Malawi Government has defended the five percent royalty it gets from mining proceeds saying the rate is competitive if Malawi is to attract investors in the mineral sector.
The Ministry of Mining said this yesterday following concerns that Malawi may only get K45 billion from rutile mining which is expected to rake in K900 billion.
In a statement yesterday, Secretary for Mining JCN Mkandawire argued that the 5 percent which payable upon production of minerals was reached at following extensive studies within the Southern African region and in order to attract investors in the mineral sector.
According to Mkandawire, in Zambia and Tanzania the royalty is also 5 percent while in Namibia it is 2 percent, in Botswana it is 3 percent and in South Africa it is 0.5 percent.
Mkandawire further said that Government is paid resource rent tax of 15 percent and has equity participation of 10 percent as prescribed under the Mines and Minerals Act of 2018.
The statement comes amid claims that Government has been duped in a deal with Australian company, Sovereign Metals, which is exploring rutile at Kasiya in Lilongwe. It was alleged that Government had already awarded a mining licence to the company.
However, Mkandawire said Sovereign Metals is yet to get a mining licence and what it has is a mineral exploration licence.
“Hence no mining is taking place at this site since studies are ongoing,” said Mkandawire.
He added that after feasibility studies are completed, an environmental impact and assessment will be conducted and if approved, the company’s application for mining licence will be reviewed and approved by the ministry.
“If all financial and technical requirements under the licence conditions are met, relevant government institutions will commence negotiations for the Mining Development Agreement where among others, fiscal matters will be dealt with,” said Mkandawire.
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