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Malawi’s Kanyika Niobium ready for mining; promises 1000 jobs…as extractive industry revenue down 10%

LILONGWE-(MaraviPost)-The halted Kanyika Niobium Project says the “mine is ready”, after years of giving hope to communities at Inkhosi Mabilabo Jere in the Northern district of Mzimba.

The exploration of Niobium and Tantalum that started 2006 to 2012, the project has assured 1,000 jobs to Malawians when mining starts in 18 months time.

This comes as the second Malawi Extractive Industries Transparency Initiative (Mweiti) report shows that revenue has gone down 10 percent to MK5.3 billion.

This is the second MWEITI report since Malawi began subscribing to Extractive Industries Transparency Initiative (EITI) standards.
EITI standards, among other things, demand that companies in the extractive industry publish their operational and financial reports and that governments must be transparent in extractive dealings.
Most mining captains hailed the 2015/2016 MWEITI report, saying it projects a bright future for Malawi’s extractive sector.

In his presentation during this year’s Mweiti second report launch in the capital Lilongwe, Chrispine Ngwenya, Global Metals & Mines Country Manager says kanyika mine is a major project and significant to benefit many Malawians.

Ngwenya disclosed that the mine is ready with assurance of serious employment opportunities for steady forex earnings.

“Construction  of the mines expected to take 18 months after we conclude DA and Finances acquired. Malawi is expected to realize about gross revenue of US$72 million yearly for 20 years the mine will run.

“About 1000 jobs will be created to Malawians once the mines starts operating. This is the important regional project for steady forex earnings,” assures Ngwena.

Annual production of both Niobium and Tantalum is estimated at 3000 and 220 tons respectively plus the presence of Uranium and Zircon.

Kanyika orebody is valued at US$1 billion.

George Harawa, MWEITI National Coordinator said, “We are on the right track towards achieving EITI standards.
Most communities are now aware of what is going on in the mining sites around their areas.”
But Natural Resources Justice Network chairperson Cossam Munthali said Malawi must quickly enact the new Mines and Minerals Bill if EITI standards are to be truly met.
“We are going nowhere if we are still nursing an old mines and minerals law which promotes secrecy, a breeding ground for conspiracy and corruption for unscrupulous investors to rob Malawians of their God given resources,” noted Munthali.
But Chamber of Mines Coordinator Grain Malunga said Malawians need to avoid what he described as “use of inflammatory language” against mining investors, saying EITI standards clearly stipulate the roles of every stakeholder to attain the much needed change in the extractive industry.
Chief Director in the Ministry of Natural Resources, Energy and Mining Bright Kumwembe took note of Munthali’s concerns, promising that government will present the new Mines and Minerals Bill before Parliament during the November sitting.

 

Brief summary of Mweiti second report;

Malawi has earned MK5.3 billion in revenue from the extractive industry, the second Extractive Industries Transparency Initiative (Mweiti) report shows.
This is a 10 percent drop from the 2015 revenue which stood at MK5.93 billion.
A breakdown of the report which was released last week shows that the forestry sector raised a big chunk amounting to MK2.5 billion.
This represents a 12 percent drop compared to MK2.9 billion released from the sector in 2014/15 financial year.
The mining sector came second with a MK1.61 billion contribution.
This means revenue collected from the mining sector has dropped by 31 percent compared to MK2.3 billion raised in 2015.
The sector’s contribution to the gross domestic product (GDP) is minimal following the suspension of production at Kayerekera Uranium Mine in Karonga and that most companies in the sector are in exploration stage.
In the year under review, transport sector contributed K951 million while oil and gas contribute MK211 million in contrast to MK674 million collected in the previous year.
As it is, revenue collected from the oil and gas sector has dropped by 69 percent.
According to the report, the revenue generated in the year contributed 8.2 percent to the GDP) and a minimal 0.8 percent to government revenue.
The report further says the mining and forestry sectors only contributed 0.6 percent to the country’s exports.
The Mweiti Report further tabulates that Malawi Revenue Authority (MRA) collected 70 percent of the total amount generated followed by Department of Forestry at 17 percent.
Ministry of Transport and Public work collected six percent while five percent was from Department of Mines and a two percent from social contributions.
MWEITI Report says in order to improve the EITI process in Malawi, additional measures should be effected and these should include mainstreaming EITI disclosure.
“In accordance with EITI 4.9.c, “where the assessment in 4.9(a) concludes that there is (i) routine disclosure of the data required by the EITI Standard in requisite detail, and (ii) that the financial data is subject to credible, independent audit, applying international standards, the multi-stakeholder group may seek Board approval to mainstream EITI implementation in accordance with the ‘Agreed upon procedure for mainstreamed disclosures.
“The government currently produces an Annual Economic Report (AER) for each calendar year systematically. The AER covers the main sectors generating wealth to the country’s economy and summarises data on the major changes in these sectors, the main projects, data on production, exports and contribution to the economy.
“However, data presented on the AER are not subject to credible, independent audits, applying international standards. As a result, data included in the AER may present material mistakes due the lack of thorough review and assurance process.”
The report has noted that AER does not include information about receipts and revenues collected by government entities involved in the extractive industry in the country such as collections of MRA, DoM and DoF.
The report has commended the Department of Mines for using a cadastral system which is publicly accesible online. However, the report says the contextual information on the extractive industry, data on revenues collected and budget allocation as required by the EITI standard, are not yet subject to electronic publication in the form of interactive open data.
In order to improve transparency in Malawi and make it an integral feature of the country’s governance and management systems, the report has recommended development of a work plan for mainstreaming and the creation of open data for EITI into government systems.
On capacity building and raising awareness of government officials on mainstreaming open data concept, the report says government should develop procedures manually and put processes in place to ensure timeliness, quality of data, reuse and cost effectiveness of the systems.
EITI requires publishing comprehensive reports, including full disclosure of government revenues from the extractive industries, as well as the disclosure of all material payments made to the government by companies operating in the oil, gas and mining sectors.
The objective of this EITI report is to strengthen the understanding of the level of contributions of the Extractive sector to the economic and social development of Malawi in order to improve transparency and good governance in all components of the extractive industry value chain.
Malawi joined an Extractive Industries Transparency Initiative (Eiti) candidate country in October 2015.
The Mweiti process covers three sectors: mining, oil and gas, as well as forestry.
The country published its first EITI report covering the 2014/15 financial year in April 2017.

 

 

 

 

 

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Lloyd M’bwana
Lloyd M’bwanahttps://www.maravipost.com
I'm a Lilongwe University of Agriculture and Natural Resource (LUANAR)'s Environmental Science graduate (Malawi) and UK's ICM Journalism and Media studies scholar. I have been The Malawi Country Manager and duty editor for the Maravi Post for the past Three Years. My duty editor’s job is to ensure that the news is covered properly, that it is delivered on time, and that it is created to the standards set out in the editorial guidelines of the Maravi Post. I also decide most of what the user will or will not see. And those users will be clicking on the website expecting to see what their trusted news. Organisation has to say on an issue. I started as a senior Reporter with the Maravi Post over a 6 years ago. When I have time, I do field reporting as well.
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