Government speaks on Kayerekera mine

Post was last updated: February 10, 2020

In December 2019, the Malawi government gave a nod to the sale of the Kayerekera Uranium Mine. Earlier, dual-listed miner, Paladin Energy Limited, announced intentions to offload its 85 percent stakes in the country’s Kayelekera uranium mine, a move that attracted mixed reactions. MANDY PONDANI caught up with Deputy Director of Mines, Peter Chilumanga, on the way forward.

I understand that the 12- year mining license for Paladin expires in 2021. Would it not be fair and sensible to wait for Paladin to relinquish the licence so that the Malawi government is free to identify an investor who would exploit the mine to the benefit of the country?

Take note that mining, like any other business, is dynamic. When Kayerekera Mine went under “care and maintenance” the hope was that they would come on stream only when the prices would be higher than their total production costs and that’s what they have been doing since this temporal closure. However, in the course of waiting another company was willing to take on the mine in its present state and hoping that they can re-engineer the mine with a view to re-opening it.

To government that’s an opportunity which cannot be missed. Efforts by the company itself which has lots of mining experience to identify buyers has been difficult and this means it would have been even more difficult for government to identify new buyers. Let me also correct you that the feeling of the general populace is the government was duped in the Kayerekera deal which is not correct. Government conducted itself in accordance with prevailing laws and hence the development and opening of the mine in 2007.

Unlike when the Kayerekera Uranium Mine was being inaugurated when a ministerial statement was presented to Parliament as a way of updating the masses through their representatives, it seems things have been done differently in this sale process, why is this so? Doesn’t government think it is falling short of its mandate of doing things in a transparent and accountable manner by keeping the public posted on the merits and demerits of this serious economic move?

Take note that government has taken a decision to allow Paladin to sell its 85 percent shares it holds in the project while government retains the remaining 15 percent. This process takes some time to complete and government is leaving no stone un-turned to ensure that the sale process goes on smoothly and all potential negative loopholes are sealed. In addition, government is trying its best in ensuring that government and public interests are not prejudiced by this sale. This means that as soon as the process is fully complete, government will come up with a communique informing the nation of the completion of the sale.

When are the new investors commencing production in Karonga?

Production will not commence immediately because the new company will have to take due diligence of the current Kayerekera standing position and using that information they have promised to undertake a thorough feasibility study to re-engineer all the mine processes with a view to successfully opening again in the shortest possible time. It is in their interest to ensure that this commences as soon as possible. Preferably within two years.

What commitment has the new investor made to ensure that locals benefit from the mine?

At this juncture it is difficult to tell and compare who is better or not. For government, the interest is to get the mine on stream again so that the benefits that accrue from the mine start trickling again into the economy. Remember that at production Kayerekera led to increase of contribution in the mine sector from 1.2 percent to 5 percent.

How far has government gone in doing a background check of these new investors, in checking their track record knowing that they will be managing a radioactive mine which may end up endangering lives of the communities as it was alleged with Paladin?

Government is and has indeed been conducting thorough due diligence on the company with a view to ensuring that the company has the right financial capital, technical competence and experience to bring back the project on stream. Immediately all this information is attained and at an opportune time government will inform the nation accordingly.

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