* 54 foreign workers to get total of US$5.45 million per annum, while 441 Malawians to get total of US$2.21 million per annum
* The Mining Development Agreement was done on July 31, 2024 at Capital Hill in Lilongwe Deal involving Minister of Finance, Minister of Mining and Attorney General
* Where the AG Thabo Chakaka Nyirenda declared that the deal “not only promises substantial economic growth and job creation but also ensures that the ensuing economic benefits are fairly split between Lotus and Malawi
* Communinty Development Agreement signing in Karonga involved Paramount Chief Kyungu and other senior traditional leaders without involving trade unions or CSOs to represent national interest
By Duncan Mlanjira
Malawi Government signed a Mining Development Agreement (MDA) with new Kayerekera Mine investor, Australian firm Lotus Resources Limited on July 31, 2024 at Capital Hill in Lilongwe, maintaining just its 15% shareholding interest it had with previous investor, Paladin (Africa) Limited.
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Lotus Resources Limited is a leading ASX-listed uranium developer headquartered in Perth, Australia, which first bought 65% interest that was sold off by the initial investor Paladin (Africa) Limited, which is an 85% subsidiary of Paladin Energy.
Malawi Government’s stake signed in 2009 with Paladin had 15% of the equity as outlined in the Mining Development Agreement signed in 2007 but in 2020 Paladin sold its 85% interest in the project to Lotus Resources at 65% and Lily Resources at 20%.
Lotus Resources then acquired Lily Resources’ 20% stake in 2021, leaving the Malawi Government still holding 15% of the Kayelekera project.
The Mining Development Agreement with Lotus Resources Limited in July 31 last year involved the Minister of Finance, Minister of Mining and Attorney General (AG) where the AG Thabo Chakaka Nyirenda declared that the deal “not only promises substantial economic growth and job creation but also ensures that the ensuing economic benefits are fairly split between Lotus and Malawi”.
Further to the deal is a Communinty Development Agreement, which was signed in Karonga involving Paramount Chief Kyungu and other senior traditional leaders, without involving trade unions or civil society organisations (CSOs) to represent national interest.
Yet included in the deal is that the Australian company’s 54 foreign workers will get a total of US$5.45 million per annum, while 441 Malawians workers shall get total of US$2.21 million per annum.
The Australian company is set to reap astronomical profits as according to an various internet mining sites, spot price of Uranium has almost doubled from US$28/lbs in April 2016 to the currently US$64/lbs and demand is expected to rise — and, meanwhile, Lotus Resources has just signed a binding uranium offtake agreement with a North American utility company.
According to the report; https://www.mining-technology.com/news/lotus-resources-uranium-offtake-agreement-north-american-power-utility/, this contract with the North American utility company involves the sale of 600,000lb of triuranium octoxide (U3O8) from the Kayelekera project, scheduled for delivery between 2026 and 2029.
The report further says the contract includes a fixed-price escalation percentage per annum, aligned with the Reserve Bank of Australia’s long-term inflation target, applicable from the first delivery year — adding that the pricing was achieved through competitive discussions, ensuring favourable terms for Lotus Resources.
The report quotes Lotus managing director Greg Bittar as saying: “Formalising this offtake arrangement with a key customer is an important milestone for Lotus as we continue to progress production restart plans at Kayelekera towards our 3rd quarter of 2025 goal.
“Notwithstanding recent weakness in spot prices, our engagement with customers and potential customers, comprising mostly North American utilities, has demonstrated to us the continuing strength in the term contracting market, as uranium customers continue to secure long-term contracts and actively seek to support new supply.”
Additionally, according to mining-technology.com, Lotus has formalised a previously announced agreement with Curzon into a ‘take-or-pay agreement’, which covers a minimum of 700,000lb of uranium for 2026–29, with potential escalation to one million pounds (mlb) by 2032.
“The pricing structure mirrors the fixed-price escalation terms of the North American utility agreement,” says the report. “These agreements, along with previously announced PSEG Nuclear offtake term sheets, represent the sale of up to 3.2mlb of uranium, with a minimum of 2.9mlb, to be produced at Kayelekera from 2026.”
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According to Lotus Resources’ website; https://lotusresources.com.au/corporate/our-story when it was in production from 2009 to 2014, “Kayekera was Malawi’s largest mine, producing 10.9 million pounds (Mlb) of uranium oxide (U3O8) but has been on care and maintenance since 2014”.
“Kayelekera’s current mineral resource estimate is 51.5Mlb U3O8 at 475 parts per million (ppm), sufficient for a minimum 10 year life-of-mine. Our October 2024 accelerated restart plan confirmed Kayelekera as one of the lowest capital cost uranium projects globally, with an 8-10 month timeline to first uranium production and initial restart capital expenditure of US$50 million.
“We are accelerating Kayekelera’s production restart, which is on track for Q3 CY2025. In July 2024, Lotus and the Government of Malawi signed a Mine Development Agreement that guarantees a stability period of 10 years.
“Lotus has secured initial offtake arrangements for up to 3.2Mlb over 2026-2032 (minimum 2.9Mlb), with leading industry participants PSEG Nuclear and Curzon Uranium amongst others. Curzon has also provided a US$15m unsecured loan facility.”
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Highlights of the MDA with Malawi — as reported on; https://omniastrategy.com/omnia-strategy-and-dwf-advise-the-government-of-malawi-in-landmark-mine-development-agreement-with-lotus-resources-for-the-kayelekera-uranium-mine/ — include:
* Economic Development; as the agreement is expected to bolster Malawi’s economy by enhancing the mining sector’s contribution to GDP and creating job opportunities;
* Fair Distribution of Economic Benefits; The agreement ensures a fair and equitable split of economic benefits for the investors and the State;
* Sustainable Practices; The deal emphasises sustainable mining practices, aligning with Malawi’s commitment to environmental stewardship; and
* International Investment; This agreement signals Malawi’s openness to international investment, fostering a favourable business climate.
According to Australasia’s Mining Weekly publication; https://m.miningweekly.com/article/lotus-malawi-government-sign-mine-development-agreement-for-kayelekera-2024-07-31, the MDA guarantees a stability period of 10 years during which the project will not be subject to any detrimental changes to the fiscal regime.
“Key tax terms are aligned with the restart definitive feasibility study assumptions, including a royalty rate of 5% and a corporate tax rate of 30%. Relief is provided on resource rental tax and withholding tax, specifically as it applies to dividends to non-residents.
“There are exemptions for import and duties, excise and value-added tax on capital goods and specified consumables directly related to mine production. The MDA includes internationally recognised principles relating to legal protection on security of tenure, dispute resolution and expropriation.”
Lotus’ managing director, Keith Bowes is quoted as saying: “We are extremely pleased to have finalised our MDA with the Malawian government. I would like to thank all parties involved in these negotiations, especially the Presidential Delivery Unit who were instrumental in finalising the agreement.
Keith Bowes
“The relevant ministries including mining, finance and justice have all been very supportive in our negotiations as we have gone through multiple iterations of the MDA.
“It has been a timely conclusion to these negotiations as we have seen increased demand for the Kayelekera product from a number of utilities which coincides with the current perceived shortages and strong prices in the market.”
The report further says the deal “demonstrates the commitment by Malawi government to develop the local mining industry, a key pillar of MW2063” national vision.
But does it going by the revelations that indicate that 54 of Lotus’ foreign workers will get total of US$5.45 million per annum, while 441 Malawians to get total of US$2.21 million per annum? — as observed by Chifipa Mhango, the Chief Economist for South Africa’s Don Consultancy Group.
Mhango contends that “historical nature of the Kayerekera Mine deal is a clear demonstration that we need to solidify and beef up our negotiation efforts in mining deals”.
“Unfortunately, we continue to make the same mistakes with no sense of correction. The recent negotiations and process leading to the signing of the new Mine Development Agreement of July 31, 2024, presented an opportunity to rectify the past mistakes.”
After signing the agreement, AG Chakaka Nyirenda maintained that the deal is “not only promises substantial economic growth and job creation but also ensures that the ensuing economic benefits are fairly split between Lotus and Malawi”.
Attorney General Thabo Chakaka Nyirenda
But Chief Economist Mhango says: “Deal making in mining industry, just like other industries requires certain skills sets, and strong attributes in understanding the process and global industry at large.
“Hence there is a strong preference for CEOs in the sector that have strong business acumen and industry trends knowledge such as CAs, industrial economist, among others. Malawi has a vast mineral reserve, and if this trend of deal making continues in the sector, then we will continue to lose out.
“Uranium is in high demand in countries such as USA, France, and China — with a projected global demand indicating almost double by 2030, with a strong spot price. We need to wake up as the country and limit political involvement in mining deal making.
“The 85% and 15% arrangement does not reflect true asset value analysis, especially on what Malawi is getting from this lucrative mining operation, which is of lowest production cost globally.
Revered Chief Economist Chifipa Mhango
“I am also concerned around the outcomes of the deal in relation to fiscal regime, in which there is zero export duties, as well as limited development obligations to Malawi in relation to the benefits accrued to Lotus Resources.”
On Lotus Resources’ offtake agreement deal with North American utility company, signed on March 18, 2025, to sale 600,000lb of uranium from Kayerekera mine, Mhango indicated that if Malawi had signed a better deal, it was bound to benefit massively as the deal is worth millions of US dollars.
“According to World Nuclear Association report of May 2024, in Africa, we have Namibia, South Africa, Niger and Malawi with huge uranium reserves, featuring among the top 20 in the world.
“At times, our own actions and decisions impoverish us, as a country. It’s high time we show our true patriotism towards our Malawi,” said Mhango.
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