Rev. Maulidi applauds government for admitting making mistakes in mining agreements with foreign countries

* Going forward, the government’s agreements with foreign investors should be done in transparent manner by involving expert mining and business technocrats and other stakeholders

* We need the mining development agreement that was signed with Lotus Resources for Kayelekera Mine in Karonga to be scrutised further

* To know what we were the mistakes that were made in order for experts to offer their best advice on how to reevaluate the contract

By Duncan Mlanjira

All Africa Conference of Churches (AACC) Economic Justice & Accountability champion in Malawi, Rev. Baxton Maulidi has applauded Minister of Mining, Ken Zikhale Ng’oma for admitting that the government has been making mistakes in the mining development agreements with foreign company investors.

Rev. Baxton Maulidi — who is Church of Central Africa Presbyterian (CCAP) Blantyre Synod’s Deputy General Secretary, is responding to Zikhale Ng’oma’s statement made in Parliament on Friday as reported in The Sunday Times newspaper, who confessed that past agreements with foreign mining companies have been signed without adequate due diligence.

He was responding to a question by Member of Parliament, Mark Botomani on what Malawi is benefiting from its vast minerals, which is top of agenda for the current government administration in the economic recovery of the country through the agriculture, tourism and mining (ATM) strategy.

The Minister confessed that despite having vast mineral resources, the country has seen minimal benefits because of poor decision-making, poor policies and rushed mining development

He added that mining would have take Malawi far by now but outsiders have benefited more from the minerals they have been extracting, saying: “Malawi is where it is now with the mining sector because of the mistakes we have made.

“We have made strategic mistakes, we have made economic mistake, contract signing mistakes, poor funding to the Ministry of Mining, security, policy and geological mistakes. These mistakes have led to Malawi being poorer and poorer and those benefiting are from outside.”

He alluded that the foreign companies have been exploiting Malawi’s legal loopholes and weak regulatory framework, rushed nature of past agreements, saying crucial details were overlooked, resulting in unfavourable terms for the country, which allowed foreign companies to maximise profits leaving the country with little benefits.

He, however, said the government is now working on strategies to clean the mining sector by revisiting past strategies to rectify the mistakes, which was kick-started in February by suspending issuance of new mining licences while banning the export of minerals until further notices.

In response, while applauding the Minister for the confession, Rev. Maulidi said going forward, the government’s agreements with foreign investors should be done in transparent manner by involving expert mining and business technocrats and other stakeholders.

“We need the mining development agreement that was signed with Lotus Resources for Kayelekera Mine in Karonga to be scrutised further to know what were the mistakes that were made in order for experts to offer their best advice on how to reevaluate the contract.

“We also need to know what are the remedies that the government has considered for future mining development agreements that will move Malawi forward to make sure that the past mistakes would not be repeated.”

Before the confession from the Minister, Rev. Maulidi — while being mindful that Government already signed the mining development agreement (MDA) with Australian company, Lotus Resources Limited in July 2024 — demanded that the contents of the contract should still be released for public scrutiny to avoid a repeat of harmful discretionary tax incentives experienced through former investor Paladin Africa for the same Kayelekera Mine.

Rev. Maulidi made the call after observing that the MDA made with Paladin Africa in 2009 had seriously flaws, which which were red flagged by ActionAid Malawi in 2015; https://www.maraviexpress.com/lotus-resources-strong-tax-breaks-on-kayelekera-mine-deal-defy-advice-against-such-incentives-made-by-actionaid-malawi-in-2015-on-former-investor-paladin-africa/

“It surprising that the current government administration did not heed the recommendations that ActionAid Malawi gave in order not to repeat the combination of what ActionAid described as harmful tax incentives — which saw Malawi losing out in revenue,” he said last week.

“ActionAid was very explicit in its recommendations that going forward, mining agreements, or for any other businesses, any tax incentives should be subject to Parliamentary and public scrutiny before being signed, and that they are made publicly available immediately upon signature.”

He observed that the mining development agreement with Lotus Resources was signed in secret having taken note that ActionAid Malawi’s report revealed that Paladin Africa manipulated the tax break incentives which saw them lower some tax rates in Malawi and exempt them from paying some taxes altogether; https://www.maraviexpress.com/lotus-resources-strong-tax-breaks-on-kayelekera-mine-deal-defy-advice-against-such-incentives-made-by-actionaid-malawi-in-2015-on-former-investor-paladin-africa/

Thus Rev. Maulidi’s emphasis that the current government administration, along with experts in the field of foreign company investment, must tread carefully in further dealing with Lotus Resources — and raised red flags that being an Australian company, Lotus Resources might have the same same intent that Paladin Africa did between 2009 till it was sold off.

He further contended that it even becomes “obviously suspicious” that after Paladin sold 65% of its shareholding interest in Kayelekera and 20% to Lily Resources, Lotus Resources then acquired Lily Resources’ 20% stake, leaving the Malawi Government still holding 15% of the Kayelekera project.

“That’s why we are asking that the contents of the agreement should still be made public just like ActionAid Malawi suggested to be done for any other mining investment so that it should be scrutinised by experts, Parliament, CSOs and any other interested stakeholders,” said Rev Maulidi.

The deal made last year just involved the then Minister of Mining, Monica Chang’anamuno; Minister of Finance, Simplex Chithyola Banda and Attorney General Thabo Chakaka Nyirenda on behalf of Malawi Government and for Lotus Resources its chairperson/director, Keith Bowes and country director, Grain Malunga.

Interestingly, in the formulation of the 2019 MDA with Paladin Africa during the Democratic Progressive Party (DPP) administration, the Mining Minister then was Grain Malunga.

And the MDA with Lotus Resources in July last year was supposed to have two witnesses appended next to the signatures of Ministers of Mining and of Finance but the spaces allocated to them are blank while the only stakeholders involved after signing the agreement were traditional leaders in Karonga, led by Paramount Chief Kyungu, who signed a Communinty Development Agreement with Lotus Resources, which did not represent national interest.