How a ‘Ghost’ coal company duped Malawi

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It came, exploited, profited and then vanished in thin air leaving, injuries, scars, diseases, misery and empty promises for the local people of Mwabulambo, in Paramount Chief Kyungu’s area in Karonga, northern Malawi.

That is how one can best describe the whole fiasco of how Eland Coal Mining Company crookedly got itself into mining coal in Malawi, exploited the resources and unceremoniously vanished into thin air without properly decommissioning the mine.

Coal mining malawiMalawians remain in the dark as to what was Eland Coal Mine, the company that after exploiting resources without any benefit to Malawi, just melted down with no trace and scot-free.

But now the Centre for Investigative Journalism Malawi (CIJM) can reveal after months of investigation that Eland Coal Mining Company was almost a ghost mining company altogether.

Background

Eland Coal Mining company, is a “Malawian constituted” company that operated a medium scale mine at Lufira within the Lufira-Kibwe coal field in Karonga, northern Malawi.

Our research shows that the Lufira coalfield was first subject of detailed mapping investigation by a Hagbood in 1954.

The fields remained of no interest until somewhere in 1999 when a Mr. Thompson under an incorporated company, Eland Coal Mine, was granted exploration rights.

But Thompson concentrated only on conducting desk studies and some mapping exercises as he lacked capital for further preliminary tech-economic studies and he was hence not able to develop the deposits.

However, Eland Coal Mine went on to secure an Exclusive Prospecting License in 2004 associated with production of coal locally.

But after conducting a feasibility study, Eland applied for mining rights in November 2006 to exploit coal reserves with the view of mainly supplying the tobacco, chemical and manufacturing sector in Malawi.

The miner discovered through proven drills that the area was seating on a 500, 000 metric tonnes of good quality coal and an additional postulated resource amounting to 3 million tonnes in the whole Lufira-Kibwe coalfield.

Now since he lacked capital to develop the mine, Thompson maneuvered his way and entered a joint venture with Mineral Sands Limited.

The two joined forces and signed an agreement in April 2007, which centered on Mineral Sands Limited bringing in development capital for the project.

Extraction activities began in 2007 under Eland Coal Mining Company with a Mr. Allan Smith and a Mr. N Jones being identified as directors of the company.

Eland controversy with surrounding communities

 It did not take long before Eland started showing traits of crookedness in its area of operation.

A surrounding community of about 600 people soon started demanding answers from the company over unfulfilled promises of its corporate social responsibility (CSR) projects.

September 4 2015, about 800 angry residents from 11 Group Village Headsmen under Traditional Authority Kilipula in the area held angry demonstrations against Eland over unfulfilled CSR projects the two sides agreed in their Memorandum Of Understanding (MOU) in 2013.

In the MOU, Eland committed to construct a secondary school and a modern health center, provide safe water as well as electricity to locals affected by mining activity in Mwaulambo.

But almost all of the promises remain barren until this day and with no hope that they will be fulfilled some day.

The then Eland Chief Executive Officer, Leon Rademeyer, said the delay in fulfilling the CSR commitments was a result of delays of relocation by the fully compensated occupants of the land targeted for mining.

He argued this slowed production, and hence cash flow to carry out the promised projects.

2015, Eland Coal Mine closes shop

 The mine was expected to operate for over 25 years according to estimated available deposits and designs but in less than 10 years the company just suddenly packed its equipment and disappeared without decommissioning the mine.

Come 2015, rumors became rife that the company was secretly and silently closing shop and relocating equipment.

On 17th August 2015, the surrounding community from 11 Group Village Headmen such as Mesiya, Mwawulambo, Mwangomba, and Mwanjasi in conjunction with Church and Society program of CCAP Synod of Livingstonia based in northern Malawi gave the company a 72 hour ultimatum to start filling its trenches following rumors that it had closed the mining site and was relocating equipment.

And what started as a rumor is now a painful and mysterious reality as the company really vanished in thin air, with no trace and leaving the mining site plundered and hopeless.

Our investigation

Environmental damage

It is an open secret after touring the mining site that Eland Coal Mine really damaged the environment as expected in any open cast mining style but what is shocking is the lack of interest by the company to redress the mining area.

Since the company just left unceremoniously, it moved almost all of its equipment on site save for one extracting machine, a tractor and a processing plant.

Eland left open deep gullies and trenches it dag during extraction of the coal.

The deep pits have become a death threat as people, especially children, and livestock are failing into them, injuring themselves in the process.

While nobody has lost a life yet, the gullies have killed countless livestock that fall into them especially in the rainy season when the pits are filled with rainwater.

Vegetative cover has been greatly affected with trees cut and grass cleared and chocked with large piles and masses of coal that the company rudely abandoned.

This has contributed to soil erosion and contamination of water as people we talked to in the area complained of different body dis eases like diarrhea, which they believe comes from contamination from the coal.

The pits filled with rainwater have become a breeding ground for mosquitoes too hence contributing to malaria related deaths in the area.

Was Eland a “ghost miner”?

Digging deep into the whole Eland mining issue, one easily comes to a conclusion that the whole process was a scandal.

Was Eland Coal Mine Limited a registered company in Malawi?

The Centre for Investigative Journalism Malawi (CIJM) can reveal that Eland Coal Mining Company was in the first place not even registered at in Malawi.

Assistant Registrar in the Registrar General’s office Violet Mhango, responding to our enquiry about the legal personality of Eland Coal Mine Limited, said the company is not appearing anywhere in the data base of the Registrar General’s registered companies.

“Following your enquiry, I have checked in our database and have consulted with my colleagues at headquarters to look for the company on our network and it is now to my knowledge that Eland Coal Mining company limited does not appear anywhere in our database,” said Mhango.

Asked what that means, Mhango said; “It simply means the company is not registered in Malawi. If it has any registration certificate from the Registrar General’s office then it should be bogus.”

Questionable contacts

For starters it is surprising that Eland Coal Mining Company, big and business oriented as it is, did not even have a website where one can easily know more about it.

We tried to contact Eland using their official addresses they have been putting on different platforms including their EIA paper in our possession but without success.

Phone numbers were out of reach while emails we sent to its official email addresses bounced.

Even Acting Director of Mines in the Ministry of Natural Resources, Energy and Mining, Atileni Wona conceded to the press that Eland vanished in the country abruptly and his department is not very sure about the whereabouts of its directors although it suspects they went back to Norway.

While admitting that the closure of the mine was illegal, as Eland did not notify the office of Environmental Affairs as required by law, Wona is quoted in the press as saying:

“…We found out that the owner is in Norway, there is no one in Malawi at the moment…”

“…We managed to get an email for the owner in Norway because the address for the owner in Malawi is nowhere to be seen. So we just used an email,” said Wona adding that however the ‘owner’ of Eland has not responded to the email.

Even a 2012 report on extractive companies operating in the eight Catholic Dioceses in Malawi released by the Catholic Commission for Justice and Peace (CCJP) titled Mapping of Extractive Companies in Malawi could not gather significant information about Eland.

The report confesses; “Not much is known about Eland Coal Mining as the company seem not have a website…”

Government officials prepared an EIA for the Eland

Ironically, our investigation also discovered that Eland Coal Mine used government officials to prepare its EIA plan and made the same officials approve it, a process that culminated into issuance of a mining license to the company.

According to an EIA plan document of the mine we sourced, some top government official, working as private consultants, led the team that did the EIA study.

“The project team for the Environmental Impact Assessment was headed by P.M.C. (Peter Mzondi Chongwe) Chilumanga of Tip-Top Associates in conjunction with Mr. A (Atileni) Wona, a qualified independent mining environmental impact assessor,” reads the EIA plan paper in part.

Ironically Atileni Wona is currently Acting Director of Mines while Peter Chilumanga is Deputy Director of Mines in the Ministry of Natural Resources, Energy and Mining. Boss and his deputy.

And these are the same people who played a key role in the process of marking the EIA plan, which culminates in the issuance of mining licenses hence raising questions of conflict of interest.

And now that the company abruptly stopped operations, leaving the mine in a mess and its top officials vanish from the country, these same government officials are tasked to hunt their fugitive crooked bedfellow Eland officials.

What triggered Eland to go AWOL?

As the top Eland officials remain incommunicado and untraceable, it is hard to come up with an explanation as to what led to this whole mess and who and how is he going to be held accountable.

Malawi’s mining expert Grain Malunga said much as he was not very much in the know about the issue, his partial understanding is that three things might have contributed to the collapse of Eland Mining activities in Malawi.

Malunga said misunderstandings between the miner and his financier, financial mismanagement at the mine and lack of markets could have played a role in the collapse of operations at Eland Coal Mine.

“Eland Coal Mine were granted a coal mining licence.  During their operation period they started complaining about lack of market outlets. Later we found that they had abandoned the mine and were selling movable assets.”

“Later on I met the owner of the mine in Blantyre and told me of the financial mismanagement at the mine and he decided to stop funding the project,” said Malunga in responding to our questions on the issue.

Eland did the mafia way

There is still one more factor that might have influenced Eland to vanish out of the country. They ran away from the financial implication of properly decommissioning the mine.

Section 96 of the Mines and Minerals Act (1981) orders mining companies to rehabilitate areas damaged by its prospecting or mining activities.

Section 96 partly reads: “(1) There may be included in a prospecting or mining licence such conditions relating to—(a) the reinstatement, levelling, regrassing, reforesting and contouring of any part of the prospecting or mining area that may have been damaged or deleteriously affected by prospecting or mining operations; and

“(b) the filling in, sealing or fencing off, of excavations, shafts and tunnels, as may be prescribed, or as the Minister may, in any particular case, determine.”

In fact, Eland Coal Mine submitted to government its Environmental Impact Assessment (EIA) plan in compliance with the Environmental Management Act (1996) which compels any company wishing to extract minerals in Malawi to submit to government an EIA plan of its proposed project.

According to Eland’s 2007 EIA plan, in the case of the mine closure, Eland was supposed to fence off its benches of up to 10 metres high and fill with top soil and re-vegetate crests of up to 4 metres wide.

“In such circumstances, decommissioning of the mining operations will only involve removal of infrastructure and machinery. Including leveling, re-vegetation and regressing and fencing off large pits.”

“Eland Mining Company will endeavor to backfill all holes and excavations and, fence-off and make safe large pits. The stockpile site will be cleared of debris and coal dust. The debris will be deposited at a designated disposal pit,” promises the EIA plan and adds:

“Trees will be planted and bare ground regressed to avoid soil erosion and green belt will be preserved.”

The Mines and Minerals Policy (2013) demands compliance of the Environmental Management Plan (EMP) during mining and decommissioning.

Most importantly it demands compliance to the process of issuing of a mine closure certificate that indicates environmental regulations during and after decommissioning and most importantly compliance to a requirement to inform the ministry of Natural Resources, Energy and Mining about intention to decommission.

However, none of that has happened as the company just left leaving unfiled gullies, stockpiles of coal, bare land, a few machines and there is no hope the culprits will be brought to justice as government is undeceive on the issue.

Now we can only conclude that Eland played the mafia by vanishing without properly decommissioning the mine.

Eland could deliberately be dragging its feet to come out in the open and inform the Mines Department that it has closed the mine as a strategy to avoid being taken to task to initiate proper decommissioning of the mine which would attract payments including costs of decommissioning the mine as per its EIA, environmental bonds, tax returns, among other compensations.

Without official communication from the mining company informing the department of mines on its intention or actual closure of the mine, Eland tactically fixed the Ministry of Mines as it could lack straightforward basis to take the company to task, save for mere call for discussions and warnings and by the time it will revoke the mining license, Eland will have completely achieved its game plan.

“It is not known if the mine had communicated to Director of Mines of the intention to close as required by the law,” said Malunga in responding to our questions on the issue, which practically backs our conclusion.

Acting Director of Mines Atileni Wona could not respond to our questionnaire, which he directed us to send, and could not respond to our follow up phone calls for over three weeks.

We asked about registration of Eland Coal Mine in Malawi, whether Eland had communicated on the status of the mine and intention to decommission, how is government through his office is failing to track down owners of Eland when it was him and his companion who developed an EIA for the company and his conflict of interest in the whole issue.

Malunga said the environmental bond helps government to rehabilitate the damaged places in cases where a mining company has vanished or shown inability to redress the affected area.

Asked what options does Malawi government have now that Eland officials are nowhere to be seen and the Department of Mines says it is finding it difficult to trace them, Malunga said the department should warn Eland and then cancel the mining license and close the mine altogether if the mining company is not addressing issues raised in the warning.

But when put to him that this meant Malawi was the loser even if it cancels the license considering that apart from losing tax returns, it is supposed to spend millions more to deal with sorting out the environmental damage which Eland left, Malunga’s answer was that of suggestive that government was now only left playing in the Eland’s shadow.

“Issues related with environmental rehabilitation are dealt with during operations and at post mine closure. Post mine closure requires an environmental bond. This helps government to address environmental issues if the miner has run away,” Malunga said.

“The Mines Department can cancel the licence after warning if Eland is not complying with the provisions of the Mines and Minerals Act. I do not have enough information on Eland (so I can’t comment further).”

Another element that Eland might influence Eland to avoid following procedure in closing the mine is that of running away from taxes as we have it on authority that the company has been in default of taxes and other remittances.

However, the Malawi Revenue Authority (MRA) Head of Corporate Affairs Steven Kapoloma refused to give detailed explanation about Eland’s tax returns status saying the institution was gagged by taxation law in giving explanations to Malawians about suspected tax fraudsters.

“Due to confidentiality principle under taxation law, MRA cannot comment on the matter,” said Kapoloma in his brief response to our query.

Executive Director of the Church and Society program of the CCAP Synod of Livingstonia Moses Mkandawire said the Eland Coal Mine issue smacks lack of accountability in Malawi’s mining sector.

In an interview Mkandawire said his organization suspects corruption took center stage in the whole transaction and the following cover-up arguing it is not true that government can fail to track down culprits in the scandal.

“That’s why we say accountability will play a critical role because I don’t think a company would come and operate even for a week without being tracked, without government knowing, I don’t think so.

“So they operated for years, they collected a lot, they benefitted quiet a lot, the question is how have Malawians benefitted from that kind of an arrangement? You will discover that it is none,” said Mkandawire.

“So individuals within particular ministries might have benefited…they might have been palm oiled. What we need therefore is to pin down some of these individual government officials because failing which we will create impunity and that’s where we have problems.”

Asked on our observation that Malawi’s Civil Society Organizations are only vocal but lack action as the Malawi Anti-Corruption Bureau (ACB) told us that nobody, including the vocal CSOs, has reported the Eland matter to the graft busting body, Mkandawire was defensive.

“Its food for thought because I have officers who are working on extractive issues in my office and I will make a follow up to see how best we can take that issue up,” he said.

However, despite the whole Eland’s Mabulambo Coal Mine scandal unfolding on the nose of authorities, the Anti-Corruption Bureau (ACB) says Eland Coal Mining Company or anybody linked to the whole scandal is not on its probe ladder.

 ACB Senior Public Relation Relations Officer Egrita Ndala said in responding to our questionnaire that the body has not commenced any investigation about Eland and the whole Karonga fiasco as nobody has logged any complaint about the company or the issue with her office.

“The Anti-Corruption Bureau has not received any allegation in relation to Eland Coal Mine Limited. The Bureau would like to request… the concerned people in the area to formally lodge a complaint on the issue in order for it to see what action it can take,” said Ndala.

Secretary to the Treasury Ben Botolo conceded in an interview that separation of power between government institutions sometimes create loopholes although he was quick to emphasize that there is strong coordination between government institutions.

“There is coordination but somebody is not doing his job. For example monitoring of mines, is it the work of treasury? No! Is it MRA to do value and taxations, yes! That’s why we created it. Is it Ministry of Natural Resources energy department of mines to do it? Yes! Because they are in there,” said Botolo.

Perhaps Eland like Paladin Energy, which mined uranium in the same district took advantage of Malawi’s lax and archaic legislation and smiled all the way to the Banks to cash their pay cheques.

Malawi may be missing a huge opportunity to curb poverty because it continues to rely on an outdated, opaque mining law that restricts tax and royalty revenues and encourages corruption.

The mining industry in Malawi is regulated by different legislations including the Environmental Impact Assessment Guidelines for Mining Projects (2002), the Environmental Management Act, the Mines and Mineral Act (1981), the Water Resources Act, the Occupation Health and Safety and Welfare Act, the Forestry Act, the Land Act as well as the Public Roads Act.

More than half of this nation’s 18m citizens live in poverty, while foreign mining companies are arriving in ever-larger numbers to exploit Malawi’s subterranean riches.

The ministry of mines says so far it has issued more than 180 licenses both exploration and mining and is also processing many more.

 

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