Lessons from Kayelekera as Mw readies to negotiate for better mining deals

Export Development Fund (EDF) says Malawi has the potential to transform its economy through the extractive industry but needs to invest in knowledge that can help in negotiating for better deals.

EDF’s Project Manager for Precious Metals and Minerals Elyvin Nkhonjera who made the sentiments recently indicated that government is now prepared to have a better team to negotiate mining contracts beneficial to Malawi.

Currently the Australian Stock Exchange mining firm Lotus Resources Ltd. has secured a $15 million unsecured loan facility to provide overall funding for Kayelekera Uranium Mining restart.

Against a background of many interested investors flocking to the country’s extractive sector, she stressed that Malawi needs to be smart enough by having a strong legislation in place.

Despite the potential in the sector, Nkhonjera acknowledged the knowledge gaps which she said investors take advantage of noting this facilitates corruption.

As a governance advocate, she advocated that good legislation that would protect mining adding that it is pleasing to note that Malawi is part of extractive industry transparency initiative promoting transparency and accountability in the sector.

She said their role as a natural resources governance justice network is to advocate for implementation of laws that stops corruption in the mining industry.

She spoke on the lessons drawn from the Kayelekera Uranium deal citing that one of them is to invest in the contract negotiation.

“To have key people that are able to negotiate a better deal. There are a lot of lessons that were learnt like maybe how the loyalties were reduced and also how some of the taxes were avoided. So I think from those lessons, the government is now prepared to have a better team that negotiates the contract which is beneficial to the country.

“So all I can say is there are lessons that were learnt from Kayelekera and am sure in the other negotiations that the government have been doing, they have been conscious of these mistakes that were previously made.”

Attorney General Thabo Chakaka Nyirenda is on record to have said that government is working on a best deal for all parties involved.

“We are still working on the MDA; we are trying to come up with the best deal for Malawi, once we are done and we agree, the mining at Kayelekera will start” Nyirenda was quoted

Located 52 kilometers west of the regional administrative and commercial centre Karonga in Malawi, Kayelekera is an open cast uranium mine and was the country’s largest mine.

Production at the mine has been paused since February 2014, due to a fall in global uranium prices.

Initially, Kayelekera was 100 percent owned by Paladin (Africa) Limited (PAL), an 85 percent subsidiary of Australian and Canadian listed Paladin Energy.

Paladin issued 15 percent of the equity in Paladin (Africa) Ltd to the Malawi Government under the terms of the Mining Development Agreement signed between PAL and the Government.

In February 2007, Lotus Resources Limited had a shareholding of 85 percent with the Malawi Government owning 15 percent of the shares.

It was officially opened on 17 April 2009 by the then Malawian President Bingu wa Mutharika and in 2014, the mine entered care and maintenance mode owing to a depressed uranium market.

In 2020, Paladin sold its 85 percent interest in the project to Lotus Resources which had 65 percent and Lily Resources owned 20 percent of the shares.

The mine had not been profitable for its operators and met opposition from organisations and individuals concerned about the mine’s tax concessions, operation, adherence to law and regulation and its potential impacts on human and environmental safety.

While in production, the mine exported containers of uranium oxide via the port of Walvis Bay.

According to the EDF’s Project Manager, locals were recruited to do only casual and labour work and the experts were all coming from outside.

Chawinga decried the impact of corruption in the sector in that the revenue that the country could have is lost, and limits the country’s development as the sector has not really performed the way it was supposed to.