ANB-BIA SUPPLEMENT

Malawi’s long search for a replacement of tobacco as her major foreign exchange earner, seems to have landed the country into the mining sector which has portrayed a high potential for growth

Traditionally, the former British Colony’s agro-based economy has depended on tobacco, but the anti-smoking campaign and unfavourable climatic conditions have led to a decline in the once vibrant industry.

Although no big mines have been established in Malawi, the sector is emerging as the fastest growing, among other potential sectors of manufacturing and tourism. Statistics from the Department of Energy and Mining, indicate that Malawi had realised 1.97 billion kwacha (about 25.6 million American dollars) from mining in the year 2001, representing an 85% increase from 1.04 billion kwacha (about 13.5 million dollars) realised in 2000.

«This demonstrates that there is potential in the minerals sector which is probably the fastest growing sector at the moment. However, the country has more mineral reserves that have yet to be fully exploited and extracted», says Malawi’s Energy and Mining Minister, Harry Thomson.

Gemstones, monazite, silica and bauxite are some of the major precious stones currently being mined in several districts of the country. According to the Director of Mining, Grain Malunga, the sector’s contribution to the country’s Gross Domestic Product (GDP) grew from 1% in 2000 to 1.5% in 2001.

«The Government is eyeing a 3% GDP contribution by 2005 which is also the region’s average contribution,» says Malunga. Malawi’s GDP per capita amounted to US $159 in 2000.

Minerals’ exploitation activity on the increase

The projected contribution comes at a time when mineral exploitation activities by both local and international mining companies have increased in the country. ALBIDION from Australia and the AGRICOLA Company from the United Kingdom are currently exploring gold and base metals in Mwanza and Balaka districts.

Traces of gold in Malawi were first discovered about 30 years ago, and in 2000, another British firm, Willards International, sold 20,000 pounds sterling worth of gold from Mwanza district.

The Malawi Mining Corporation (MMC) has since expressed an interest to explore tantalum in three districts, while Allied Procurement Agency Limited (APAL) has commissioned a mining project in the central district of Salima.

Feasibility study reports carried in the Investor Magazine, a Malawi Investment Promotion Agency (MIPA) quarterly publication, indicate that there are 100 million and 70 million metric tonnes of ilmenite and rutile sands in Nsanje and Salima districts, respectively.

The Investor states: «There are also numerous marble and granite deposits in Mchinji and Dedza districts. Eleven million tonnes of monazite and 11 million tonnes of stantianite are available in Balaka».

Another feasibility study conducted in Phalombe in 1970, also reveals that the district has large quantities of mineral reserves waiting to be exploited. But lack of financial support is the major problem facing the mining industry, which is currently dominated by, small-scale miners with no proper tools and technical know-how. The trend has resulted in mass pilfering and smuggling of mineral products that are sold at very low prices, just to meet the immediate needs of the workers.

Malunga says: «Workers stay long periods without being paid and this is encouraging theft of good quality stones in mines and is also encouraging smuggling of stones. This type of activity is making the government lose in excess of 5 million United States dollars per annum».

Malunga suggests that establishing a small-scale mining revolving fund which could be administered through the Geological Society of Malawi (GSM), for education in finding and mining minerals and in financial management, could help solve the problem.

But observers feel providing loans to small-scale miners alone will not help to curb the smuggling of minerals from the country. They say that despite the wholesale liberalisation of the country’s economy, the government should strictly regulate and police the digging and exporting of all precious stones in the country.

Since Malawi’s economy was liberalised in 1994, several foreign companies and individuals have been sneaking into the country to dig minerals, which they take out without paying tax to the government.

While agriculture contributes over 75% of the total foreign exchange earnings, mining may well be a better bet for Malawi’s long term future.

• Kennie Ntonga, Malawi, January 2003 — © Reproduction authorised, with usual acknowledgment