issue, or the price of a Hylea capital raising in the 90 days preceding.

Paladin will receive a 3.5% royalty based on revenues derived from future production at Kayelekera, capped at A$5M.

Paladin will also be repaid the funds advanced to provide security for the US$10M environmental performance bond issued to the Government of Malawi for Kayelekera. The repayments will occur in four tranches: US$4M on Completion, US$1M on the first anniversary, US$2M on the second anniversary, and the final US$3M on the third anniversary.

The transaction is subject to Hylea shareholder approval, Paladin Noteholder consent and customary terms and conditions, including Government of Malawi approvals, as well as containing standard representations and warranties. Completion is expected to occur in late 2019. Hylea’s associated capital raisings are underwritten for A$8M.

The sale of the Company’s non-core asset to Hylea and the repayment of the environmental performance bond advance will enable Paladin to prioritise its capital and other resources on optimising and restarting its Langer Heinrich Mine (Langer Heinrich) in Namibia (ASX announcement 26 February 2019) and to position Langer Heinrich to be among the first significant global producers to return to production.

Selling its interest in Kayelekera will provide Paladin with additional capital and other resources available for that purpose and also eliminate the significant ongoing care and maintenance costs associated with Kayelekera.

“The sale is a positive result that will enable Paladin to focus all of its resources on restarting our flagship asset Langer Heinrich by releasing restricted cash resources of approximately US$10M and realising significant care and maintenance cost savings of approximately US$5M per annum. It is consistent with our stated strategy of focusing on the re-development of Langer Heinrich whilst preserving our capital and developing opportunities to monetise non-core assets. With this structure, we also keep some exposure to the upside of this transaction through the A$4.8M in share placements early in the development cycle”, Chief Executive Officer, Scott Sullivan said.

“Kayelekera has been an asset that has produced 10.9Mlb of uranium and now provides the opportunity for the new owner to generate a commercially viable operation once the uranium price has recovered.”

About Kayelekera

Paladin permitted, constructed, commissioned and operated Kayelekera between 2007 and 2014 and produced 10.9Mlb of uranium from open-pit mined ore processed through an acid leach processing plant. In February 2014, Paladin placed Kayelekera on care and maintenance due to the consistently low uranium spot prices. Internal studies determined that an improved uranium market would provide an opportunity for Kayelekera to again produce uranium from its remaining 31Mlb resource.

The Government of Malawi owns 15% of Kayelekera and provided support for the project by executing a Development Agreement prior to construction to provide a stable fiscal environment for the first 10 years of operation. The Government of Malawi is committed to supporting and encouraging the private sector to assume a leading role in the economic development of projects in the mining sector.

Kayelekera made a substantial fiscal contribution to Malawi and created opportunities for employment and improvements to social infrastructure, particularly in northern Malawi.

Paladin Energy Ltd

SCOTT SULLIVAN

CHIEF EXECUTIVE OFFICER

For further information:

Karen Oswald

Investor Relations

Karen.oswald@paladinenergy.com.auor + 61 (8) 9423 8162

Ref: 447488

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#BreakingNews Malawi Cabinet out pic.twitter.com/t0TRmbTeFQ

— Towards Malawi Elections 2024 (@malawi2024) June 19, 2019

A new cabinet has been formed following the 2019 tripartite elections. The two main opposition parties are contesting the results and demonstrations took place with more promised over the conduct of the Malawi Electoral Commission and the results.

#malawi #ElectionResults2019 #demonstrations.Opposition party leaders @LAZARUSCHAKWERA & @SKChilima joined.Happening hours after President @APMutharika named a 24 member cabinet.@malawipolice assured #Malawians of #Security #election case in#Court.@BBCAfrica @BBCpictures pic.twitter.com/e7ajMBXuZ3

— Mathews Malata (@malatamathews) June 20, 2019

The new Minister of Natural Resources, Energy and Mining is Hon Bintony Kutsaira (Lilongwe Msinja North) MP and the Deputy Minister is Hon Mungasulwa Mwambande MP (Karonga North). Kutsaira and Mwambande follow in the footsteps of Hon Aggrey Masi MP and Hon Werani Chilenga MP, who were minister and deputy minister in the previous cabinet.

Bintony Kutsaira, Malawi’s new Minister of Natural Resources Energy and Mining, Photo Credit: Official Malawi Government Online Facebook Page, 20 April 2019

Kutsaira first joined the Democratic Progressive Party in 2005, crossing the floor from the Malawi Congress Party, the ticket he was elected on.  In 2012, former president Bingu wa Mutharika appointed Kutsaira head of the National Intelligence Service. After wa Mutharika died in office in April 2012, Kutsaira rejoined the Malawi Congress Party in 2013 but did not stay long after he lost in the primaries for Lilongwe Msinja. He joined the People’s Party and was appointed Deputy Minister of Agriculture in January 2014. You can see him in action as deputy minister in the video below. Kutsaira rejoined DPP and mostly recently served as governor for the Central Region in the DPP, a position he also held during late wa Mutharika’s presidency.

Bintony Kutsaira Deputy Minister of Agriculture Malawi - YouTube

Deputy Minister Mwambande is a businessman from Karonga, the district home to Kayelekera uranium mine.

This is what I had to say about the DPP’s manifesto commitments on mining before the elections:

The Democratic Progressive Party (DPP) 2019 Manifesto ‘Sustaining a people-centred government’, is built on the pillars of patriotism, integrity and hard work. The manifesto promises

The DPP government will embark on extensive but cautious mining and utilisation of our oil resources, now that the legal and institutional frameworks have been developed.

The DPP government will embark on mining for rare earth metals (tantalum, zircon and nobium) in Kanyika Hills in Mzimba, Songwe Hills in Phalombe, Makanjira in Mangochi, and Kanga Nkude in Balaka. We will develop mines for graphite in Malingunde in Lilongwe and Ilomba in Chitipa. We will mine ruby in Chimwazulu in Ntcheu and bauxite in Mulanje.

The DPP government will also begin extensive exploitation of our oil resources now that the legal and institutional frameworks have been developed.

I expect it was not the intention to confuse the public, but here it sounds as if the government will lead exploration and production of all sorts of minerals. Rather, simplistically put, the current arrangement in Malawi is that private companies are awarded licences by the government to carry out exploration and production. In return, the government collects royalties and taxes. Yes, sometimes, the government gets free carried equity (i.e. a stake it doesn’t have to pay for in a subsidiary of a company carrying out mining, or in the case of Kayelekera, in exchange for some tax breaks) but this does not mean the government or its officials are actually mining.

Take, for example, the rare earths projects that the ‘DPP government will embark on’. In fact, these exploration projects are being carried out by Australian-listed company Globe Metals & Mining in Kanyika, Mzimba, and Mkango Resources in Songwe Hill, Phalombe.

The last few years has indeed seen progress in legislative reform – a new Mines and Minerals Act (2018) and a National Artisanal and Small-Scale Mining Policy (2018) – and Malawi joined the Extractive Industries Transparency Initiative, which was a promise made in the Democratic Progressive Party’s previous manifesto, but why no continuity between the promises then and now?

It is also a little misleading to say that ‘The DPP government will also begin extensive exploitation of our oil resources’ when the companies with licences are still in the exploration stage. As of yet, as far as I am aware, no economic reserves of petroleum have been proven, and until they are, we cannot talk of ‘exploitation’. And unless something changes dramatically in our legal framework and with contracts already signed, it will not be the government exploiting reserves, but companies.

What will change in the mining sector if the Democratic Progressive Party are reelected? In short, it’s not clear. We probably can presume things will continue as they have been, which includes implementing the new Act, unless the government really intends to start mining and exploring itself.

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RAK Gas continues its exploration for oil in Blocks 4 and 5. In today’s edition of The Nation, the public has been invited to public hearings and to comment on their latest Environmental and Social Impact Assessment for seismic surveying. At this stage, there is no exploratory drilling.

This Environmental and Social Impact Assessment is for similar seismic surveying operations as carried out by Surestream Petroleum. The licences have subsequently been acquired by Hamra Oil.

RAK Gas signed production sharing agreements in May 2014, just days before the 2014 tripartite elections. These contracts are public. Oxfam published a study on this in 2017: Malawi’s troubled oil sector: licenses, contracts and their implications.

The press release for the public hearings is copied below.

Six petroleum exploration licences; licences were awarded for all blocks, but companies exploring in Blocks 1 and 6 have since relinquished their licences

PUBLIC HEARING FOR RAK GAS MB 45 SEISMIC OPERATIONS FOR OIL EXPLORATION IN BLOCK 4 AND 5

Members of the General Public are hereby informed that RAK Gas MB45 LTD has prepared and submitted to Environmental Affairs Department (EAD) in the Ministry of Natural Resources, Energy and Mining (MoNREM), an Environmental and Social Impact Assessment (ESIA) report for the on-and off-shore oil and gas exploration in Blocks 4 and 5 in the Central and Southern Regions of Malawi.

The exploration activities at this stage of the project will include undertaking seismic operations (using a seismic and air-gun acoustic technologies) on shore, and, where necessary, off shore. The resulting sound waves travel into the earth and are reflected back by the underlying rock layers to an array of geo-phones. These geo-phones generate signals which are further relay to a processing vessel/station, which interprets whether there are / or not, the rock structures which could host/trap oil and gas.

The public is further informed that if the results of the Seismic Surveys show that there is a high probability of trapping oil/gas, then a second ESIA will be conducted for drilling the structure to confirm if there is trapped, the oil and/or gas. Please be informed that this ESIA is for the exploration activities for identifying the oil and gas trapping structures, and not for drilling.

In terms of the Environment Management Act, 1996, members of the Public are invited to review the ESIA documents, and offer their comments to RAK GAS MB 45 LIMITED for consideration prior to approval by the Government of Malawi for this on-/ off-shore Oil and Gas Exploration to proceed.

In this regard, copies of the ESIA reports have been displayed and may be reviewed at the following venues:

  • Mangochi – Office of the District Commissioner, Mangochi District Council
  • Machinga – Office of the District Commissioner, Machinga District Council
  • Dedza – Office of the District Commissioner, Dedza District Council
  • Salima – Office of the District Commissioner, Salima City Council

Written comments should be submitted to either the above District Commissioners Offices or Rak Gas MB 45 Limited Offices not later than the 10th of June, 2019.
Following the disclosure of the report at the above venues, the General Public is invited to the public hearings/ presentations of the draft ESIA Report as follows:

  • Machinga District Administration 10.00am 3rd June 2019
  • Mangochi District Administration 9.00am 4th June 2019
  • Dedza – District Administration 10.00am 5th June 2019
  • Salima District Administration 10.00am 6th June 2019
  • National Consultations Capital Hotel 9.00am 12th June 2019

For Enquires please contact:

  • Martin Kansichi (Dr.) on 0991473357
  • Hilton Banda (Consultant) on 0999168875

Signed: Chimwemwe Chikusa, Country Manager

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Sovereign Metals is exploring a site for a potential graphite mine in Malingunde, Lilongwe. The draft Environmental and Social Impact Assessment is now available for your comments. Take a look at the collection of documents here.

From the company:

Sovereign Metals Limited (Sovereign) is currently conducting a number of technical studies, which will culminate in a definitive feasibility study (“DFS”), to determine the viability of developing the natural flake graphite deposit at Malingunde in central Malawi, 20 km southwest of Lilongwe Boma.

In addition to the DFS, Sovereign commenced the environmental and social impact assessment (ESIA) process in 2017 as required by the Environment Management Act (EMA), (Act No 19 of 2017). The environmental scoping phase of the ESIA was completed in April 2018 after the environmental scoping report (ESR) was presented to stakeholders for comment and review. The ESR was submitted to the Malawi Environmental Affairs Department (EAD) in May 2018, and the terms of reference for the ESIA phase was approved by them in June 2018. Notifications were distributed in December 2018 communicating the delay in finalising the specialist assessments required for the ESIA.

We are pleased to announce that the draft environmental and social impact assessment (ESIA) report is now complete and will be available for your review and comments from 13 May to 24 June 2019.

You are invited to review the report and can access a copy at the following places:
a) Electronic copy: http://sovereignmetals.com.au/building-malingunde/
b) Offices of C12 – Office Number 7, Skyband Complex, off Paul Kagame Rd, Lilongwe
c) Environmental Affairs Department (EAD)
d) Lilongwe District Council Offices
e) Offices of the Traditional Authority for the Malingunde area

Meetings will be held from 10 to 14 June 2019 with various stakeholders to discuss the findings of the draft ESIA report, and to obtain your views and comments on the impacts. Notifications, with details of the date, time and venue of the meetings, will be sent to you in due course. However should you wish to attend any of these meetings, please register your interest with the stakeholder engagement
consultants.

Comments on the draft environmental and social impact assessment report must be submitted in writing (either by email on in hard copy) to the stakeholder engagement consultants by 24 June 2019.

All comments, issues and queries raised will be incorporated in the final ESIA report which will be submitted to the EAD in July 2019.

Should you have any additional comments or queries, these can be directed to the stakeholder engage ment consultants as follows:

AECOM
Anelle Lötter
Email: Anelle@jaws.co.za
PO Box 30523, CC3, Lilongwe, Malawi

C12
Grace Mpinganjira,
Email: admin@ctwelve.org
Tel: +265 998 521 663/+265 881 409 466

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Malawi’s tripartite elections on 21 May 2019 are just three weeks away. Here, I briefly (and off the cuff!) look at promises made about mining in the manifestos of the four main political parties. Undoubtedly, I’ve missed things (especially as I have not looked at other related sectors like energy).

So, over to you readers, what’s been left out of the manifestos? What seems feasible? Are you convinced?

The Democratic Progressive Party (DPP) 2019 Manifesto ‘Sustaining a people-centred government’, is built on the pillars of patriotism, integrity and hard work. The president of the party (and current president) is Arthur Peter Mutharika and his running mate is Everton Chimulirenji, who is MP for Ntcheu North East. Between 2019 and 2024, if re-elected,

The DPP government will embark on extensive but cautious mining and utilisation of our oil resources, now that the legal and institutional frameworks have been developed.

The DPP government will embark on mining for rare earth metals (tantalum, zircon and nobium) in Kanyika Hills in Mzimba, Songwe Hills in Phalombe, Makanjira in Mangochi, and Kanga Nkude in Balaka. We will develop mines for graphite in Malingunde in Lilongwe and Ilomba in Chitipa. We will mine ruby in Chimwazulu in Ntcheu and bauxite in Mulanje. 

The DPP government will also begin extensive exploitation of our oil resources now that the legal and institutional frameworks have been developed.

I expect it was not the intention to confuse the public, but here it sounds as if the government will lead exploration and production of all sorts of minerals. Rather, simplistically put, the current arrangement in Malawi is that private companies are awarded licences by the government to carry out exploration and production. In return, the government collects royalties and taxes. Yes, sometimes, the government gets free carried equity (i.e. a stake it doesn’t have to pay for in a subsidiary of a company carrying out mining, or in the case of Kayelekera, in exchange for some tax breaks) but this does not mean the government or its officials are actually mining.

Take, for example, the rare earths projects that the ‘DPP government will embark on’. In fact, these exploration projects are being carried out by Australian-listed company Globe Metals & Mining in Kanyika, Mzimba, and Mkango Resources in Songwe Hill, Phalombe.

The last few years has indeed seen progress in legislative reform – a new Mines and Minerals Act (2018) and a National Artisanal and Small-Scale Mining Policy (2018) – and Malawi joined the Extractive Industries Transparency Initiative, which was a promise made in the Democratic Progressive Party’s previous manifesto, but why no continuity between the promises then and now?

It is also a little misleading to say that ‘The DPP government will also begin extensive exploitation of our oil resources’ when the companies with licences are still in the exploration stage. As of yet, as far as I am aware, no economic reserves of petroleum have been proven, and until they are, we cannot talk of ‘exploitation’. And unless something changes dramatically in our legal framework and with contracts already signed, it will not be the government exploiting reserves, but companies.

What will change in the mining sector if the Democratic Progressive Party are reelected? In short, it’s not clear. We probably can presume things will continue as they have been, which includes implementing the new Act, unless the party really intends to start mining and exploring itself.

Continuing in alphabetical order, Malawi Congress Party’s (MCP) 2019 Manifesto has a little more to go on. So it’s broken up below. The party’s president is Lazarus Chakwera, who is currently MP for Lilongwe North West and was leader of the opposition in the National Assembly from 2014-2019. His running mate is Sidik Mia, formerly a member of parliament and part of the cabinet in both previous Democratic Progressive Party and People’s Party governments.

The Malawi Congress Party seeks to ‘Build a new Malawi on the foundation of a democratic developmental state powered by the Chakwera Super Hi5’. What’s this Super Hi5, you ask? Servant leadership, United Malawi, Propsering together, Ending corruption, Rule of law.

The author of this section of the manifesto has very clearly been inspired by the Africa Mining Vision, which all African presidents and heads of state endorsed in 2009. Laudably, in short, the Africa Mining Vision ‘presents a paradigm shift away from a resource development model anchored on extractives toward one in which mineral resources are harnessed to accelerate broad-based development and build resilient, diversified, and competitive economies‘.

Mining has great potential to contribute to the country’s fundamental structural transformation and sustainable development. The ambition stated in various policy documents since the turn of the Century has been to raise the contribution of the mining sector to 20% of the country’s GDP by 2020. Estimates indicate that currently
mining and quarrying contribute between 0.9% and 2% to the country’s GDP. This is attributed to the absence of a viable management regime to ensure that the country fully maximizes benefits from the mining sector.

Let’s start with the premise that the low contribution of mining to the nation’s gross domestic product is ‘attributed to the absence of a viable management regime’. Yes, there are challenges in management that all stakeholders acknowledge, even if we don’t agree on all the details. However, arguably, global depressed prices for commodities is the biggest reason that mining has not taken off as expected in Malawi. Since there is less demand for all types of minerals (and especially for uranium) with resultant low prices, there’s less money around for companies to explore new sites. In Malawi, most projects are in the exploration stage. In addition, running a mining project is expensive in Malawi (we don’t have the best energy or transport infrastructure yet), so we haven’t seen as much mining as was anticipated in the commodity boom years of the early 2000s.

Nevertheless, managing the sector well will serve citizens better and create an fairer operating environment for companies who play by the rules. Illegal mining, dubious contracting and licence issuance (usually the political party is at fault here!), shady companies, tax evasion and avoidance, and non-declaration of exports are some of the challenges that need tackling.

The MCP believes that the capacity of a country to meaningfully benefit from mining is directly linked to its governance architecture. A well-governed country is more likely to maximize the contribution of mining by negotiating good terms with mining companies; collective managing and spending revenues wisely; and creating an enabling  environment to enhance employment. There is currently limited transparency and accountability especially in the issuance of mining licenses and management of proceeds from mining. The MCP government will create a viable and robust mining management regime with an optimal mix of legal, regulatory, fiscal, environmental and social development policy tools and approaches.

To do this, the Malawi Congress Party says that it will:

Implement the new mining policy and its related laws and regulations to ensure that appropriate institutional and legal settings, safeguards and quality control are in place.

Revise Malawi’s Petroleum (Exploration and Production) Act, 1983 so that our laws adhere to international standards and are also capable of addressing emerging sectoral issues such as technical, fiscal and environmental challenges.

Develop the sector’s local content policy to ensure that Malawians benefit directly from the investment activities.

Arguably, the above are already in the works. So, if elected, the Malawi Congress Party government would continue what is already started. Very few countries in Africa have actually implemented the Africa Mining Vision, but Malawi started work on a country mining vision at least three years ago. In this vein, the Malawi Congress Party will

Promote transparency and accountability in the issuance of mining licenses and management of the proceeds for the sector to meaningfully contribute to cause of national development through the attainment of winwin situations between the country and the investors as enshrined in the African Mining Vision (AMV).

Domesticate the AMV, Africa Resource Utilization Strategy, and Hope Strategy adopted by the African Heads of State in 2009 by coming up with a workable and investment based Country Mining Vision (CMV).

Develop a Comprehensive Mining Strategy (CMS) that provides for domestic and  foreign investment in mining; joint venture mining operations involving state, communities and international investors; publication of monthly reports on mining operations and incomes generated; and provide guidelines for effective corporate social responsibility strategies.

Further, to assist the sector, the Malawi Congress Party will take a number of steps. This includes improving communication between and with stakeholders (yes!),

Promote the sector so that it emerges as an attractive destination for investment by both local and international companies through strict adherence to, and compliance with the laws.

Ensure consistent and factual updates to all stakeholders on progress made in both solid and petroleum sectors as provided in the laws of the country.

Develop and operationalize the sector’s laboratory services ensure that testing of both mineral and petroleum samples is done locally.

Finalize geo-mineral resource mapping across the country and develop a comprehensive exploitation plan in line with the country’s strategic national development goals.

On artisanal and small-scale mining, the Malawi Congress Party seeks to formalise and legalise the sector.

Implement the Artisanal and Small Scale Mining (ASM) policy which favours ASM subsector and among other things, promotes formalization of ASM illegal miners and the existence of small-scale miners through formation of cooperatives.

Develop the ASM sector by championing the identification of potential mineral buyers and re-establishing the abandoned Gemstone Marketing Centres across the country.

Order immediate stop of all illegal mining activities across the country in order to ensure that the country’s mineral deposits are exploited to the benefit of a nation

The party concludes with a realistic take – mining is no panacea to the challenges facing the country.

The MCP realizes that mining presents opportunities, challenges and risks to sustainable development. Our motivation is to get the framework that governs mineral resources right as a critical first step to leveraging mining for broader national development. The ultimate goal of the MCP’s government mining regime will be to ensure that adequate institutional and technical capacity of different stakeholders is developed to effectively implement the policies, tools and approaches to manage mining more sustainably.

What will change in the mining sector if the Malawi Congress Party are elected? Framing mining through the lens of the Africa Mining Vision gives an indication of the party’s thinking. Improving sectoral management to increase investment and local benefits for structural transformation seems to be the first step. To some extent, there is continuation with what the government is currently doing or supposed to be doing according to commitments in policy documents. Given the party’s recent alliance with the People’s Party, it will be interesting to see if dubious oil contracts awarded and payments allegedly received by former president Joyce Banda’s government will still be investigated.

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Mining in Malawi by Rachel Etter-phoya - 2M ago

Malawi’s tripartite elections are just weeks away. The April 2019 edition of the Mining & Trade Review examines the main political party manifestos. You can take a look at the latest edition here. Head across to Nyasa Times to download the manifestos for yourself.

Aspiring parliamentarians and councillors in Karonga were given the opportunity to debate their mineral-related policies, courtesy of the Natural Resources Justice Network and the Catholic Commission for Justice and Peace (financed by Oxfam). The Catholic Commission for Justice and Peace also engaged faith leaders in Karonga diocese on the free, prior and informed consent principle for securing community rights.

One resident in the area (Petros Mfwara from Uwembe Village) had this to say:

It really mocks our dignity and pride as Karonga appears on the map as a district endowed with many mineral resources but we do not benefit from this mineral wealth. […].
These investors come here and follow the rules set in place by our government and policy flamers [sic]. So it will be unwise to blame the former but government which claims to manage these resources on our behalf.

At the end of April, Tanzanian president John Magufuli visited Malawi. Commentators argued that it was a lost opportunity because Malawi’s president Arthur Peter Mutharika and Magufuli steered clear of talking about the Lake Malawi dispute that flared up in 2012 with the issuance of more petroleum exploration licences by the Malawian government.

Malawi Women in Mining Association (MAWIMA) also launched the much awaited strategic plan for 2019 to 2023.

We launched our 5 year strategic plan successfully on 16-04-2019, we invite you on board as we walk the journey.@MiningNyasa @mgichuhi @OxfamMalawi @Maletagems @MalawiGovt @MITC_Malawi @unwomenafrica @undpmalawi pic.twitter.com/BVuMinowiD

— Malawi Women in Mining – Central (@WomenMalawi) April 18, 2019

Conflict over land and resources continues to simmer in Namizimu Forest according to reports from The Daily Times.

The 300 megawatts Kam’mwamba Coal-Fired Power Plant Project in Neno is still alive, said the Ambassador of the People’s Republic of China to Malawi Liu Hongyang, with a lifespan of 30 years. The project is partly financed by the Export and Import (Exim) Bank of China with a loan of USD 667m.

More electricity is good news and especially to exploration companies. Sovereign Metals released its Quarterly Report with updates on the definitive feasibility study of their graphite project in Malingunde. You can also take a look at Mkango Resource’s Management’s Discussion and Analysis for 2018, which is now available on SEDAR. It provides an overview of operations with a focus on their rare earths exploratoin project in Phalombe, this is being developed against a “backdrop of increasing demand for rare earths used in electric vehicles, direct drive wind turbines and other green technologies”.

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Mining in Malawi by Rachel Etter-phoya - 3M ago

The Malawi government courts the Commonwealth Secretariat for hand in oil sector assistance. This is the leading story in the Mining & Trade Review (March 2019, available for download).

The Commonwealth Secretariat has been asked to support the government in the:

  • Review of Petroleum (Exploration and Production) Act of 1983
  • Finalisation of the development of Petroleum Policy
  • Developing a model petroleum sharing agreement (PSA)
  • Re-negotiation of the PSA that it signed with RAKGAS
  • Development of a community engagement strategy
  • Capacity building

This comes on the back of ongoing exploration being conducted primarily by RAK Gas and Pacific Oil. As Head of Oil and Gas Desk at the Department of Mines in the Ministry of Natural Resources, Energy and Mining, Cassius Chibambo, said

As a nation, we are very excited with the incoming results from oil exploration work being conducted by these tenement holders.  The likelihood of finding commercial petroleum discoveries in these potential sites is high with average values in the range of 16.8% – 20%, exceeding the typical international oil industry threshold of 10%

It’s been nearly five years since the government of Malawi under former President Joyce Banda signed three production sharing agreements just days before the elections. The Anti-Corruption Bureau continues to investigate.

The Mining & Trade Review also covers the following stories:

  • The Natural Resource Justice Network’s concerns with the new Mines and Minerals Act, including the absence of free, prior and informed consent provisions.
  • Ignatius Kamwanje tries to clarify why some companies need large samples during exploration
  • Grain Malunga discusses gemstones and concludes that “The gemstone industry in Malawi has potential to support the economy if it is properly explored and regulated. The artisanal miners need to be supported through a properly baked policy, technical and financial support mechanism.”
  • The government’s public consultation on mining safety regulations, but where is the discussion on unionised labour which is the best way to secure workers’ rights and safety. A miner was killed in February at Jalawe Coal Mine in Rumphi.
  • Shayona and LaFarge have spent some money on corporate social responsibility projects

Also in March, aspirants for president and vice-president faced each other in live debates although President Arthur Peter Mutharika and his running mate Everton Chimulirenji chose to follow in former president Joyce Banda’s footsteps and not show up. Mining was on the agenda and you can read more here and here. I hope to take some time this coming month to look at how mining is framed in several of the political party manifestos – watch this space.

Mkango Resources filed a new technical report on Songwe Hill Rare Earth project and now has the finances to be able to complete its feasibility study. Here’s the latest NI 43-101 Technical Report, and you can find their earlier reports and all documents they have filed as a result of being listed in Canada by searching SEDAR.

BRGM wrote a short news piece on the work it is doing to support the government:

BRGM has been coordinating a large-scale project in Malawi to develop the country’s mining sector, covering all aspects from geological mapping and an inventory of mineral potential to organisation of the sector. […]

The BRGM had already worked on Malawi’s geology and mineral resources in cooperation with its counterparts in Malawi, producing a brochure in 2015 summarising current knowledge to promote the mining sector.

This was the basis for an initial field campaign conducted in 2017, aiming to review, relocate and reinterpret all known indices (about 180), in anticipation of a geochemical survey of stream sediments, which plans to take some 3000 samples.

These studies have already indexed – and confirmed – numerous occurrences of minerals across 2/3 of the southern part of the country (sulphides, copper, graphite, titanium, vermiculite and rare earths, including high potential for the niobium used in new technologies). The petrographic and geochemical characterisation studies now under way should produce a better understanding of the origins of these minerals and their potential.

Particular attention is given to small-scale mining for gemstones (corundum, rubies, beryl, tourmaline and spinels) with a view to organising the sector more efficiently, in particular through training for those involved and the establishment of a certificate of origin. To date, 12 geological maps to the scale of 1:100 000 (out of 40) are being finalised and a GIS is under development to document the main active quarries producing industrial rocks and minerals (marble and aggregate, both essential to the country’s development) and potentially favourable lithological formations.

And if you are interested, Paladin Energy’s most recent corporate presentation at the Toronto Canada Roadshow had this to say about Kayelekera uranium mine.

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The Malawi Mining & Trade Review February 2019 edition is available for download.

The main stories included:

Foreign cement floods Malawi… Local producers bemoan “unfair competition”. 2,000 jobs might be at risk. According to The Daily Times

About 2,000 workers in cement manufacturing companies risk losing their jobs as firms struggle to compete with cheap imports, an investigation by The Daily Times has revealed.

The investigations also revealed that management of the country’s three cement producers—Lafarge, Shayona and Cement Products—have on several occasions met officials in the ministries of Trade and Finance to consider invoking anti-dumping regulations, with no success.

Government responded (Ministry of Trade and Industry spokesperson, Mayeso Masokera:

Government, we have the mandate to balance the needs of both the producers and the consumers with regard to availability of this essential commodity as well as its price and the current cement importation does not amount to an influx.

We have had situations where cement prices rose to around MK12000 in 2017. Therefore, it is, essential that, cement availability and affordability is safeguarded for the healthy growth of the Malawi economy.

The Ministry is discussing with other Government agencies such as the Malawi Revenue Authority and the private sector stakeholder institutions so that issues of smuggling are addressed holistically. As a Ministry, we would like to appeal to the private sector to hold hands and collaborate with Government in order to root out this malpractice bedeviling our manufacturing sector

The Anti-Corruption Bureau (ACB) gets stakeholder input on corruption fight and ACB’s Director Reyneck Matemba said:

The extractive industry, including mining, is of interest to us as they have been a number of suspected cases of corrupt practices in the sector. You can see in this meeting we have representatives of the sector coming from as far as Mzimba.

Illegal gold mining resumes in hotspot areas. Chairperson for Nyasa Mining Cooperative (NMC) Percy Maleta offers one solution to give titles to the so-called illegal miners at the hotspots. He adds:

Creation of a formal market for the minerals is of utmost importance. For instance, we do not have a proper market for gold and other precious minerals in Malawi serve for few Chinese who normally smuggle the precious minerals.  In the actual sense our country does not have any laid down procedures on how one can export gold. The government should create and establish market centres in all hotspot areas where gold and other precious minerals are produced.

Government backs bulk mineral sample exports…Companies not taking too much for lab testing. It’s good the government has spoken out to clarify misunderstandings around sampling as Globe Metals & Mining, Mkango Resources and Sovereign Metals all have sent samples for testing. I wrote about Malawi’s “stolen” minerals a few months ago.

Want to know more about drilling in the exploration stage of a mining project? Read Ignatius Kamwanje’s column for the month.

Sovereign Metals upbeat on Malingunde rutile prospects. According to Managin Director, Julian Stephens:

This discovery of large areas of high-grade rutile suggests the potential also for significant rutile deposits within Sovereign’s large grounding holding. Given the currently strong fundamentals of the titanium feedstock market, the Company intends to undertake further exploration and metallurgical studies to advance this potential rutile opportunity.

Grain Malunga shares Malawi Chamber of Mines and Energy report of member activities in 2018. In short, progress is made on exploration projects and the new Mines and Minerals Act is a welcome development. In his words,

Malawi continues to take advantage of the existence of renewable energy resources as projects with potential to bring about economic development. Rare earths, niobium and graphite have the highest potential to be developed. Malawi government needs to solve the energy crisis as a matter of urgency.

The Mines and Minerals Act 2018 will help bring stability and manage people expectation through community development agreements as a means of benefit sharing. Resource companies expect a stable fiscal regime to be able to meaningfully come up with a reasonable cash flow projection for their projects.

And at the Chamber’s Annual General Meeting, Kondwani Dombola, Acting Director of the Geological Survey Department, said studies unveil more mineral prospects in Malawi: Mchinji Dyke has potential for chromium, lead, zinc…Kayelekera uranium deposit bigger…Nchalo basin possible petroleum trap.

The Department of Mines has been conducing extensive consultations on draft safety regulations. While news came in this month that at miner was killed “by a big stone” at Jalawe coal mine in Rumphi and another man lost a finger at Fluoride Cement Company Limited Balaka in December last year.

In other news, Malawi has been graded as having made meaningful progress towards the Extractive Industries Transparency Initiative. More here.

And finally, it’s been 10 years since the Paladin subsidiaries and the Government of Malawi entered an agreement for Kayelekera uranium mine.

22 February 2007: On this day 12 years ago, Malawi signed an agreement with Paladin Energy (actually with two subsidiaries – one in Malawi and and notorious tax haven Netherlands) for Kayelekera uranium mine.

— Rachel Etter-Phoya (@MiningInMalawi) February 22, 2019

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Throwback to 2016 – Outgoing EITI Chair Rt. Hon. Clare Short with part of MWEITI delegation (Chikondi Mcheka – Mkango Resources, Kossam Munthali – FOCUS, Rt. Hon. Clare Short, George Harawa – MWEITI Secretariat/MoFEPD, Rachel Etter-Phoya – Citizens for Justice)

After many years of campaigning, Malawi joined the Extractive Industries Transparency Initiative in 2015 to ensure mining contributes to economic transformation in a way that safeguards rights. This week, the Extractive Industries Transparency Initiative Board met and affirmed that Malawi has made meaningful progress on implementing the initiative.

The EITI Board applauded the government and the multi-stakeholder group comprised of government institutions, civil society groups and companies.

Advances in fiscal and contract transparency, as well as the launch of an online license cadastre and publication of extractives contracts, have helped create the basis for governing the sector in an inclusive and equitable manner. In taking this decision, the Board welcomed Malawi’s efforts to go beyond the requirements of the EITI Standard in disclosing extractives production data, providing an effective diagnostic of inconsistencies across various sources.

The Board also made a series of recommendations in the Final Validation Report. This includes ensuring all revenue from the extractive sector is reported. There were gaps in information relating to the Petroleum Training Fund and company mandatory social payments.

Extractive sector revenues are largely recorded in the single treasury account. Some revenues are retained internally in off-budget funds, such as the Petroleum Training Fund, managed by the Department of Mines. But significant information is missing or unclear, with no values reported through EITI or otherwise.

The report covers mandatory social expenditures for two mining companies and all petroleum sector companies. But almost no payments are reported nor is any reason for lack of payments identified. Reported mandatory social payments are not disaggregated sufficiently. The report does describe and disclose voluntary social payments associated with one reporting oil and gas company.

It is a moment to celebrate, but also an opportunity to take stock of what needs to happen going forward.

On a lighter note –

In 2015, we joined the E-I-T-I

Some detractors didn’t understand and asked us why.

We pushed on and sent in our application

Thanks to the Secretariat and MSG – what dedication!

Civil society and some civil servants had struggled for years

To get the message to the right ears.

The initiative, they said, was to improve the sector,

To attract good investors and help the state in its role as protector.

Corporates, activists, government folk

Sat around a table, one another they were not allowed to choke.

Working, learning (and arguing) together

To make sure Malawi’s resources make a difference forever.

The fully-costed workplan set the tone.

To better understand the revenue, contracts and stone,

Companies and governments were asked to report

On all they were doing to ensure Malawi was not being sold short.

Contracts and licences were given to many a company,

But no longer are these shrouded in secrecy.

And by 2020, we will also discover,

The beneficial owners, so crooks take cover!

What an achievement

After time (and donor money) spent

The process, reports and impacts assessed

Meaningful progress as we continue on our quest.

With the EITI board’s recent decision

We have a joint, renewed mission

For Malawi’s uranium, rare earths, graphite and gold

To bring transformation now, in future, for young and old.

For more information

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In November 2018, a workshop on Artisanal and Small-Scale Mining in Malawi was held in Lilongwe. Topics included health and safety, formalisation, socio-economic characteristics, value addition, the mineral processing techniques, environmental issues, and how to discover deposits and organise a mining site. T

All the presenters prepared a chapter for a handbook that is currently being finalised. The draft version is available here.

The workshop was aimed at staff from the Geological Survey Department, Department of Mines, Cadastre Office, Environmental Affairs Department, Ministry of Industry, Trade and Tourism, Malawian EITI as well as small-scale mining organisations and universities.

All the presentations are now available online and can we watched on YouTube.

Further information is available here. Check out my presentation (with PhD researcher Josh Sandin) and book chapter on the socio-economic characteristics of artisanal and small-scale mining in Malawi – quite a challenge with the lack of data and research.

The workshop was organised under the PanAfGeo for “Pan-African Support to the EuroGeoSurveys-Organisation of African Geological Surveys (EGS-OAGS) Partnership”. Financed by the European Commission and a consortium of 12 European Geological Surveys, PanAfGeo supports the training of geoscientific staff from African Geological Surveys.

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