‘The resource curse in Mwaulambo’ is a new film made by Jacqueline Chiwale about Eland Coal Mining Company’s abandoned coal mine in Karonga, Malawi. Norwegian oil magnate Berge Gerdt Larsen has a stake in the mine, according to Human Rights Watch.

You can watch it online now.

Eland Coal Mining Company (Malawi) was covered in Human Rights Watch report ‘They Destroyed Everything: Mining and Human Rights in Malawi‘ produce in 2016. Over a year later, the film shows that rehabilitation of the mine site has still not happened.

Mwabulambo coal mine, an open pit mine located 30 kilometers north of the district capital, is operated by Eland Coal Mining Company, a Malawian company. Eland is a subsidiary of the Isle of Man based Heavy Mineral Limited, which is in turn owned by Independent Oil & Resources PLC, a company based in Cyprus.^[80] Over 70 percent of Independent Oil & Resources PLC is owned by the Norwegian oil magnate Berge Gerdt Larsen and members of his family.^[81] The coal mine is located on a flat and fertile area near Lake Malawi where residents have traditionally relied on subsistence farming, especially rice farming. It is unclear when and if operations will resume after they stopped in 2015. According to information given by Jan Egil Moe, chairman of the board of Independent Oil & Resources PLC, in July 2015, “Eland Coal Mine has suspended operations as the operations were not sustainable, and is in the process of being liquidated.”^[82] However, site visits in August 2015 and March 2016 suggested that the company still employs a local watchman and has not started rehabilitating the area.

Malawi’s mineral potential

…Geological mapping bares real picture

…Prospects for high value minerals noted

By Marcel Chimwala

The ongoing Geological Mapping and Mineral Assessment Project (GEMMAP), which is being funded by the French Government to the tune of 10.8-million Euros, is proving beneficial in unveiling the true mineral potential of the country.

This was revealed at a recent conference organized by GEMMAP in conjunction with the World Bank and European Union-funded Mining Governance and Growth Support Project (MGGSP) in Zomba where experts from Geological Survey of France (BRGM), Geological Survey of Finland (GTK) and Council for Geosciences South Africa (CGS) of South Africa, who are providing technical assistance to GEMMAP made their   presentations on the progress of the project.

GEMMAP is, among other things, interpreting data obtained from the countrywide airborne   geophysical survey dubbed Kauniuni which was financed by the World Bank and European Union through MGGSP.

The results are so far confirming Malawi’s potential for a number of minerals including rare earth elements, which are dubbed the vitamins of modern industry as they are very crucial in various modern high-tech applications including the production of magnets used in loudspeakers and computer hard drives, hybrid vehicles, rechargeable batteries and wind turbines.

Malawi has a number of prospects for rare earth elements mainly in the Chilwa Alkaline Province in the Southern Region and proven deposits include Songwe Hill in Phalombe, Kangankunde in Balaka and Lake Chilwa’s Chisi Island.

GEMMAP, which is providing on the job training for Malawian geologists, is also working on anomalies for high value minerals including gold, diamond and platinum group metals.

In addition, GEMMAP is studying the geology of neighbouring countries in relation to that of Malawi and the results have so far confirmed that the geological environment in some mineral-rich neighbouring countries extends into Malawi.

Malawi’s other significant mineral occurrences which are on the spotlight in the studies include uranium, coal, bauxite, copper, iron ore, gemstones, marble and graphite.

Malawi reports satisfactory progress in geomapping project

…We will now understand better the country’s geology-Salima

By Marcel Chimwala

The Malawi Government has reported satisfactory progress in the 10.8-million Euros Geological Mapping and Mineral Assessment Project (GEMMAP), which is funded by the French Government.

The Government, which is implementing GEMMAP through Geological Survey Department (GSD) and the Department of Mines in the Ministry of Natural Resources, Energy and Mining (MNREM), contracted a consortium of the Geological Survey of France (BRGM), Geological Survey of Finland (GTK) and Council for Geosciences South Africa (CGS) of South Africa to provide technical assistance to the five-year project.

GEMMAP was officially launched on June 15, 2016 by the then Minister of Natural Resources, Energy and Mining, Bright Msaka. It comprises six components namely geological mapping, mineral resources potential mapping, natural risks mapping, support to artisanal and small scale mining, provision of laboratory equipment and construction of documentation centre, and training of staff.

The implementation of these components is based, among other things, on the interpretation of the country-wide high resolution airborne geophysical data, which was acquired through a survey funded by the World Bank and European Union as part of the Mining Governance and Growth Support Project (MGGSP). A GTK-BRGM consortium is in charge of the interpretation of the acquired radiometric and magnetic data.

GEMMAP and MGGSP, therefore, jointly held a conference at University of Malawi’s Chancellor College in Zomba last month to update stakeholders and the interested public on the progress of the project.

Director for Malawi’s Geological Survey Department (GSD) in the MNREM, Jalf Salima, told the gathering at the two-day conference that the project is coming up with satisfactory results, which will be vital in improving the    understanding of Malawi’s geology.

The results coming through GEMMAP and MGGSP, will give a new picture of Malawi’s geology and its history,

said Salima.

In the initial phase, lasting from September 2016 to February 2017, GEMMAP has compiled relevant geographical, satellite and geoscientific data from Malawi and surrounding countries.

The review and analysis of these data have been presented in the GEMMAP inception report. It includes the overview of the Malawian geology in relation with that of surrounding countries, mineral resources assessment of Malawi, geohazards catalogue, review of Artisanal and Small Scale Mining (ASSM) sector, production of provisional 1:1 million scale geological and structural maps, metadata of GSD Technical Reports, transfer of past geochemical surveys into GIS and georeferencing of historical 100k geological maps.

The GSD archive has more than 1,000 technical reports that concern all modules of the GEMMAP project including geology (detailed geological maps), mineral resources (exploration works including geochemical surveys), metallurgical tests, resource evaluation, geohazards and small-scale mining. Their analysis throughout GEMMAP are considered fundamental for the evaluation of the mineral potential of Malawi.

Furthermore, GEMMAP, in conjunction with MGGSP, will greatly improve the data storage and data access at GSD through (1) digitising analogue data which presently are available in hard copy format only (2) organisation/classification of these data (3) creation of metadata, (4) selected data treatment and analysis (historical geochemical and geophysical surveys, technical reports).

The geological mapping component of the project involves systematic mapping of the geology of Malawi, doing field observations including structural analysis, and collecting samples for petrographic, geochemical and geochronological studies, combined with the interpretation of high-resolution geophysical data and satellite multi-spectral data. The Deliverables include updated geological maps at scales of 1:1,000,000 (1 map); 1:250,000 (10 maps) and 1:100,000 (40 maps) and accompanying reports.

GEMMAP is also progressing in its second component of mineral resources potential mapping whose objectives are to assess the potential of mineral resources of Malawi, attract international major/junior mining companies through the identification of prospective areas and identify mineral resources for country development.

While MGGSP is working on fulfilling its objective to rise the contribution of the mining sector to gross domestic product (GDP) through a number of reforms such as updating of mining law, development of the cadastral licensing system and the acquisition of high-resolution airborne geophysics, GEMMAP has emerged as an important project in assessing the mineral potential of the country,

said Salima.

Assessment of the mineral resources concerns energy commodities (coal, uranium), industrial rocks and minerals, base and precious metals and gemstones. Work under this component involves re-investigation of already identified mineral prospects (around 160) through field surveys, sampling, petrographic and geochemical analyses.

The identification of new prospective areas will be performed by sampling and analysis of around 3,000 stream and soil samples in areas poorly covered by historical geochemical surveys. The surveys will take into account the interpretation of newly acquired high-resolution airborne geophysics data set which allowed identifying around 85 radiometric and magnetic anomalies.

The data of all mineral occurrences will be stored in a dedicated database containing the exact location, the mineral/commodity, shape/morphology of the ore body, description of the host rock, estimated size of the deposit, status in terms of past, present and future exploitation, and relevant information regarding mineralogy, ore grade and past production.

Based on this information, a 1:1000,000 scale map of the mineral potential of Malawi and another one detailing the inferred mineral potential of the country will be produced.

Said the Project’s team in a report:

A lot of information has to be extracted from existing reports and stored in a dedicated database.

Petrographical characterization, geochemical analysis and geochronological data will bring new information in terms of origin and typology of mineral occurrences.

We hope to produce a fresh/actualized view of the mineral potential of Malawi and to identify new prospective areas for future exploration/exploitation.

The results of the Geohazard component will assist the government to implement and manage the prevention policies of the country’s structural development plan. The final products comprise one synthetic map at 1:1,000,000 scale and 10 geohazard maps at 1:250,000 scale illustrating the areas that are prone to various types of geohazards encountered in Malawi (floods, landslides, earthquakes…). The accompanying reports will include detailed descriptions of the geohazards encountered on each map.

The ASSM sub-sector has a significant potential to contribute towards the rapid economic growth and development of the country through rural job creation and providing alternative economic activities.

However, there are several challenges that exist in the sub-sector and need to be addressed. These include limited access to modern technologies, capital for investment in mining and mineral value addition and established markets.

The artisanal and small-scale miners have inadequate marketing skills, their mining operations are informal, they are unable to understand geological information and usually disregard basic mining occupational health, safety (OHS) and environmental considerations.

The GEMMAP Project is intended to compile an inventory of ASSM in Malawi, to assess the methods used by ASSM operators together with possible environmental challenges and environmental issues at the mining sites, give recommendations for their improvement and provide training related to gemstone activities.

The GEMMAP 2018 programme started by implementing the analytical program for samples collected in 2017. This comprises, amongst others, selection of samples and laboratories, geochronological and geochemical analysis, quality control, data treatment and interpretation and thin section petrography.

The project manager, Dr. Thomas Fullgraf (BRGM), informed that the programme in 2018 furthermore includes preparation of twelve draft geological maps (100k scale) of southern Malawi, start of sheet explanations, geological mapping of northern to central Malawi, Karoo mapping of Malawi and completion of geological mapping of southern Malawi.

In the mineral resources component, the project will carry out the mineral assessment of northern and central Malawi. Geochemical surveys will be conducted in three areas, which will involve definition of sample areas and points, preparation and execution of one major field campaign lasting about 10 weeks during which about 1500 stream and soil samples will be collected and processed.

In the geohazards component, GEMMAP has planned in 2018 to conduct mapping of cenozoic sediments, field study visits of geohazards sites, development of geohazards catalogue and production of Seismo-tectonic map.

In the training component, GEMMAP, will organise training for officers at Geological Survey and Mines Departments on artisanal and small scale mining operations and prepare training manuals for artisanal miners.

The ASSM training programme for the government officials will involve sending one officer for specialised training in gemstone certification in Madagascar, 12 officers for lapidary training and four officers for ceramics to Tanzania.

Under GEMMAP, GSD geologists are also trained on-the-job by learning through observing and carrying out tasks assigned by the consortium geologists.

The organisation, financing and supervision of five Master’s study programs as well as collaboration with the Earth Science Department of Chancellor College is part of the academic training.

This training shall enable us continue geological mapping of Malawi after termination of GEMMAP,

says Salima.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

EYE ON MALAWI’S Extractives with Rachel Etter Phoya

What is the role of the public in Malawi’s ESIA?

Malawi has a new Environmental Management Act (2017). The law guarantees public participation broadly in environmental management (Section 5) and access to information (Section 85); under old legislation, the Director of Environmental Affairs was given the discretion to determine if public hearings should take place. Now the Environmental Social Impact Assessment (ESIA) – as opposed to just an Environmental Impact Assessment (EIA) – is a compulsory process for all companies.

The purpose of ESIAs is to help public authorities (including representatives of citizens, such as Members of Parliament) weigh the potential of economic development through an activity like mining against the potential environmental, cultural and social impacts. It also provides information to subsequently monitor activity and take precautionary action and may give the public the opportunity to influence or stop a project.

The EIA was first introduced as an environmental management tool in the 1960s in the United States. Since then, most countries include it as a requirement for certain types of projects, particularly in the extractive industries. The way the public is defined in national legislation, the purpose, type and duration of public participation, and the possible outcomes for a project due to public participation vary, of course, from country to country.

In fact, in a recent study [1], nine different potential objectives of public participation in the EIA process were identified: public participation to allow those affected to influence decisions (1), to increase democratic capacity (2), to encourage social learning (3), to empower and emancipate marginalised people and groups (4), to improve the quality of the decision through public participation by harnessing local knowledge and information (5), to incorporate experimental and value-based knowledge (6), to test the robustness of information from other sources (7), to generate legitimacy for a project (8), and to resolve conflict (9).

Malawi first introduced the EIA with the 1996 Environmental Management Act. There has been only limited published research to date on the EIA process. However, Mhango concludes that there needs to be mandatory regulations to ensure the EIA is a useful tool and society and the environment are safeguarded. [2] At present, there are guidelines from 2011 that help direct the EIA process, but these are not binding. That said, international companies and financial institutions have often gone beyond the law (e.g. implementing ESIAs where only EIAs are required in the past) as part of their stakeholder and risk management approach as well as due to international financing regulations and expectations of shareholders. This cannot be said for all projects though.

The most extensive study [3] of sixty EIAs and environmental audit reports concluded that ‘public participation is not adequate at most of the key stages of the EIA process in Malawi which puts the human and ecosystem health at risk’ (307), and for one mining project this resulted in popular disapproval.

To ensure meaningful public participation, the following are some basics established by international organisation Pact [4] in its work in the Mekong Region in Southeast Asia:

• Clearly define the objectives of public participation as this affects how the process is defined, who is counted in the ‘public’ and potential outcomes of participation
• Distinguish between different groups in the ‘public’ to design appropriate means of inclusion (e.g. to ensure that not only community leaders or adult males are consulted), considering characteristics such as literacy levels, expertise, availability and infrastructure
• Determine the type of participation (a range exists from informing and consulting to involvement, collaboration and empowerment); Free, Prior and Informed Consent is the most inclusive form of public participation, but this is not guaranteed under any of Malawi’s laws at present (see image)

• Public participation goals and ensuing process design must be considered along six steps of the ESIA process: screening, scoping, EIA investigation and preparation, review of EIA report and EMP, decision making, and compliance, monitoring and enforcement
• Government, as it has the mandate to regulate and oversee the process, should have a checklist for meaningful participation to be used to assess participation from the perspective of stakeholders at each stage; although distinct questions are required for each stage, they should include questions about the type and objectives of engagement, who was involved, what and how has information been shared and collected, what were the desired outcomes and if these have been met
• Companies should develop a public participation plan for approval and review by government and stakeholders.

The ESIA process provides an opportunity for building consensus around a project. Public participation can help to ensure key environmental, economic and social considerations influence project development if a project is given the go-ahead, which is desirable for all involved or affected.

For further reading, take a look at:

1. Glucker, A.N., Driessen, P.P.J., Kolhoff, A., and Runhaar, H.A.C. 2013. Public participation in environmental impact assessment: why, who and how? Environmental Impact Assessment Review 43: 104-111.
2. Mhango, S.D. 2005. The quality of environmental impact assessment in Malawi: a retrospective analysis. Development Southern Africa 22(3): 383-403.
3. Kosamu, I.B.M., Mkandawire, A.A., Utembe, W. and Mapoma H.W.T. 2013. Public participation in Malawi’s environmental impact assessment (EIA) process. African Journal of Environmental Science and Technology 7(5): 307-311.
4. March 2017. Guidelines on Public Participation in EIA in the Mekong Region.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Shayona forges ahead with CSR despite poor business environment

By Chiku Jere

Shayona Cement Corporation has pledged to continue fulfilling its Corporate Social Responsibility (CSR) programme despite facing difficult times ushered in by ‘the current bad business environment’.

The commitment was made at the company’s factory  in rural Kasungu by its Operations Manager, Prajeesh Padmanabhan, during a handover ceremony of drugs worth K2.5million to St Augustine Community Clinic and desks and teachers’ furniture worth K6.5million to three schools – Ergo and Chamama Community Day Secondary Schools and Chigumba Primary School.

The company is going through a very bad patch in terms of business. The situation on the market seems to be getting worse, but we cannot afford to pay a blind eye to matters of the community and matters of national interest because Shayona Cement Corporation is more than just a cement manufacturing company,

said Padmanabhan.

He said Shayona is a true development partner of the Malawi nation, a fact which compels it to always take a leading role in implementing programmes to support the Malawi community.

The event also included a tree planting exercise that saw the planting and distribution of over 5000 Mahogany tree (Khaya Anthothecca) seedlings worth K2.5million to over 10 schools.

The K11.5 million pumped into the three components of the CSR investment – education, health and environment on that day was a finalization of Shayona’s K18million allocated for the 2017 CSR programme.

Padmanabhan also announced that they have also allocated the same figure (K18million) for the year 2018 CSR activities.

We were supposed to raise up the figure but the situation on the market is not permissible. Among other challenges, we still face stiff competition from unfair importation of cement and power also has become a major setback. The blackouts issue is affecting industrialization in Malawi. Imagine we have power just in four out of the seven days a week which is immensely affecting our production,

he said.

Nevertheless, Padmanabhan said the company continues to put much effort to maintain standards and offer the market the best.

We are still focusing on our expansion drive which is not only looking at the local market but we also want to compete at the regional level,

he said.

Presiding over the function as guest of honour was Kasungu District Council Acting Director of Administration Thomas Mwafongo who stood in on behalf of the District Commissioner.

In his remarks, Mwafongo hailed Shayona for being a shining example when it comes to CSR as well as investing big in the country, which, he said, needs factories to grow its economy.

Agriculture alone cannot help us change our economic fortunes. Selling of raw materials has become economically redundant and unattainable. We need to start adding value to produce through factories if we are to attain tangible economic contribution from our raw materials,

he said.

He, therefore, urged communities to support investors who come to set up factories in their areas saying for Malawi to develop, there is need for mindset change by communities.

Communities need to reduce resistance to development. We need to be open-minded people who welcome and accommodate investors, because, through such massive investments, we will end up being winners as an area, a district, as well as a country,

said Mwafongo.

Shayona Factory Administration Manager Austin Mvula attributed the resilient and success of Shayona to the visionary leadership of the company’s directors with support from management and staff.

Everyone can see we have grown. From a mini struggling cement manufacturing plant, producing just a little above 80 tons of cement per day, we have become a big cement manufacturing plant, with modern equipment,

he said.

He said the vision of the owners of the entity urges to remain steadfast and focus towards achieving big.

We refuse to be compared with any plant in the country because our focus is no longer limited to our country. We know if we have to be the best, we have to have our focus in the regional market and compete effectively there and surely Shayona Cement Corporation has become one of best in the region,

said Mvula.

Even with that, the Factory Administration Manager said they are not yet satisfied and they are pushing harder until Shayona becomes the very best of them all.

He, however, acknowledged that the journey has never been easy and they do not expect it to be easier now.

It is a challenging vision but we believe it is achievable,

he said.

Mvula said since early days, even when they had not started producing cement, CSR has always been at the heart of Shayona Management.

Donations to the education sector, the health sector and of course environment form part of the company’s central policy which is about serving the people.

You will all, therefore, discover that Shayona Cement Corporation is not just about business; we are about total human care,

said Mvula.

Meanwhile, the company has confirmed that works on its new 80 metre high state of the art hi-tech rotary plant which was branded as phase two of factory development is almost done and will be commissioned this year.

Currently Shayona produces 300 tonnes of clinker and 650 tonnes of cement which translate to 13 thousand 50kg packets of cement per day, making it the biggest cement producer in the country. But with the completion of the new rotary plant, the output is expected to rise to 400 tonnes of clinker and 1200 tonnes – 24 thousand of 50kg bags per day, making Shayona one of the biggest cement producers in the region.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

MINING & SOCIAL ISSUES with Ignatius Kamwanje

An Overview of Environmental Impacts of Mining Operations to the Surrounding Communities

Mining operations are perceived to have more overall negative impacts to the communities than the positive ones. In the long run it is the communities that are left  with nothing but sinkholes, displaced families, polluted environment, erosion of culture, social obligation and economic status as time passes, just to mention but a few.

In particular, these impacts are documented in the Environmental and Social Impact Assessment in line with government legislation as a requirement before any mining operation takes off and is commissioned. It is also envisaged that the government spearheads the signing of development Agreements with the mining company on behalf of the communities where mining operation shall take place.

It is a requirement by mining companies in most countries to follow strict environmental, bio-remediation measures and rehabilitation codes in order to minimize environmental and human health impact. These codes and regulations require the common steps of environmental impact assessments, development of environmental management plans, mine closure strategies, planning and environmental monitoring plans or mechanisms. All these assignments are a requisite before mining, during operation and after mine closure. It is envisaged that of particular interest, most governments in developing countries, neglect these regulations through irregular monitoring and enforcement procedures. Mining operations usually create a negative environmental impact hence, most of the countries have passed regulations to decrease the impact together with safety measures that do not prolong environmental pollution from released toxic chemicals even if after the mines are abandoned or closed.

Environmental impacts should ideally be identified and mitigated according to the phase in the mining life cycle. This is a more practical way of dealing with environmental impacts since the scale of impact differs according to stage (e.g. impacts made during exploration are much less than those made in the operational phase). In addition, the environmental monitoring and management varies with each stage of the mining life cycle.

Environmental Impacts during Mineral Exploration Stage

The first stage on management of environmental impacts of mining comes with exploration for a new deposit. Exploration activity usually impacts the least on the environment in comparison to other stages of mining. However, in the past, prospecting and exploration was the domain of non-professional prospectors, who because of lack of knowledge of the market and  requirements of the processing industry, coupled with the absence of professional exploration skills seldom conducted formal investigations or evaluations prior to opening mines. This has led to many ugly scars/sinkholes on the landscape around the world, as full scale mining commenced without any knowledge of the underlying geology, mining methods, pit optimization, grade control, tailings facilities and in these circumstances, mining was  often unsuccessful.

Successful mines provide sufficient information to make an informed decision as to whether or not to proceed to the next stage taking the risks of a negative outcome into account. At each step of this sequence, the environmental impacts are taken into account, and the minimum possible footprint is disturbed. From an environmental point of view this approach has the benefit that environmental disturbances are minimized considering the possibility of a negative outcome. Thus if an exploration project is abandoned after drilling, the environmental impact is that the order of magnitude are lower.

The field evaluation stage of exploration has minimal impact on the environment and impact is caused mainly by the exploration team’s vehicles when they clear existing flora for pathways and drill pads. Should the team choose to establish exploration camps close to the site then further environmental impacts will be caused by fires, sanitation and domestic waste disposal. This also has a minimal impact.

At the detailed mapping stage environmental impacts may start to intensify, particularly if it is necessary to mechanically clean mapping traverses. This may result in removal of vegetation and soil. In other mining types, e.g. quarrying, it is not often necessary to clear paths for mapping as fairly large solid outcrops of stone are often the exploration target and these have minimal cover if at all. Minerals extracted at this stage do not have significant impact, and the extraction sites can be concealed by replacing topsoil, or backfilling. If after detailed mapping is completed it is decided not to pursue the project further, it is relatively easy to replace the removed soil and seed with appropriate vegetation.

From the drilling stage the environmental impacts begin to become more significant, but can still be limited. The most severe environmental and social impact is land clearance caused by road construction for easier access for vehicles and air compressors resulting in damage to natural resource base, possible damage to sites of archaeological, religious or historical importance and health and safety risks to community members, livestock and wildlife.

At the bulk sampling stage the impacts are not considerably more than during the drilling phase, as a relatively small area is disturbed to extract the one or two blocks required. The impacts of bulk sampling are however limited by the relatively small area disturbed. Should a decision be made to proceed from bulk sampling to test mining, the environmental impacts are not significantly different from full scale mining, with the exception that at this stage no permanent infrastructure such as offices, workshops and other houses would be constructed.

Impacts on the natural resource base during the exploration phase may include impacts on soil, agricultural land, forest or woodland resources and surface and groundwater resources. Impacts on soil may result from vehicle traffic, drilling and materials storage resulting in soil erosion; impacts on soil structure (mainly compaction) and soil chemistry (as a result of petrochemical spills). Impacts on agricultural land may result in short term destruction of crops or grazing land or long term impacts due to disturbance of soil or vegetation which may affect long term agricultural viability The quality and quantity of surface or groundwater resources may be impacted by poor storage of chemicals and fuels resulting in spillage; inappropriate waste disposal practices; stream damming or diversion; land clearance in the upstream catchment and soil erosion.

Impacts on biodiversity may include loss of habitat, fatalities resulting from direct contact with exploration equipment and supplies (vehicles, bulldozers, chemicals, waste); Damage to or impacts on access to sites archaeological, religious or historical significance can be incredibly emotive and inflict major damage on the relationship with the local community. Exploration poses a risk to the health and safety of community members, livestock and wildlife through contact with machinery and vehicles; excavations and contact with chemicals and fuels.

Environmental Impacts during the Development Stage

Development is the preparation of the facilities, equipment, and infrastructure required for extraction of the valuable mineral material, and the phase includes land acquisition, equipment selection and specification, infrastructure and surface facilities design and construction, environmental planning and permitting, and initial mine planning. During this phase of many mining projects, there may also be a need for involuntary relocation of communities located in proximity to the proposed mining area. This can be a fatal flaw of a project and should be facilitated by qualified and experienced consultants. Given the nature of the mining methods employed, it is possible to mine safely much closer to human settlements than with most other surface mines and quarries.

In equipment selection, it is necessary to consider the sources of power to be used for the equipment.  If the project is situated at high altitude, consideration must also be given to the fact that the engines of diesel powered earthmoving equipment may require modification in order to operate efficiently. Roads should be designed in such a way as to avoid soil erosion and to cause as little disturbance to flora as possible. Maintenance workshops should be designed to avoid contamination of soil and water by spilled fuel and lubricants.

The construction phase is associated with a number of environmental impacts resulting from excessive site clearance, poor waste management, poor site water management and socio-economic impacts. Impacts that may be caused by excessive site clearance during the construction phase, in addition to those mentioned in the exploration phase, are excessive dust problems, increased soil erosion and increased noise due to vehicle traffic and the use of explosives. The buffer (mainly vegetation), limited noise and dust to local communities may also be removed.

Poor waste management practices at this stage are particularly extensive due to a lack of established waste disposal facilities, ignorance of how to dispose of certain waste streams and failure to train the construction workforce in appropriate waste disposal. The types of waste that need to be disposed of at this point are construction waste, packaging   material, oils and greases from construction fleet, tyres and domestic refuse (should there be camps around the site).

The main environmental impact resulting from poor site water management is associated with storm water management; especially in high intensity rainfall areas. Poor site water management can undermine or destroy structures, limit or even suspend site access, cause major soil erosion and lead to widespread contamination if flood events wash away poorly contained hydrocarbons or chemicals.

Impacts of construction on the social environment have to also be taken into consideration, especially if there is a pre-existing community near the proposed mining project. These impacts include public health risk caused by increased vehicle traffic (dust, hydrocarbon spillage, greenhouse gas emissions) and access to unsecured infrastructure under construction; nuisance factors such as noise, dust and vibration; adverse impact on traditional lifestyle of local communities for example alcohol abuse, prostitution, introduction of a cash economy, in-migration and breakdown of traditional tribal culture.

Environmental Impacts during the Extraction Phase

The major impact of mining on the environment is the aesthetic visual impact upon the landscape. Any mining activity which disturbs the surface of the earth will have a visual impact for its duration. Environmental impacts not associated with infrastructure include impacts to groundwater, surface water and communities. Groundwater inflow in surface mining operations can flood the lower sections of the pit – provided that the pit has surpassed the depth to the water table. High pore pressures in side walls can trigger collapse, leading to catastrophic events.

Disturbance of the earth’s surface by any form of mining will result in complete removal of existing vegetation and ecosystems within the disturbed area, and dimension stone mining is no exception. The impacts are significant, but localized to the disturbed area, and the overall extent of the impact is determined by the concentration of mining and the sensitivity of the disturbed ecosystems. A proper environmental impact assessment (EIA) process will however identify areas where mining would cause irreparable damage, and mining should be excluded from such areas.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

GAM bemoans lack of govt. support in gemstone marketing

By Deborah Manda

The Gemstone Association of Malawi (GAM) has bemoaned lack of government efforts in coming up with strategies which would help small scale miners identify profitable markets for their products.

GAM President John Chikokoto told Mining & Trade Review in an interview that unlike in other countries, Malawi does not have established markets and recommended prices for gemstones hence miners just sell their products at their own desired prices.

One of the challenges facing us, ASMs, is that we do not have established markets where we can showcase and sell our gemstones so if a  buyer comes, we just sell without considering whether we are making a profit or loss,

said Chikokoto.

Chikokoto said GAM has, therefore, proposed to the Department of Mines in the Ministry of Natural Resources, Energy and Mining to facilitate the establishment of market centers for gemstones in all the three regions of the country.

It is sad that up to now the government is still mum on the proposal and miners continue to be robbed by middlemen who buy the stones at unrealistically low prices to sell at whooping profits,

he said.

He explained that it was high time Malawi emulated the cases of countries like Zambia and Tanzania which have well organized ASM cooperatives who are well trained in processing of stones to sell at established market centers.

Zambian and Tanzania are benefitting a lot from gemstone mining because they are well advanced in the trade but here we have nothing to show and we just sell rough stones to middlemen from these countries who add value to the stones to sell for a huge profit,

he said.

Chikokoto, therefore, said it is high time the Malawi government trained the ASMs in modern value addition technologies so that more rough stones are cut and fashioned within the country.

The government has to take prompt action on this issue because it is losing lots of revenue as these middlemen do not pay any taxes since they just smuggle the stones to the neighbouring countries,

he said.

Meanwhile, the Association is currently liaising with Auction Holdings Limited Commodity exchange (AHLCX) to introduce gem fairs.

Chikokoto said AHLCX has welcomed the idea but are only looking for experts who will be engaged to organize the fairs.

Yamikani Jimsole, a small scales miner concurred with Chikokoto that with proper marketing strategies, the gemstone industry can bring more revenue to the country since it has quality gemstones such as rubies, garnets and acquamarine that can compete with the best in the industry.

There is a lot of secrecy in the Malawi market and traders are never on the same page about the value of gemstones. Gem dealers and miners set their own prices with no set valuation standards,

said Jimsole.

But Director of Geological Survey, Jalf Salima, said under the Geological Mapping and Mineral Assessment Project which is funded by the Government of France, the Malawi government has planned to train government geologists on quality assessment of stones to certify them for the international market.

Certainly, this will help a lot in the marketing of local gemstones,

Salima told delegates at the conference in Zomba which was organised by GEMMAP and the World Bank and European Union funded Mining Governance and Growth Support Project.

Through smuggling, Malawi gemstones find their way to international markets with other countries getting recognition and credit as producers.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

A rare opportunity: Gemstone training in Malawi

Efora Energy (formerly SacOil) relinquishes oil exploration licence in Malawi

Prospecting for oil in Malawi’s northern Block 1 has not been successful. As a result, South African company Efora Energy has decided not to renew its prospecting licence.

According to JSE-listed Efora Energy, formerly trading under SacOil Holdings, the prospectivity did not meet project investment criteria. SacOil initially acquired the licence in December 2012.

The company announced in November 2017:

In line with our strategy, we have evaluated our position in Malawi and Botswana and the prospectivity of the respective fields.  Those reviews indicated that the prospects of success on these two fields did not meet with our project investment criteria and as such we decided not to renew the exploration licences when they expired during H1 FY2018.

TECHNICAL FILE by Grain W. P. Malunga FIMMM Minerals and Environmental Management Expert

The Geology and Mineral Potential of Malawi

Abstract

Malawi offers exploration and mining companies’ new hope of investment opportunities. The country has just undertaken airborne geophysical survey for the whole country and the data is being interpreted and ground follow up is underway to confirm the geology of Malawi and over 85 geophysical anomalies that have been detected.

A few mining companies have made progress in pursuing their mineral rights and are looking for financial and technical partnership to open up mines. The new Mines and Minerals Bill is awaiting enactment.

1. GEOLOGY

The geology of Malawi is part of Kibaran orogeny that was formed through continental collision that constructed Rodinia as known in Africa (Dirks et al, 2011). Malawi is mainly composed of Archean and Paleoproterozoic (Ubendian) terrain.  This terrain is dominated by what is known as Basement Complex rocks which were later overlain by Karoo sedentary rocks and intruded by basaltic/dolerite dykes and sills.

The Permo-Triassic period was later followed by Upper Jurassic – Lower Cretaceous period which saw the intrusion of syeno-granitic and nepheline syenite rocks that were later intruded by volcanic rocks infilled by carbonatite and alkaline dykes. The Southern part of Malawi is dominated by these rocks and have been grouped as Chilwa Alkaline Province. The same period saw sedimentary deposition characterized by Dinosaur Beds.

The above rocks have been overlain by Tertiary – Pleistocene rocks characterized by consolidated to semi consolidated beds grouped into Timbiri, Chiwondo, Chitimwe and Alluvial. Minor volcanic activities have been witnessed through existence of Songwe Volcanics.

2. STRUCTURE

The structural set up of Malawi is influenced by Lake Malawi rift structure. Main faults strike north – south while transform faults strike north – east. The southern part of the country, within the Chilwa Alkaline Province, radial faulting may be encountered due to volcanic activities related with intrusion of carbonatite rocks and other infracrustal ring structures.

Mineral resources in Malawi are attached to the Basement Complex and the Chilwa Alkaline Province. The Basement Complex hosts economic deposits of marble for lime and cement, graphite, niobium. The Chilwa Alkaline Province hosts rare earths, strontianite, fluorite, manganese, rock phosphate and barite. Coal and uranium exist in Karoo rocks.  Bauxite occurs as residual deposit on Mulanje and Zomba Mountain.

4. MINING COMPANIES

Malawi has several exploration companies looking for uranium, rare earths, niobium, graphite, rock phosphate, coal and titanium minerals (Table 2). All minerals except uranium are at pre-feasibility study.  Uranium mining was halted and the mine was put under care and maintenance.

Other companies are exploring for gold, titanium, dimension stone and limestone.

Paladin Africa Limited has uranium mining under care and maintenance due to low prices of uranium on the world market.

Mkango Resources have done detailed exploration for rare earths at Songwe in Phalombe District. They are looking for technical and financial partners to go into bankable Feasibility Studies.

Globe Metals and Mining are exploring for niobium and have credits of zircon and uranium at Mabulabo in Mzimba District. They are looking for serious technical and financial partners to go into mining.

Sovereign Metals have done detailed exploration for flake graphite in Lilongwe and surrounding districts. They have found world class deposits and are going into pre-feasibility study where they will undertake socio economic and technical studies in order to go into mining and processing of saprolite graphite.

Optichem (2000) Limited and Mota-Engil are jointly assessing Tundulu Phosphate on Nanthache Hill, Phalombe,  in order to mine and process phosphoric acid and rare earths.

Crown Minerals are exploring for heavy mineral sands (titanium) at Tengani in Nsanje. They are at pre-feasibility study level and are looking for technical and fincial partners to come up with a process flow sheet for separating rutile from ilmenite.

Other junior companies are looking for heavy mineral sands at Makanjila Mangochi, gold in Mangochi, Lisungwe Valley in Neno/Balaka and Dwangwa in Nkhota Kota.

Several small companies are mining coal in northern Malawi. Kasikizi Coal Mine is mobilizing to mine coal at Vungu in Mwankenja coalfield. This is expected to be the main producer of coal in Malawi by end of 2018. The company intends to supply coal for the manufacturing industry and thermal power industry.

5. IMPROVED PROSPECTIVITY

Recent Airborne Geophysical Survey popularly known as Kauniuni has given hope into improvement of the knowledge of the geology of Malawi and over 85 geological anomalies have been detected and are being pursued by a consortium of Geophysical Surveys of France and Finland. Most interesting are prospectivity for gold in Central Malawi and northern Malawi, rare earths in southern Malawi and niobium in south and central Malawi.

6. FISCAL REGIME

The fiscal regime associated with mining investment was enacted by Parliament in 2016 and provides a long term stability period to accommodate long term payback period associated with mining investment. The provisions in this fiscal regime will become effective once the new Mines and Minerals Bill is enacted by parliament. Issues of benefit sharing and community engaged have also been addressed.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

EDITORIAL with Marcel Chimwala

Malawi needs more marketing of its mineral potential

As reported in our lead article, the results coming out of the Geological Mapping and Mineral Assessment Project (GEMMAP) are quite exciting.

The project, which is funded by the French government, is coming up with results that are confirming that Malawi is endowed with numerous mineral resources that can be exploited for the benefit of the country.

The mineral resources include bauxite, uranium, gold, gemstones including the most expensive rubies and sapphires, marble, coal, iron ore, niobium, tantalum, graphite and rare earths which have been discovered in large quantities in the Southern Region’s Chilwa Alkaline Province.

There are also anomalies for diamonds and platinum group metals which would require follow up studies.

GEMMAP is, among other things, interpreting the high resolution data acquired through the recent Countrywide Airborne Geophysical Survey dubbed Kauniuni, which was funded by the World Bank and European Union as part of the Mining Governance and Growth Support Project (MGGSP), and other similar surveys executed in the past.

We commend the government and its cooperating partners namely the World Bank, European Union and the French government for funding GEMMAP and MGGSP, which are proving that Malawi just like its neighbouring countries with similar geological environments is also a mineral rich country.

Listening to the presentations that were made at the recent GEMMAP/MGGSP conference in Zomba, one would indeed tell that with these projects in full throttle, Malawi is on course to transform its minerals sector.

The interpreted data from these projects will surely be an asset for Malawi in attracting investment in the minerals sector.

One interesting aspect of GEMMAP is that it is also overhauling the data storage system at Geological Survey Department so that data is stored in digital and not analogue form as has been the case.

This is very important as it has been cumbersome for investors to access data with the analogue system.

It is also commendable that GEMMAP is providing on-the-job training to Malawian geologists as this will ensure that Malawi has practically equipped geologists who will be up to the task even when the international experts engaged to execute the project finish their work.

MGGSP on its part has also played a great role in several aspects including reviewing the curricula for mining related courses in the country’s tertiary institutions so that they are in tandem with practical requirements of the industry, development of the cadastral licensing system at the Department of Mines and financing the review of the archaic Mines and Minerals Act.

We feel these reforms are enough to transform Malawi’s mineral sector to be at par with that of neighbouring countries in these days when nations are competing for investment in the sector.

However, it is imperative that Malawi scales up its marketing campaign to attract investors in the sector as the country does not have a rich mining history.

In order to attract investors, the government must also be decisive in handling of licence applications for large scale mining ventures because mining investors will always favour a country where fellow investors are undertaking successful mining operations.

It is absurd for the government to just shelve applications for mining licences because it is scared that there will be outbursts from the civil society.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Sovereign Metals constructs boreholes for Malingunde community

By Deborah Manda

ASX-listed resources group Sovereign Metals has constructed two boreholes for Kumalindi and Ndumila villages and repaired one for Chiyamika Village in Malingunde area in Lilongwe where it is prospecting for flake graphite.

Sovereign Country Manager Andries Kruger said at the official hand over of the boreholes that the company has executed the works in response to a request from members of community, who have been complaining of lack of access to portable water.

Group Village Heads Pindeni and Chitsulo approached us to assist them with boreholes as their subjects used to walk long distances to fetch portable water so Sovereign, as a socially responsible corporate citizen, decided to help. Today we are very happy to be handing over the boreholes to the community,

said Kruger.

Member of Parliament for the area Peter Dimba said that he is very grateful to the company for the boreholes adding that he expects Sovereign to implement more development projects in the area as part of corporate social responsibility.

We expect to have a community development agreement in place so that we, people of this area, adequately benefit from this treasure beneath our ground,

said Dimba.

Guest of honour at the function Lilongwe District Council Chairperson John Kawinga said the boreholes will go a long way in providing portable water which is very significant at this time when the country has been hit by an outbreak of cholera.

Kawinga said:

The Council is very thankful for the timely gesture from Sovereign because access to safe water is a right for everyone.

I urge the communities to take good care of the boreholes.

said Kawinga.

He also touched on the issue of compensation for the people affected by the project assuring them that they will get their full compensation package when the company starts mining as in exploration stage their entitlement is just a disturbance allowance.

Sovereign Metals operates in Malawi through its subsidiary Sovereign Services.

The company has been conducting exploration at the Malingunde site which has confirmed the presence of sizeable quantities of high grade flake graphite, and is now planning to launch a feasibility study.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Malawi Govt. lauds strides in formalising ASM operations

By Deborah Manda

Government says it is making strides in its quest to formalise Artisanal and Small-scale Mining (ASM) operations so that they adequately contribute to the country’s economy.

Director of Geological Survey Department Jalf Salima told Mining & Trade Review upon his return from an Inter-Governmental Forum (IGF) on ASMs in Geneva, Switzerland that despite some difficulties that the Malawi government is experiencing in managing ASM activities, at the meeting Malawi was one of the shining examples of countries that are progressing in formalising the activities.

The meeting’s theme was “Managing Artisanal and Small Scale Mining” and Salima told the delegates that Malawi has already developed a draft ASM policy, which is a guideline to manage ASM activities.

The draft policy, which the Ministry of Natural Resources, Energy and Mining has developed with funding from the World Bank and European Union under the auspices of the Mining Governance and Growth Support Project, is currently being scrutinized by government officials before its adoption.

In the draft policy unveiled in March 2013, the government says it recognizes the contribution of the ASM subsector to the economy which includes the discovery of mineral occurrences, mineral production, creation of employment and generation in the rural communities.

Salima said in view of this, the government is committed to support the subsector by facilitating the transformation of the ASM activities into more organized and modernized mining practices, and further promote modalities of mineral marketing which encourage transparent business transactions and discourage smuggling.

Malawi will integrate the knowledge gained at the IGF to integrate informal ASM activities into the legal, formal economic systems and reduce the social and environmental impacts of ASM,

said Salima.

He said the government is also formalizing ASMs by encouraging them to obtain Non-Exclusive Exploration Licences (NEPL) and Mining claims for them to operate legally.

We are also facilitating the formation of mining cooperatives to enable them access technical services and financing as groups rather than individuals. There is also a provision of training in basic geology, mining, mineral processing and marketing done jointly with other organizations such as Technical Entrepreneur Vocational Education and Training (TEVET) and Ministry of Trade,

said Salima.

He said that the Ministry is also promoting legal marketing of minerals and local value addition besides monitoring ASM activities to ensure that they are operating according to basic health and safety standards and following environmental regulations.

He said that at the IGF meeting, Malawi gained some knowledge and experience through presentations, panel discussions, plenary, and sharing experience with participants on how to manage ASM, which they will put to use.

The Guidance to Governments on managing ASM document was discussed and shared, its content will complement the ASM Policy being drafted by the Ministry of Natural Resources, Energy and Mining in coming up with an ASM implementation strategy for Malawi,

said Salima.

But he said although government is progressing in   managing ASM, there are a lot of challenges just like in many other countries as ASM is a poverty driven activity.

Many people are engaged in ASM to sustain their livelihoods and this usually follows crop failure or is practised due to unemployment or the desire to supplement household income.

Most ASM are informal thus they operate without licences and they lack basic geological knowledge that can help them in prospecting and mining which leads to destruction of the environment,

he said.

Salima also bemoaned the ASMs use of rudimentary methods of mining which results in low production and poor quality products since the small-scale miners cannot purchase proper equipment for mining to produce high quality minerals.

With lack of capital to invest in exploration, equipment and mining, banks are reluctant to provide loans to ASMs hence they fail to process minerals and, therefore, most of them sell rough minerals usually at low prices which leads to illegal trading of mineral products,

said Salima.

There is also the challenge of conflict with land owners and large scale exploration and mining companies as ASM say that large scale companies encroach in their territory.

Chikomeni Manda a Small Scale Miner from Mzimba who also attended the IGF said that the meeting emphasized on ASM formalization and financing as a lot of ASMs operate without proper documents and if they could be formalized it will help to boost government revenue in form of taxes.

About 1% of ASMs are licensed while the rest are operating illegally. If they could be formalized it will help the government to have reliable data on how much we are extracting and exporting,

said Manda.

He also added that if ASMs are formalized it can be easier to acquire good technology and loans from financial institutions through associations and cooperatives.

The Intergovernmental Forum is an interactive meeting that gathers representatives from members and observer member governments, mining companies, industry associations and civil society and academia to discuss the linkages and interaction between artisanal and small scale mining and Development.

The IGF, Minerals, Metals and sustainable Development 13th Annual General Meeting focused on Guidance to Governments on managing ASMs and was attended by delegates from over 60 countries across the globe.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 58 (February 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Malawi’s EITI Multi-stakeholder group 2018-2020 (courtesy of MWEITI)

A new multi-stakeholder group (MSG) is in place for Malawi’s Extractive Industries Transparency Initiative that aims at ‘National sustainable development through revenue transparency‘. This group comprises representatives from government, the private sector and civil society that are responsible for overseeing the implementation of EITI in Malawi. The first group was in place for 3 years and I had the privilege to represent civil society for 2.5 years.

Each year, an EITI report is produced that reconciles payment information on the forestry, mining and petroleum sector and provides a series of recommendations. The first report was finalised last April and the next one is expected in two months and should include information on what progress Malawi has made in governing its resources.

I wrote three short posts about last year’s report

• 10 things I learned from Malawi’s first EITI report
• 10 recommendations from Malawi’s first EITI report on forestry, mining, oil & gas
• 10 questions I have after reading Malawi’s first EITI Report

For the next three years, the different stakeholder groups have selected as representatives:

Government (typically less/no changes)

• Ministry of Finance, Economic Planning and Development (remains same)
• Department of Mines (remains same)
• Malawi Revenue Authority (new – had been permanent observer in first MSG)
• Reserve Bank of Malawi (remains same)
• Office of the Auditor General (remains same)

Private sector

• Bwanje Cement Company (remains same)
• Shayona Cement Corporation (new)
• Sovereign Metals (new)
• Mkango Resources (remains same)

This means Paladin and Globe Metals & Mining are no longer sitting on the MSG.

Civil society

Take a look at their announcement letter here.

• Foundation for Community Support Services (remains same)
• CCAP Livingstonia  Synod – Church & Society Programme (new; chair of Publish What You Pay Malawi)
• Centre for Environmental Policy and Advocacy (new; host of Publish What You Pay Malawi)
• Oxfam Malawi (new)

This means ActionAid Malawi, Citizens for Justice, and the Catholic Commission for Justice and Peace have been replaced.

Now that the new group is in place, they will be tasked with developing a new fully-costed work plan and ensuring recommendations are translated into action.

MWEITI shared the news via Twitter:

MWEITI MSG member organisations for the next three years up to December 2020!..https://t.co/wY9ybQchQo pic.twitter.com/jixDTRJJWK

— MWEITI (@MweitiMalawi) March 1, 2018

Malawi’s Mining, Oil and Gas News #33

February 2018

Government corner

Malawi was at the Investing in African Mining Indaba and the Alternative Mining Indaba in February in Cape Town.

#MiningIndaba18 Malawi – An emerging exploration and mining destination presented by Hon. Agreey Masi, the Minister of Natural Resources Energy and Mining @MalawiGovt pic.twitter.com/SmvAZex3RP

— PanAfGeo (@PanAfGeo) February 7, 2018

•  Govt courts investors at SA mining indaba

Malawi’s Mphatso Kapokosa and Ellen Nakoma also presented experiences on implementing Malawi’s new mining cadastre during the Trimble Landfolio conference following the Indaba. Access the online public cadastre here: http://portals.flexicadastre.com/malawi/

Challenges and successes of Malawi’s @TRMB_Landfolio mining cadastre implementation. Cloud hosting key to regional connectivity. pic.twitter.com/DE1WJUUTOV

— Nick Holleman (@nickholleman) February 9, 2018

The Geological Survey Department now has a Geological Data Management and Information system. This system has been financed the the World Bank Malawi Mining Growth and Governance Support Project and is

based on web-technology, allowing the administration and evaluation of non-public data (Intranet) and the promotion of public data (Internet) to attract potential investors of the extractive industry. The new website will be published soon – after pending clearance of some data copyright issues.

A potentially useful site (iGuide) for investors was launched by the Ministry of Industry, Trade and Tourism. Take a look for yourself: http://www.theiguides.org/public-docs/guides/malawi

From the private sector

Malawian-focussed companies also attended the Mining Indaba. Watch Sovereign Metals Managing Director discuss the company’s Malingunde Graphite Project. Recent updates include:

Engineering: DRA Global (Minnovo Pty Ltd in Perth) has been selected as the project engineering consultant and have started a review process of historical project information. DRA have significant experience in the development of graphite operations in Africa and North America. 

Mining: Pit optimisations have been completed and preliminary mine schedules developed. Requests for quotes have been sent to mining contractors for costing purposes. Detailed mine design will commence shortly.

Resource drilling: 210 holes for 6,212 metres of aircore drilling was completed in late 2017, with the first batch of high grade aircore results released to the market. Further assay  results to define and upgrade the resource classification levels and to test graphite mineralisation at Malingunde South Extension and other targets will be reported as they become available.

Processing: A program to test the suitability of a scrubber in place of primary crush and mill units at the front-end of processing is progressing well. Variability testwork has also commenced, with results from both programs to be reported once received.

Infrastructure: A location study for the tailings storage facility, waste dumps, stockpiles and processing plant has been completed and preferred options selected. Pump testing of the new hydro-monitoring wells for pit dewatering investigations are nearing completion.

Environmental: Baseline specialist environmental studies are continuing with wet season site visits in progress. The ESIA Scoping Study report is scheduled for completion in late Q1.

Social: The first round of stakeholder consultations has been completed. A second round of consultations will commence after the submission of the Scoping Study report.

Corporate Social Responsibility: In late 2017 the Company installed two water bores for the communities surrounding the Malingunde Deposit. An inauguration ceremony for the bores involving the community, government and NGO representatives was recently held.

PFS on schedule: The PFS remains on track for completion in mid-2018, with certain work programs designed to continue directly through into the DFS stage.

Malawi’s Block One for oil exploration was relinquished by Efora Energy (formerly SacOil) following the company’s initial exploration work.

Shayona Cement, Sovereign Metals and Mkango Resources all shared news about their corporate social responsibility projects this month.

• Sovereign Metals constructs boreholes for Malingunde community
• Shayona forges ahead with CSR despite poor business environment
• Education tops Mkango corporate social responsibility

Paladin’s half year financial report (December 2017) released this month shows the company has made some progress is addressing its tight financial situation. It started trading again on the Australian Stock Exchange (ASX) but has been delisted from the Canadian Stock Exchange (TSX). The company’s strategy continues to be:

Our exploration business and KM [Kayelekera Mine] are being maintained on a minimal expenditure and care and maintenance basis until such time as the uranium price recovers substantially.

Malawian rubies were set to be at the ‘UK’s first ethically sourced gemstone fair‘. However, given the currently contested change in ownership of mining licence for Nyala Mine (Ntcheu), it is not clear if stones mined will be considered ‘ethical’ in future.

For those involved with small-scale gemstone mining, there will be an opportunity for training later in the year: A rare opportunity: Gemstone training in Malawi (date & venue TBA)

Community rights

With the assistance of the Livingstonia CCAP Church and Society Programme, community members in Kanyika are taking Globe Metals & Mining and the government to court for ‘disruption of livelihood‘.

And a documentary made by student Jacqueline Chiwale ‘The resource curse in Mwaulambo’ about Eland Coal Mining Company’s abandoned coal mine in Karonga, Malawi, is available on YouTube. As one reader pointed out, the use of ‘resource curse’ is not correctly used. Norwegian oil magnate Berge Gerdt Larsen has a stake in the mine, according to Human Rights Watch.

Doing business

Of course, the electricity situation continues to dominate headlines:

• EU pledges €20m for Malawi-Moza power project
• Egenco shifts gensets arrival dates again
• New dams in Africa could add risk to power supplies down the line
• Coal against power blackouts
• President Mutharika commissions 55 megawatts of power supply, says it is the end of poverty

And there may be some positive news for coal producers in Malawi with developments in the region

• New coal terminal planned for Beira could be a gateway to the east
• Indian investment in Mozambique aims to reduce logistics cost for coal miners

It is also worth knowing that the Malawi Electoral Commission has announced the date for the next tripartite elections: 21 May 2019.

And in other news

This will be my last news roundup for a few months as I head on maternity leave.

Australian-listed Sovereign Metals through its wholly-owned subsidiary McCourt Mining is developing Malingunde Graphite Project in Lilongwe District, Malawi. Currently in its exploratory phase, Sovereign plans to complete the bankable feasibility study by the end of 2018. Sovereign is also carrying out an Environmental and Social Impact Assessment through consulting groups Dhamana Consulting (Australia), AECOM (South Africa) and C12 (Malawi).

A draft Environmental Scoping Report (ESR) is now available for comments as per Malawian legislation and international requirements. The public has until 13 April 2018 to review the ESR that can be downloaded from Sovereign’s website: http://sovereignmetals.com.au/building-malingunde/. The report is also available:

• Offices of C12 Office Number 7, Skyband Complex, off Paul Kagame Rd, Lilongwe
• Environmental Affairs Department (EAD)
• Lilongwe District Council Offices
• Offices of the Traditional Authority for the Malingunde area

This is the second round of public engagement. Comments and questions raised in the first round have been listed in Appendix H with the company’s response.

Wrangle over Ntcheu rubies

…Nyala Mines Limited injunction vacated

…New owner kick-starts geological assessment

By Chiku Jere

Government has won a legal battle involving mining rights for the highly-valued Chimwadzulu Hills corundum deposit in Ntcheu after previous tenement holder, Nyala Mines Limited, had sought a court injunction stopping authorities from awarding the tenement to a new applicant.

Acting Director for Department of Mines Atileni  Wona confirmed to Mining & Trade Review that the new licence holder Mwalawanga Mining Limited which was awarded the mineral rights for Chimwadzulu was failing to kick-start its operations on the mine site due to Nyala’s court action after government rejected the latter’s application for renewal of the mining licence.

The government rejected Nyala’s renewal of the licence due to the company’s breach of some licence requirements, among them, failure to submit the application a year earlier before the expiry of the 10-year licence.

It is also alleged that the company was under-declaring production and was incessantly claiming that it was not making any profits, which deprived government of revenue from the extracted minerals.

New licencee Mwalawanga Mining Limited is said to be owned by several individuals, among them, lawyer Ishmael Wadi, who is running front-line operations.

When Mining & Trade Review inquired about how far the new company has gone in as far as commencement of operations, Wadi said the company is ready to start implementing plans, but it was failing to go full-throttle because of the legal battle between government and the previous licence holder.

We have already been formally introduced to the communities, and we have started partial engagements with them in as far as corporate social responsibility and community development agreement are concerned. We, also, have deployed our geologist on the site who is doing some geological assessment. The only thing holding us back is the court case between the previous licencee and government. Once that is cleared, we are ready to go,

said Wadi.

He also reported that Nyala has maintained its security personnel at the site who are guarding the new equipment that the company bought.

So as you can see, there is need to have these issues amicably ironed out first before we fully start our operations,

said Wadi, adding that his company was open to discussion with Nyala for the two entities to reach a deal which will allow Mwalawanga to hire or rent Nyala’s equipment.

But Wona said the successful vacation of the injunction by government means that the new licence holder can go ahead with operations, as the court found that the grounds of argument that Nyala Mines Limited presented were not holding water.

In essence, the court found our action of rejecting Nyala’s licence renewal application not in conflict with any law, hence the vacation of the injunction implying that government’s decision has been upheld and validated,

claimed Wona.

Meanwhile, US-based buyers for Chimwadzulu mine products have expressed interest to work with the new licence holder in ensuring that there continues to be a ready market for the products.

US-based International Mining Consultant, David Hargreaves of Fair Trade Gemstones Ltd, told Mining & Trade Review in an email that despite the change in ownership of the mineral rights, his company is still interested to continue buying from the mine and promoting it worldwide.

He said:

I am a regular reader of your magazine. My interest in Malawi dates back to the early 1990s when I redeveloped the Chimwadzulu gemstone mine.

My company, Fair Trade Gemstones is still interested to buy from the mine and promote it worldwide through its associate, Columbia Gem House of the USA.

Columbia Gem House has done much work in developing the marketing and the financing of local facilities, including schools, hospitals and water.

Hargreaves also said he could be materially useful to the restoration not only of the mine but also the furtherance of the gemstone industry in Malawi.

If any of the involved parties wishes to contact me, we can progress. I bring over 20 years of experience of the project to the table. I appreciate that Malawi would like to build a mining industry, but it needs help. I consult to many of the leading gemstone producers worldwide and would like to help Malawi,

he said.

Wadi welcomed the proposal from Fair Trade Gemstones saying his company is ready to work with any party in the development of the mine at all levels starting from production to marketing.

I find their proposal interesting, let them come up with something on the table,

he said.

Rubies and sapphires are highly valued gemstones and when well processed, their prices outdo diamonds on the world market.

Government has not yet made public the terms of the licence for Mwalawanga and when asked in an earlier interview Wona only said “we are working on the terms.”

However, the Government signed a development agreement with the previous licence holder Nyala Mines which stipulated that locals have 30% participation in the mine, 10% of equity is issued to government, and the government also receives 10% royalty of the gross value of corundum exported.

Under the agreement, Nyala was exempted from resource rent tax, value added tax on capital purchases, duty and tax for imported materials, equipment and consumables for use in mining and processing of minerals.

There was also a provision for training to Malawians, support to local education and health sector and annual provision of US$20,000 for corporate social responsibility projects in the locality.

The development agreement also required Nyala to set up a lapidary in Malawi to ensure that the minerals are processed locally.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Malawi markets mineral potential at SA Indaba

…Mission very successful – Masi

By Marcel Chimwala

Minister of Natural Resources, Energy and Mining, Aggrey Masi, has described Malawi’s participation at this year’s International Mining Indaba in Cape Town, South Arica as a very successful undertaking in marketing Malawi’s mineral potential to global investors.

Masi was speaking after leading a delegation of eight officials from his Ministry to attend the Investing in Africa Mining Indaba, the world’s largest mining investment conference, which was held at the Cape Town International Convention Centre from February 4 to 9.

The 2018 Mining Indaba was very successful as Malawi managed to promote its mineral potential on a global scale. The projects presented at the country case study attracted a lot of attention as the minerals being explored for are currently designated as strategic minerals,

said Masi.

He said at the Malawi booth, his Ministry displayed updated geological, geophysical, geochemical and Mineral Resources and Occurrence Maps, posters and burners obtained courtesy of the World Bank and European Union funded Mining Governance and Growth Support Project (MGGSP) and French supported Geological Mapping and Mineral Assessment Project.

The Minister says the updated data attracted a lot of attention from the Indaba participants including potential investors.

The materials that were displayed and were handed out to those patronising the booth also included a booklet on Georesources of Malawi, a pre-assessment; brochures on Songwe Rare Earth, Tengani Titanium and Malingunde graphite projects; leaflet on Country-wide High-Resolution Airborne Survey and GEMMAP; leaflet on Mineral Tenements and Licensing procedures; leaflet on Reforms in Mining Sector of Malawi; one hundred memory flush disks containing information on geology and mineral resources of Malawi and the regulatory frame-work and computer demonstration of the mining cadaster system.

Masi said:

The booth was the venue for interaction between the Malawi delegation and a cross-section of delegates.

Patrons to the booth enquired highly about the mineral resources of Malawi especially rare earth elements, uranium, coal, copper, gold, limestone, dimension stones, heavy mineral sands, platinum group metals and graphite.

They were also interested to know how they can access the country’s geoscientific data, procedures for acquiring mineral rights including updates on the installation of the mining cadaster system, progress on the review of the Mines and Minerals Act and other regulatory reforms being undertaken and the prevailing investment climate in Malawi’s mineral sector including incentives offered to mining and exploration companies.

The Minister attended a number of sessions at the conference and delivered a key note address entitled “Malawi an Emerging Exploration and Mining Destination,” which highlighted the geology and mineral potential of Malawi; prevailing policies and the regulatory framework, specific mining projects, investment opportunities along with the country’s mining vision and incentives.

Director for Geological Survey Department Jalf Salima made a presentation on Geological Information available in Malawi.

Four exploration companies working in Malawi were also given the platform to present their projects including Crown Minerals on Tengani Titanium Project; Globe Metals on Kanyika Niobium Project; Sovereign Metals on Malingunde Graphite Project and Mkango Resources on Songwe Rare Earth Project.

The companies expressed concern over the delays in the enactment of the Revised Mines and Minerals Bill (MMB) and the launch of the Geodata Management and Information System (GDMIS) for ease access to geodata.

Masi assured the audience that the bill shall be tabled in the May-June 2018 parliamentary session while the GDMIS will be functional by mid-March 2018.

There were also worries from the investors on unrealistic community expectations from mining projects, and the Minister assured the companies that such issues have been addressed in the new law.

The companies requested for tax waivers on mining and exploration equipment and Masi assured them that such exemptions shall be provided upon submission of a request by the companies to the Ministry of Finance.

Inadequate energy in Malawi for mining was another issue raised at the conference. I highlighted the initiatives government is pursuing including the Kam’mwamba Coal fired project, Interconnector with Mozambique, and the Independent Power Producers (IPP) initiative,

said Masi.

The investors further talked on the need for government to rehabilitate roads to potential mining sites and address resettlement issues around mining project sites.

The Minister told the investors that he will take up the issue of road rehabilitation with the Ministry of Transport and Public Works and work with the Ministry of Lands for smooth and orderly resettlement process.

At the Indaba, Masi also met representatives of cooperating partners including the World Bank and the African Legal Support Facility (ALSF)/International Senior Lawyers Project (ISLP) of the African Development Bank (AfDB).

On February 5, 2018, The Hon. Minister had a meeting with Mr. Christopher Sheldon of the World Bank. The Hon. Minister expressed his gratitude to the Bank for the assistance to Malawi, especially through MGGSP. The Hon. Minster highlighted the achievements of the project and how the project has transformed the mining sector,

reads the report from the Ministry of Natural Resources, Energy and Mining detailing Masi’s engagements at the global forum.

The report says Masi requested for the need for a follow up project as MGGSP is phasing out in March 2018.

Masi suggested that the follow up project must build up on the foundation laid by the current project and should include; ground follow up of geophysical anomalies from Kauniuni, construction of minerals laboratory, capacity building and review of the petroleum legislative framework.

Mr. Sheldon assured the Hon. Minister his support towards the follow up project. He advised that the issue should be brought before the Minister of Finance for inclusion in the financial package that the Bank provides to Malawi,

says the Ministry in the report.

Masi also attended a consultative meeting of African Mining Ministers on February 8, which was convened by the World Bank Group in collaboration with the AfDB and International Finance Corporation (ICF). The discussions focused on Sustainable development; increasing investor confidence and economic growth, mineral trade competitiveness, challenges, prospects and access to geological data.

The key issue during plenary was on World Bank’s support towards the acquisition of competitive and up to date geoscience data which is key to mining; strengthening of the weak governance structures prevailing in most African countries and mineral revenue management.

The World Bank urged the Mining Ministers to engage their colleague Ministers for Ministry of Finance to allocate a portion of the World Bank country financial support package towards reforming the mining sector,

says the report.

The AfDB delegation that met Masi was led by Steven Karangizi who informed the Minister about the Bank’s support towards legal advice and capacity building to African countries on venture and fund litigation, complex commercial negotiations, and related sovereign transactions.

He also informed the Hon. Minister about the Bank’s approval of the Songwe River Power Generation Project and an offer to assist in renegotiation of the Pacific and RAKGAS Petroleum Sharing Agreements.

He advised that Malawi should submit a formal request on capacity building and setting up of a multi-sectoral contract negotiating team,

says the report.

The Minister also held a fruitful meeting with a Japanese delegation led by Dr. Masaki Oguchi, Parliamentary Vice Minister for the Ministry of Economy, Trade and Industry of Japan.

The discussions focused on Japan’s interest in minerals such as nickel, cobalt, graphite, lithium following the advent of electric vehicles and green energy.

They also focused on Japan’s continued assistance to Malawi on capacity building in the areas of geological information systems and remote sensing for Malawian Geoscientists.

The Hon. Minister expressed gratitude for the technical assistance Malawi gets from the Japanese Government. He pledged government’s support to exploration companies from Japan investing in Malawi,

says the report.

The report also mentions the meeting that Masi held with Bill Johnstone, Minister of Minerals, Petroleum, Commerce, and Industries of Western Australia (WA) in which he highlighted the mineral potential of Malawi and extended invitation to companies from Australia to invest in Malawi.

Masi acknowledged some companies from Australia working in Malawi including; Paladin Africa, Globe Metals and Sovereign Metals and Johnstone informed the Malawi Minister that Western Australia is the hub of mining in Australia and has many opportunities from which Malawi can benefit from.

The opportunities include: World class universities for capacity building; Reputable mining service companies in areas of mineral processing, engineering, and finance; Australian Scholarships to deserving students to study in Australian Universities; Vast experience in the oil and gas sector that can be shared; In-country training programs offered by experts from Australia; and Experience in community   engagement, environmental management and occupation health and safety that can be shared.

Hon. Johnstone invited the Hon. Minister to visit WA especially during the 2018 Africa Down Under Conference hosted in Perth in August for further discussions and visit to mining facilities,

says the report.

Masi also courted investors from Canada when he met Paula Caldwell St-Onge, Director General, Pan African Bureau for Canada and highlighted the mining potential of Malawi to which Canadian companies can invest.

The Canadian delegation in turn highlighted the areas for possible cooperation including: Capacity building targeting women, vocational training and oil and gas; Renewable energy technology; Community engagement and development; and Environmental management.

Mrs. Caldwell invited the Hon. Minister to attend the 2019 Prospectors and Developers  Association of Canada (PDAC) Conference which will offer an opportunity to Malawi to promote its mineral sector to Canadian and global audience,

says the report.

The Minister also attended the Ministerial Symposium, which is the only event on the African continent that engages the most prominent mining CEOs, African Mining Ministers and the major industry organisations and multilaterals such as the World Bank Group, United Nations Economic Commission for Africa (UNECA), Chamber of Mines South Africa and the African Development Bank.

The 2018 Mining Indaba was attended by over 7000 delegates from exploration and mining firms, mining service providers, investors, and government, who included 36 African Mining Ministers.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

EDITORIAL

We demand transparency from govt. on Chimwadzulu mine issue

It is interesting that government, which usually loses court cases, has successfully vacated an injunction which an investor, Nyala Mines, obtained restraining the Ministry of Natural Resources, Energy and Mining from awarding the Chimwadzulu Corundum licence to another miner, Mwalawanga Mining Limited.

The development certainly implies that the new investor, whose hands were tied by the injunction, is now free to start work at the mine for rubies and sapphires, the most expensive gemstones which are priced more than gemstones when well processed.

In fact, there were a number of reasons why the government never granted an extension of the 10-year mining licence to Nyala ranging from delays to apply for the extension of the licence, allegations of under-declaration of revenue from the mine for tax evasion purposes and failure to meet environmental conservation requirements.

We will not go into detail to try to prove these allegations because as the case has ended in government favour, these are water under the bridge.

However, our concern is lack of transparency on how the government has taken on board the new miner for these precious stones.

We are told this so called Mwalawanga Mining Limited is owned by a local consortium with renowned legal bull Ishamel Wadi as a front man but it is surprising that the other Directors who are to benefit from this Malawian treasure are still not known.

We would have expected the government and the Directors to come forward and address the media on what their plans for the mine are, their budget for development of the mine and what they have in store for the people of Malawi and Chimwadzulu community in particular.

In fact, the government signed a development agreement with the previous investor, Nyala Mines, which stipulated that locals have 30% participation in the mine, 10% of equity is issued to government, and the government also receives 10% royalty of the gross value of corundum exported.

Under the agreement, Nyala was exempted from resource rent tax, value added tax on capital purchases, duty and tax for imported materials, equipment and consumables for use in mining and processing of minerals.

There was also a provision for training to Malawians, support to local education and health sector and provision of US$20,000 annually for corporate social responsibility projects in the locality.

The development agreement also required Nyala to set up a lapidary in Malawi to ensure that the minerals are processed locally.

This implies that government, among other things, used this development agreement to assess the eligibility of Nyala to be granted an extension of the licence.

But what about this Mwalawanga Mining Limited; how is the government going to monitor and assess its operations if we are not told that there is a   similar development agreement in place?

The other question we have is on the competency of the company to successfully invest in such a mining venture.

We are told Mwalawanga is a new company; so did the government undertake any due-diligence on the company to find out if it has the technical know-how, financial muscle and market advantage for such a venture?

Certainly, such questions will keep on boggling the minds of Malawians more especially people of Chimwadzulu if the government continues to keep the licence terms for Mwalawanga under wraps.

This lack of transparency on the part of the government is also a threat to the strides that the country is making in fulfilling the requirements of the Extractive Industry Transparency Initiative (EITI), a global standard for good governance of oil, gas and mineral resources.

The other point is that it is laughable that guards for the two companies are still at Chimwadzulu with Nyala Guards guarding equipment and Mwalawanga guarding the precious stones which were being illegally mined by invaders.

We advise the government to sort out this mess by using its influence to do away with the previous investor and let Mwalawanga get to work.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

Sovereign targeting 2020 for commissioning of Malingunde graphite mine

…company planning to produce 44,000 tonnes graphite concentrate annually over 17 years

By Marcel Chimwala

ASX-listed Sovereign Metals, which is currently conducting a feasibility study for its Malingunde graphite project in Lilongwe, says mine construction at the site may commence next year with commissioning set for 2020.

Commencement of mining at the site would be contingent on completion of a successful feasibility study, approval of the environmental and social impact assessment (ESIA), granting of a mining licence, product marketing agreements, award of a mining licence and procurement of the necessary financing for construction, among other items.

Sovereign Metals’ Country Manager for Malawi, Andries Kruger, says the company is on course to complete the ongoing feasibility study and ESIA for the project toward the end of this year, or early in 2019.

We will likely be applying for a mining licence after we successfully complete the feasibility study and the Environmental Affairs Department issues us with a certificate for the ESIA. If all goes to plan, we will start mining graphite in 2020,

says Kruger.

Sovereign completed a scoping study on Malingunde deposit in 2017 and Kruger says the study delivered the world’s largest reported soft saprolite-hosted graphite resource with capital and operating costs per unit at the very bottom of the graphite supply cost-curve.

The study results indicate that the project’s total operating costs are estimated at US$301 per tonne concentrate (FOB Nacala Port) which is the lowest of any reported ASX-listed peer company of scale <300ktpa.

The results also show that the total capital cost of US$29 million, (includes 35% contingency) for production of ~44,000 tonnes of concentrate per annum is the lowest capital intensity of all peers.

They demonstrate a very rare combination of low capital and operating costs for Malingunde at a realistic scale of production and a payback of under two years using conservative graphite pricing assumptions.

The results also indicate very low mining costs with the soft saprolite being free-dig with a low strip ratio of 0.5:1, and the project supports a simple process flow sheet with no primary crush or grind, leading to low processing costs and lower capital requirements.

The study shows that Malingunde will have simple plant design which uses “off the shelf equipment” allowing rapid and cost effective initial construction and future expansion options.

Kruger says:

With such low production costs compared to its peers, the other interesting aspect of Malingunde is that it has high quality product with excellent concentrate grades and a very large proportion in the Super Jumbo and Jumbo categories.

Therefore, the project should still generate significant cash margins even in severe downside global graphite price scenarios.

The Malingunde deposit is large and relatively high grade, with visually coarse and jumbo flake graphite identified throughout.

Saprolite-hosted mineralisation has been identified in drilling over 3.4km of strike with cumulative across strike widths locally exceeding 200m and averaging about 120m.

Grades of mineralised saprolite average around 7% TGC (nominal 5% TGC cut-off) with a number of coherent higher grade zones well above 10% total graphitic carbon (TGC) identified.

Kruger says the company recently raised US$5 million from the Australian Stock Exchange, which it is using to finance the ongoing Malingunde feasibility study and ESIA.

The feasibility study involves gathering baseline data, metallurgical work, costing, mine design, logistics and other technical aspects of the project.

We have a team of specialists with extensive international experience working on this study,

he says.

The ESIA process has three phases, namely compilation of the project brief, environmental scoping and ESIA process.

The project brief has been submitted to the Environmental Affairs Department (EAD) and the environmental scoping phase has now commenced. The EAD indicated that an ESIA will be required,

says Sovereign Metals’ Stakeholder Engagement Officer Annelle Lotter.

The scoping phase of the study running from December 2017 to March 2018 includes project announcement through distribution of a project background information document and some meetings with stakeholders, production of a Draft Environmental Scoping Report to be available this month, meetings with stakeholders to be held this month to identify issues and concerns and production of a Final Environmental Scoping Report to be submitted to the EAD after stakeholder review and comments.

The ESIA phase will involve specialist assessments, production of Draft ESIA Report to be available in in the fourth quarter of 2018, meetings with stakeholders to be held early September 2018 to present findings from the ESIA, and submission of the Final ESIA Report to the EAD.

The Malingunde Project is likely to have a range of impacts on the environment and the people living in the area.

The expected positive developments include creation of job opportunities, growth in the economy, improved infrastructure and social development.

However, some negative impacts may also be experienced including that some people may lose farmland or may have to be resettled, and the project may result in changes in the quality and quantity of water, levels of dust experienced, disturbance of vegetation and animals, and changes in noise and traffic levels may be experienced.

The specialists will investigate potential impacts and develop measures and plans to manage the impacts to ensure that they are minimized,

says Lotter.

Open pit mining with traditional excavator and haul trucks will be used to mine the ore at Malingunde but no drilling and blasting activities will be required for the operation as the material is relatively soft and suitable for free digging.

Mining will be undertaken in shallow open pits, with maximum depths of 25 m and maximum widths of approximately 150 m and once excavated, the ore will be loaded onto 40 tonne trucks and hauled from the pit to either the processing plant or if it is waste material, to the waste rock dumps.

After treating the ore in the plant (scrubbing and flotation), the tailings material will be pumped to the tailings storage facility site for final disposal.

The processed product will be transported on flatbed trucks by road over approximately 26 km to the Kanengo train station in Lilongwe, from where it will be sent by rail to the port of Nacala in Mozambique for export.

Meanwhile, Sovereign Metals is negotiating an infrastructure term sheet agreement with Malawi’s rail operator Central East African Railways (CEAR) to use the rail network to transport graphite to the port of Nacala.

Sovereign’s Managing Director Julian Stephens says a binding agreement between the two companies is expected to be signed by June this year.

Under the agreement, services will be provided over a 20 year period for the movement of up to 100,000 tonnes per annum of concentrates, providing upside to Sovereign’s initial target of 44,000 tonnes per annum.

Given that a single train can transport up to 84 containers at one time, the project will only require one train movement every two weeks,

says Stephens.

The Malingunde scoping study considered production of approximately 44,000 tonnes per annum of graphite concentrates, equating to the movement of approximately 2000 twenty-foot shipping containers per year.

Under the agreement, CEAR will supply and maintain all infrastructure, equipment and personnel required to provide the services.

The Malingunde scoping study logistics cost estimate was circa US$65 per tonne free on board (FOB), based on indicative pricing for the services.

Minister of Natural Resources, Energy and Mining, Aggrey Masi, comments that the government of Malawi fully supports the project as it has always been the desire of the country’s Head of State Professor Arthur Peter Mutharika to attract foreign investment to shore up the economy.

Masi says:

Malawi has taken significant action to provide an attractive environment for investors in the mining industry.

We have successfully joined the EITI, a global standard for the good governance of oil, gas and mineral resources, which will provide accountability and transparency around mining and petroleum revenues.

To this end, the Government of Malawi offers its full support and assistance to Sovereign Metals in order to develop Malawi’s first flake graphite operation at Malingunde.

Sovereign Metals welcomes the reforms that Malawi is undertaking to improve the investment climate in the minerals sector including joining of EITI and repealing the outdated Mines and Minerals Act.

We only ask the government to ensure that the new law is enacted as soon as possible as it is an integral part of our feasibility study for the project since it will determine the government and community expectations from the project. Potential investors would always want clear guidelines on their operations,

says Kruger.

The ongoing Malingunde feasibility study also involves a marketing study, and Sovereign is expected to sign off-take agreements with potential graphite buyers.

Sovereign Metals’s other graphite tenements in Malawi include Duwi in Eastern Lilongwe where high-grade, coarse flake graphite mineralisation has also been identified over a cumulative ~24km strike length.

Around 2km of this trend has been drilled by Sovereign, resulting in the definition of the Duwi Main, Duwi Bend and Nyama graphite deposits, with a combined Mineral    Resource Estimate of 85.9Mt at 7.1% TGC for 6.13Mt   contained graphite.

Sovereign Metals has also been undertaking corporate social responsibility projects at Malingunde and the initiative saw the firm donating two boreholes to the people of the area.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

MINING & SOCIAL ISSUES with Ignatius Kamwanje

The Role of Development Agreement in Mining

‘A Malawian perspective’.

When a giant or a junior mineral exploration company engages an interest in an area commonly referred to as a tenement, it becomes the holder of the tenement. A series of technical aspects or activities in the long run lead to undertaking of a Bankable Feasibility Study (BFS) which is in relation to a typical mineral that is anticipated to be mined within the tenement upon meeting certain terms and conditions with the government.

Therefore, the government must ensure that it safeguards the interest of the people that will be affected while also ensuring that the operation benefits the company because a mining company is prone to risks and uncertainties and therefore it aims at securing significant returns from an investment.

Sound mining governance will adequately contribute to the socio-economic welfare of the people of a country let alone the people surrounding the mining area and perceived to act in a manner that is consistent with the community needs and also environmental protection through provision of successful mitigation measures.

One must also be mindful that in Malawi, pursuant to the Mines and Minerals Act of 1983, the Minister of Mines on behalf of the government is given powers to enter into agreement with the holder of the tenement. This ensures that the government of Malawi and the holder of the tenement, in this case a mining company, negotiate an equity stake as an agreement. This shall be of benefit to the company, the government, the community and the project itself. In this case, the company as a proponent of the project ensures that it persuades/or seeks comfort from the ruling elite (government) and the government must show full commitment and responsibility of supporting the terms and conditions as set forth therein for sustainability of the project.

It is therefore an expectation that certain matters and issues must be agreed upon and should be set out in the agreement as binding and also should reflect the national interest and stability of the project as an investment.

In development and operational matters, the mining company submits an approved programme of operations in accordance with Best Practices in Mining, Ore Processing/Extractive metallurgy and Environmental Practices. This is in accordance with the Mines Act. In Malawi, as a case study, it is done to expand the investment commitment following the schedule of programmes set out by the company except in the event of a Force Majeure where the project might be suspended or curtailed. Of course the government has an obligation as set out in the agreement that it will act in a timely manner and in good faith when such a situation arises.

The development agreement also contains agreements on waiver of duty free status, import and export. For example, in Malawi. under this, the company may be entitled to import and export materials, consumables for use in mining, ore processing, equipment and other services. Also under this agreement, the mining company is obliged to keep the mine product under adequate custody in terms of security on its premises, being transported and at the point of exit. The government may agree in facilitating the implementation procedure for the processes.

Under Local Business Development, a mining company is asked to develop a comprehensive programme encompassing development of Malawian businesses that will have the opportunity of supplying goods and services to the company. This programme forms part of the Bankable Feasibility Study (BFS).

There are also other essential services that form part of the development agreement that are crucial to the development of the area. These can be electricity, water, schools, clinics/ hospitals, land and other infrastructure developments.

In the event of other unforeseeable conditions, the company is also required to disclose to the government how and why such a situation has arisen and list the necessary measures that will be taken into consideration. It is under these circumstances that a mining company engages itself in insurance of the operationalization and commercialization in accordance with the laws of the land. This mainly covers areas of OSHE (Occupational Safety, Health and Environment), Best Practices in Mining, Ore Extraction/ Processing and Environment.

In the event of suspension and curtailment of production, a mining company has the right to curtail or suspend production as stipulated in the Mines Act. This suspension can either be effected by the mining company or the government’s action. For example, the Kayelekera Uranium Mine suspended its operation due to poor spot price of uranium. Suffice to say, this was the companys’ action due to economic disequilibrium and not the government. However, the government may also take such an action based on the same note or operational conditions that may have an adverse effect on either.

There are also surface and other infrastructural rights that the public and the government can use within the tenement owned by the mining company provided that access will not jeopardize the security of the company and also interfere with the welfare/operation of the company.

The mining company is also obliged to submit records and reports, possibly annual reports submitted quarterly of operations to the government through the ministry concerned. This report outlines the mining and processing operations carried out within the tenement. These reports contain valuable information such as;

• Accounting
• quantity of mined ore (ore tonnage) and averaged grades
• the quantity of Mine product and the proceeds of the sales,
• quantities of Waste mined,
• operational costs,
• any geological and metallurgical investigations that may be obtained from time to time.
• It also includes ongoing exploration/prospecting
• activities taking place elsewhere within the tenement.

There are also other necessary undertakings contained in the development agreement. These may apply to foreign exchange, environmental issues, employment, occupational safety, health issues and corporate social responsibility (CSR).

For the general stability, taxation, royalties and consent, one of the components is sound fiscal regime. The company is entitled to enjoy its fiscal regime without limitations with support from the government in a timely manner. This is provided for in the Taxation Act. Besides, without limitation the government shall cause the Malawi Revenue Authority (MRA) to provide a duty exemption in writing to be issued by the Malawi Investment and Trade Centre.

The disturbance and resettlement issues in the development agreement is also crucial. The company may request to the government to permanently remove any person occupying any unauthorized structure within the mining area and the company is not required to provide any indemnity to the government with respect to removal of a structure or person. In the event that there is disturbance of land by the mining company and that the occupier of a structure needs relocation, then the mining company shall meet the costs of resettlement and any other compensation as provided for in the Land Act and these costs must be in line with the   government policy.

However, in my view, Malawi lacks behind in formulation and enactment of Compensation and Resettlement Act. Nothing much is gathered to implement it. In my opinion and understanding on issues to do with addressing involuntary resettlement, a mining company must commission an organization to prepare a Resettlement Action Plan (RAP) to facilitate involuntary resettlement of the Project Affected Persons (PAPs). Always a good practice is to include formal land acquisition in project specifications (World Bank, 2004). A mining company should treat the resettlement aspect as an integral component of the development process and devote the same level of effort and resources to resettlement preparation and implementation as to the rest of the project. This is because implementing resettlement as a development program not only helps the people who are adversely affected but also promotes easier, less-troubled implementation of development projects. The Resettlement Action Plans must therefore be developed with reference to a specific country and also International Standards. Through a participatory consultative process, the mine and the Project Affected Persons (PAPs) must agree on land compensation procedures. The RAP process may include negotiations between the mining company and Community Representatives leading to an agreement on the size of land to be relocated.

According to the RAP, the communities sometimes agree with the mining company to construct some facilities and infrastructure as part of the entitlements for the PAPs: You may wish to know that this RAP process does not in any way supersedes as what is agreed in the Development agreement. This is totally a different entity aimed at assisting the displaced people due to land being occupied by the miner.  In line with the World Bank Operational Policy 4.12 which describes the Bank’s policy and procedures on         involuntary resettlement, a mining company should comply with this since it claims to operate under international standards. According to this Policy, all displaced persons should be compensated for their losses with full replacement cost prior to the actual move, assisted with the move and supported during the transition period in the resettlement site. This is done to improve their former living standards, income earning capacity and production levels. Land,   housing, infrastructure and other compensation should also be provided to affected populations that might only have customary rights to the land or other resources lost as a result of the project.

In conclusion, there are also general provisions that form part of development agreement. These can be summarized as:

• Assignments
• extension to time
• termination disputes
• amicable settlement of disputes (negotiations and mediations)
• arbitration,
• expropriation
• expert determination
• performance to continue
• applicable law
• Force Majeure
• indemnity by the company
• variations,
• liaison committee
• notice
• waiver
• severability further acts
• representation and warranties

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 59 (March 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.