The mining industry which is touted to have the potential to pull Malawi out of its economic woes continues not to bear fruits as details of a fresh scandal involving trillions of Kwacha have emerged.
Investigations by News, Research and Initiatives on the extractive industry in Malawi have revealed irregularities in mining, energy, and other environmental project contracts and permits.
Due to poor governance, the Malawi government gave the Kangankunde Rare Earths Mining Project in Balaka to multiple tenants.
One of the companies that were contracted to carry its work in the area, Australia’s Lynas Corporation, is failing to develop the resource after purchasing it at US$4-million (about K2.5-billion) due to legal complications.
Previous tenement holder of the Kangankunde Rare Earths Mining Project, South Africa’s Rift Valley Resources, sued the Malawi Government and obtained an injunction against the development of the mine on the grounds that the Bakili Muluzi administration erred by not renewing its exclusive prospecting license for the Kangankunde resource, whose rights at that time were with Rare Earths Company.
Rare Earths Company sold the resource to Lynas Corporation at US$4-million in 2007 for fear that it will lose the mineral rights, and the Bingu Wa Mutharika administration allowed the deal to go through despite the prevailing court injunction.
Currently, Rift Valley Resources, owned by South African geologist Michael Saner, is claiming US$100-million from the Malawi Government for damages plus sunk costs, legal costs and interest.
Lynas says the purchase agreement contained a number of conditions precedent that were satisfied before completion, including approval by the Malawi Department of Mines for the transfer of the Kangankunde tenement to Lynas, approval by the Malawi Investment Promotion Agency for the Lynas project proposal and approval by the Malawi exchange control authorities for Lynas to make payment as a foreign investor.
The wrangle arose because of poor decision making by the government and it has become costly to the nation and the investor for the Kangankunde Rare Earths Mining Project.
According to the paper, the corrupt acts involved the innermost circles of power during the tenures of late Mutharika and Muluzi.
Meanwhile, Rift Valley Resources, Lynas Corporation has left the site due to the High Court injunction.
Mining and energy projects in the country have also faced intense community resistance which has often become the target of crackdowns by state and corporate security forces.