Mining & Trade News

I was one of the journalists invited to Kangankunde in Balaka to cover the launch of Project Early Learning which Lindian Resources is implementing to support Kangankunde Primary School.

Minister of Education Bright Msaka officially launched the project, through which Lindian is constructing new infrastructure at the school including school blocks and a netball court, and also giving learners learning materials such as books and pens.

I left my base in Lilongwe early in the morning on that day to arrive in time for the event that was scheduled to start at 9.00am at the primary school.

I never went wrong regarding punctuality as I was assisted by the good access road from M1 to Kangankunde that Lindian has constructed to gravel standards to ease access to the mine.

When I arrived at the event, I was surprised to meet my Uncle, Mr Mathias Chimwala, in the company of a fellow old man. Mr Chimwala is the only one alive among my late father’s siblings and stays in our home village Chimtendere in Traditional Authority Nsamala’s area near khwisa Trading Centre in the northern side of Balaka, a bit far from Kangankunde. “Oh dad, what brings you here?” I reached out to him as traditionally we refer to a father’s brother as another Dad.

He explained that he had come from Khwisa to visit the old man in his company Mr Mwatitola, who is one of his brothers in-law and long-time friend.

“Several years have elapsed since I paid him a visit. He asked me to escort him to attend this event. I am just surprised that this area has changed now. Villages here used to be surrounded by thick bushes with Malawi’s renowned hungry hyenas of Ntcheu and Balaka on the prey feasting on people’s livestock.”

Before I could respond to ask Mr Mwatitola if they had managed to overcome the threat of the hungry hyenas, he chipped in: “There are now hungry hyenas feasting on Kangankunde Mineral Deposit Mr Chimwala. I will tell you about these hyenas.”

No community development agreement  

He then started explaining about the project. Mr Mwatitola enlightened us that unlike other big mining projects in Malawi, there is no Mining Development Agreement (MDA) nor Community Development Agreement (CDA) on Kangankunde. This is because only companies that hold a large-scale mining licence are mandated to sign MDA with Government and CDA with the community. Strange enough, Lindian is still operating using a medium scale mining licence to run Kangankunde, one of the largest and most significant rare earth deposits in the world.

“Why is the company not acquiring a large-scale mining licence then with such a huge and high value deposit understanding rare earths are one of the critical minerals in high demand on the world market?” I posed the question to Mr. Mwatitola.

He told us that Lindian wants to start with very low production that does not deserve a large-scale mining licence and scale up and obtain a large-scale mining licence later.

I posed a question to him: “So if Lindian wants to make money out of Kangankunde to raise money to expand to large scale mining, what is failing the Malawi Government from revoking its licence to give it to a capable investor to develop large scale mining with all its benefits? Do you know that there are huge investors out there, some with the backing of rich governments such as USA, looking for rare earth deposits of that size and quality?”

Very cool and calm, Mr Mwatitola responded to me: “My son, this is the work of the hyenas I talked about. They are some hyenas in government feasting on Kangankunde based on such peculiar arrangements.”

“If Kangankunde was being managed in a sound way, we would certainly have had a large-scale mining company pursuing the deposit. This company would have signed MDA and CDA with us, according to the Mines and Minerals Act (2023). Through the CDA, we would be able to propose the development projects that we want here as natives of Kangankunde other than waiting for someone in luxury at Lindian’s head office in Perth, Australia to decide what to voluntarily do for the people of Kangankunde. We are certainly being taken for a ride by these hyenas.”

Processing of monazite to be conducted in Kazakhstan and Australia

I was mesmerized with the knowledge and reasoning of Mr Mwatitola on mining issues and I asked him how he manages to follow these issues.

He told me that he follows the issue of Kangankunde mine from Traditional Leaders who are invited to Council meetings. Mr Mwatitola also reminded us about his experiences working in mines in “Salisbury” now Zimbabwe.

He continued his talk: “My son, it is clear that we, the people of Kangankunde, and the Malawi Nation will not adequately benefit from Kangankunde due to the work of these hyenas.”

“Kangankunde is a lost opportunity for Malawi looking at the size and global significance of the deposit with Lindian having signed a binding agreement with an Australina firm Iluka Resources including an offtake loan to develop the mine and buying a refinery in Kazakhstan to process the monazite. It pained me as an old man to see pictures in online news articles of US and Australian officials and also US and Kazakhstan government officials holding hands celebrating bilateral coordination over rare earths including those of Kangankunde. Foreign nations are celebrating cooperation over rare earth from Kangankunde while I lack a kwacha to buy bonya  (very small fish). Cry for my beloved Kangankunde! Cry for my beloved Malawi!”

It was becoming vivid that the old man was getting emotional when he later complained about lack of jobs for the youths in Balaka and Malawi as a nation while Kangankunde is exporting jobs through these arrangements of sending monazite concentrate to process in foreign countries.

The old man explained that through such arrangements. Malawi is also losing the chance to bring the rare earth processing technology home.

“I hear that in Salisbury, President Munangagwa banned exports of both processed and semi-processed critical minerals such as this concentrate. Chinese companies are, therefore, opening lithium processing plants there, employing more locals,” Mr Mwatitola gave an example of Zimbabwe.

I reminded him about the Executive Order issued by State President Arthur Peter Mutharika banning exportation of raw minerals asking why it is not working on Kangankunde.

He responded to me by explaining that Lindian officials indicated that the ban excludes Kangankunde because it is only a ban on unprocessed minerals. Kangankunde will not export run of mine material. It will develop the material into concentrates.

Then my Uncle laughed and said: “You know, some of these announcements by politicians mainly serve political interests. You can see the ban boosted the popularity for the President but is mainly impacting poor artisanal and small-scale miners with investors avoiding it.”

Government officials pocketing allowances

As Mr Chimwala was talking, the Minister started the hand over of books to selected learners at the primary school as part of the ceremony.

This prompted me to speak in praise of the Lindian for the project but Mr Mwatitola responded; “My son, while this project is indeed important, we still want the mining project to upgrade to large-scale and sign a CDA and MDA. While the CDA will enable us to choose the projects that we want, the MDA will increase transparency in the project as it states what benefits are there for the Malawi Nation and the mining company.”

“This medium scale mining licence is keeping us in the dark on the benefits in so doing giving an opportunity to the hungry hyenas to continue feasting on our resource.”

As we continued discussing these issues on the sidelines of the event, we noticed queues of locals including women with babies strapped on their backs queueing to receive a packet each of biscuits and  juice in 240ml bottles that Lindian bought as lunch for the locals.

At the same time, government officials were seen entering one of the modern classrooms constructed by Lindian to receive brown envelopes which we knew contained funds for transport expenses’ reimbursements and allowances.

Mr Mwatritola continued his talk: “Look here, these government officials are pocketing allowances while locals like me are supposed to scramble for small packets of biscuits and juice. These government officials and politicians are the hyenas I talked about feasting on Kangankunde on our watch.”

“Members of Parliament from the last cohort of the Parliamentary Committee on Natural Resources also came to tour Kangankunde and demanded hefty allowances from Lindian which were paid immediately.”

“Besides that, Lindian is one of the companies that has been sponsoring government officials to attend international mining conferences in different countries. These officials shamelessly ask for sponsorship from Lindian without any worry of compromising their roles. Do you think these officials can make any decision to Lindian’s disadvantage though for the good of the nation?”

 “Hungry hyenas are feasting on Kangankunde while we, the locals here, and many Malawians continue to live in abject poverty.”

As Msaka bade farewell to the gathering at the event, I invited the two old men to join me in enjoying Kachaso, a locally brewed gin, in Kangankunde Village. It was not the talk of the Minister encouraging locals to support Lindian in developing Kangankunde Mining Project but the old man’s talk of hyenas feasting on Kangankunde that stuck in my mind.

Mining engineer Dennis Mkandawire has urged the government to abandon the continued use of raids by security officers against Artisanal and Small-scale Miners (ASM), arguing that the approach has failed to formalize the country's mining sector.

In an interview with Mining & Trade Review, Mkandawire said the government should instead prioritize registering informal miners, providing technical support, and integrating them into the formal economy to improve safety, revenue collection, and regulation.

Mkandawire likened the ongoing pursuit of unregistered miners to ‘trying to empty Lake Malawi with a bucket,’ saying the strategy consumes public resources without delivering lasting results.

"The government spends time and money chasing artisanal miners from one pit to another. They run away from the police when theycome, and two weeks later they are back to business as usual. The question is: Is this working?” he said.

Mkandawire said continued enforcement operations have imposed significant costs on the government through fuel, police deployments, and court processes, while the majority of mining activities remain outside the formal regulatory system.

He said that the current approach has also denied the government valuable information about mining activities, reduced opportunities for tax and royalty collection, and contributed to unsafe mining practices.

"Chasing miners gives us no reliable data, no tax revenue, no safety standards, and no effective way to support them. Instead, it creates hostility between miners and the state. When miners operate in hiding, unsafe pits remain unchecked and fatal accidents become more likely," he said.

He said formal registration would enable authorities to identify where miners operate, what minerals they extract, and how many people depend on artisanal mining for their livelihoods.

He added that registration would also improve government revenue through royalties and licensing fees, strengthen occupational safety through training on proper mining methods and Personal Protective Equipment (PPE), and ensure that minerals such as gold and gemstones are sold through legal channels, including licensed buyers and the Reserve Bank of Malawi (RBM).

To achieve this, Mkandawire recommended deploying mobile registration teams to major artisanal mining areas such as Kasungu, Karonga, Mchinji, Mzimba, and Mangochi.

He also called for simplified registration procedures, affordable licensing fees, and support for miners to establish cooperatives.

In addition, Mkandawire proposed a six-month amnesty period that would allow informal miners to register without penalties for previous unlicensed operations before strict enforcement measures are introduced.

"If the goal is to build a formal, safe, and profitable mining sector, then registration should be the first tool, not raids," he said.

Perekezi ASM Consultants MD Chikomeni Manda said although the government's intention to formalize the ASMs is commendable, the current approach has not delivered the desired results.

"Formalization cannot be achieved through force. Instead, it requires inclusive participation of ASM stakeholders through their various associations to come up with mechanisms that benefit everyone," said Manda.

He said the suspension of license issuance and the gemstone export ban have further complicated the sector, forcing many operators to rely on social licences in the absence of legally mandated ones.

"Consequently, gemstones are being smuggled out due to the export ban, resulting in significant losses for the government," he said.

Manda also argued that ‘Operation Samala Mgodi’ has disrupted the operations of many Malawian artisanal miners.

"As a result, between 50 and 70 percent of the gold being purchased by RBM now originates from Mozambique, undermining the local empowerment of Malawian gold miners. This approach only penalizes hardworking Malawians while empowering non-Malawians who gain access to a gold market that was originally intended to benefit local miners," he said.

He further warned that the absence of licences has also weakened environmental accountability in the sector.

"At the end of the day, the environmental damage is so huge because ASM operators are not held accountable in the absence of licences," said Manda.

President of the Federation of Artisanal and Small-Scale Mining in Malawi (FASMIM), Percy Maleta, described Mkandawire's observations as timely, saying they deserve serious consideration.

"It is becoming increasingly evident that relying on raids and enforcement alone will not achieve the formalization of Malawi's artisanal and small-scale mining sector. Registration, technical support, access to markets, and simplified licensing are practical and sustainable solutions that can bring thousands of miners into the formal economy," he said.

However, Maleta said there is one critical element that should not be overlooked, arguing that formalization should begin by strengthening the leadership structures of the ASM sector.

"Government efforts should deliberately focus on building the capacity of FASMIM and its member associations before engaging individual miners. These organizations are best positioned to become the bridge between government and artisanal miners. They understand the realities on the ground, have established relationships with mining communities, and can effectively mobilize, educate, and monitor their members," he said.

According to Maleta, a strong federation and vibrant associations would become the government's eyes and ears in mining communities by facilitating registration, promoting compliance with mining laws, disseminating safety information, encouraging environmental stewardship, and ensuring minerals are traded through legitimate channels.

"This approach is far more sustainable than expecting government institutions to directly reach every individual miner across the country," he said.

Maleta observed that many ASM associations currently exist largely on paper and have limited operational capacity because they have received little institutional support.

"This is not because they lack commitment, but because they have received little institutional support to carry out the important role they were created to play. Strengthening these organizations through training, resources, and structured partnerships would significantly accelerate the formalization agenda," he said.

"Empowering these institutions will create a coordinated system where government provides policy direction and oversight, while the federation and associations drive grassroots implementation. Formalization will not succeed by registering miners alone; it will succeed by building strong institutions that can organize, represent, educate, and support those miners for generations to come," he said.

Malawi has in recent years intensified efforts to reform and formalize its mining industry as part of the Malawi 2063 development agenda, which identifies mining as one of the country's priority sectors for economic transformation.

Lack of transparency threatening Malawi’s mining sector

It is unfortunate that several months have now elapsed since we started reporting developments at the Kangankunde Rare Earth Mine in Balaka but the Malawi Government is not coming out in the open to explain to Malawians about the mine.

The information that we have is always from Lindian Resources published on Australian Stock Exchange (ASX) as the Australian junior resource firm entrusted with Malawi’s gigantic world class resource continues to attract investors in the global financial market.

As reported in our lead article, these ASX revelations enabled us to learn that Lindian is exporting raw monazite concentrate despite the ban on exportation of raw minerals declared by State President Arthur Peter Mutharika.

After being summoned to the Mining and Minerals Regulatory Authority (MMRA) offices to explain our revelations, we were told that the exports were part of mining trials with Lindian reporting on ASX that it was testing its refinery in Kazakhstan.

It is through the same ASX that we learnt that Lindian bought a refinery in Kazakhstan specifically for Kangankunde Monazite.

As reported in the article on Front Page, we initially published a letter from MMRA signed by the former Director General Samuel Sakhuta authorising Lindian to export raw monazite concentrate, which we sourced from the ASX as part of a Lindian Press Release informing the markets that it had secured consent from the Malawi Government to export the rawer mineral.

Later we sourced another letter from MMRA with the same date, headline  and signatory indicating that MMRA had rejected Lindian to export monazite concentrate owing to the ban.

It is surprising that there has been no official statement on the issue from the Government with the Minister of Mining Thoko Tembo saying he is waiting for technocrats in his Ministry to investigate before issuing an official statement.

But the question we have is that when will these technocrats that Tembo is waiting for finish investigations for Malawians to be told the truth on the issue?

Malawians, as rightful owners of the minerals have the right to know whether government gave consent to Lindian to be exporting raw mineral concentrate or not despite our elected leader banning the same.

Civil Society Organisations have been complaining about lack of transparency in Malawi’s mining sector. By delaying to come out officially on Kangankunde, government is qualifying this as the truth which is not only a fertile ground for corruption but also a threat to the growth of the sector that has the potential to transform Malawi’s economy.  

The Minister of Mining, Honourable Thoko Tembo, has commended Portland Cement Malawi Limited for its K200 billion investment in the manufacturing and mining sectors following a visit to the company’s Balaka Plant.

Honourable Tembo, accompanied by government officials including representatives from the Balaka District Council, toured the plant and mining operations to appreciate the company’s contribution to industrial development, responsible mining, and economic growth.

The Minister applauded Portland Cement for undertaking the large-scale investment, describing the Balaka Plant as a significant milestone that is supporting Malawi’s industrialisation agenda through increased local cement production, job creation, and economic opportunities. He further recognised the company’s potential contribution to foreign exchange generation through cement exports, which can support the country’s economy and strengthen Malawi’s position in regional markets.

Honourable Tembo noted that investments of this magnitude demonstrate the critical role of the private sector in driving economic transformation, promoting local value addition, and creating opportunities for surrounding communities. He further commended Portland Cement for its commitment to responsible mining and sustainable business practices.

The Minister also assured Portland Cement of the Ministry’s support, stating that the Government remains committed to creating an enabling environment for investments that contribute to national development. He acknowledged that the company’s current production capacity is sufficient to cater for Malawi’s cement demand and commended Portland Cement for helping strengthen the country’s self-sufficiency in cement production. He added that the Ministry of Mining will continue working closely with the company and supporting initiatives that promote sustainable mining, value addition, and industrial growth.

Speaking during the visit, Portland Cement Chief Executive Officer Liu Jianguo expressed appreciation to Honourable Tembo and the accompanying delegation for visiting the Balaka Plant. He reaffirmed the company’s commitment to producing high-quality cement products that meet required standards while ensuring full compliance with all regulatory requirements governing its operations.

Liu further highlighted Portland Cement’s commitment to environmental protection, responsible mining practices, and workplace safety. He noted that the company remains dedicated to supporting surrounding communities through various Corporate Social Responsibility (CSR) initiatives aimed at contributing to local socio-economic development and improving livelihoods.

Meanwhile, Balaka District Council Vice Chairperson Councillor Tiyanjane Chisowile described the investment as a major boost to the district’s socio-economic development. He applauded Portland Cement for creating employment opportunities for local people and for its continued support towards community development.

Councillor Chisowile also commended the company for its upcoming construction project at Ngonga Primary School, where Portland Cement is expected to construct classroom blocks to help improve the learning environment for learners in the surrounding community.

The visit highlighted the importance of government-industry partnerships in promoting sustainable mining, strengthening Malawi’s manufacturing sector, and supporting the country’s long-term economic development.

Prime Insurance Senior Marketing Officer Charity Skeva has urged players in the minerals sector including Artisanal and Small-scale Miners (ASMs), medium as well as large scale miners to insure their assets in order to maintain peace of mind when executing business.

In an interview with Mining and Trade Review, Skeva observed that despite the sector having great potential, there are many challenges that players face including accidents, theft cases and poor returns after extraction.

Skeva said insuring assets as well as employees is, therefore, of paramount importance for the players in the mining sector.

She said: “As Prime Insurance, we support miners by comprehensively insuring their assets. For example, recently we compensated a local smallscale mining group Tinyololoke Mines after they had encountered mishaps. It is our wish that most mining institutions get insurance so that they can come to us for help in times of eventualities.”

There are a number of companies providing insurance services to mining establishments across Malawi including Old Mutual, Nico, Britam, United General, Re-Union, and General Alliance, among others.

‘As a company, we know that mining has the potential to turn around the economic fortunes of the country although sometimes it is overlooked,’ said Skeva.

MD for Trinity Insurance Clement Kansese Ndala concurred with Skeva that mining has the potential to overtake agriculture as the country’s number one forex earner if properly supported.

 “There is potential in mining and as an industry we are there to provide the necessary back up support,” said Ndala.

Mining is touted as one of the countries’ potential sectors to spur Malawi’s economic transformation in the country’s blueprint, Malawi 2063.

Malawi’s minerals sector is, currently, attracting global attention due to continued discovery of minerals critical to the global technological revolution including rare earths, graphite, rutile, uranium, niobium and tantalum.

The Reserve Bank of Malawi (RBM) says it cannot disclose the buyer of gold from the country’s reserve after selling around 600kgs of gold it purchased from local small-scale miners.

In an interview with Mining and Trade Review, Spokesperson for RBM Boston Maliketi Banda said the Central Bank is not allowed to disclose the buyer under the commercial agreements.

“We have so far sold around 600kgs bringing in over US$74 million. Under the commercial agreements we cannot disclose the buyers. However, these are established buyers of gold on the global market,” said Banda.

The Malawi government established the structured gold market in May 2021 that started buying gold from Artisanal Smallscale Miners (ASMs) as one way of curbing market challenges faced by the ASMs and bringing in sanity into the system which was flooded with foreign buyers.

Banda has, meanwhile, disclosed that RBM has secured MK400 million to resume buying of ASM gold which was paused for months due to shortage of funds.

Commenting on the development, Desk Officer at the Secretariat for Malawi Extractives Industries Transparency Initiative (MWEITI) Leonard Mushani said transparency and accountability are utmost pillars of MWEITI and that they will ensure that they acquire the information of the entire gold selling deal to appear in the next MWEITI report.

Mushani said:  “Unfortunately, we cannot respond on behalf of the RBM at the moment but we can only speak for MWEITI to say gold purchases and sale are part of MWEITI disclosures and we report such information in our MWEITI reports which you can access through our website.”

“You may wish to know that the information you have asked for since its recent will be covered in the next MWEITI report which will be published before December this year.”

“All that information will be disclosed as we usually do. If we can get that information, we will be able to share where necessary.”

However, National Coordinator for Natural Resources Justice Network, Kennedy Rashid said by not disclosing the buyer and some of the information contained in the deal, Government is leaving important information gaps which is an embarrassment to the sector understanding that Malawi is a champion of transparency under MWEITI.

Rashid said such details are important to ensure public understanding, especially where public institutions and national resources are involved.

He said: “From a transparency and accountability perspective, the disclosure of only the quantity of gold and revenue realised, without providing information on the buyer, the nature of the transaction, and whether the gold was sold in processed or unprocessed form, leaves important information gaps.”

“As champions of transparency under MWEITI, we believe that disclosure should go beyond financial figures and include sufficient information to allow citizens and stakeholders to understand the full value chain of extractive transactions.”

“Transparency helps build public trust, strengthens accountability, and reduces the risk of speculation or perceptions of impropriety.”

Rashid  admitted that the specific disclosure obligations of the RBM and Export Development Fund (EDF) would depend on the applicable legal and policy frameworks governing the transaction.

“However, where public resources or state-linked entities are involved, proactive disclosure of relevant information should be encouraged in line with good governance principles. Addressing these information gaps would help reassure the public and demonstrate Malawi’s commitment to responsible resource governance and the principles of the EITI,” he said.

RBM  is buying unprocessed gold from ASMs of 90 to 99% quality at around MK500,000 per gram.

Former Director General for Mining and Minerals Regulatory Authority (MMRA) Samuel Sakhuta says he is shocked with reports solely associating him with the two contradictory letters to Australian junior miner Lindian Resources that Mining & Trade Review published regarding exportation of raw monazite concentrate from Kangankunde Rare Earth Mine in Balaka.

Mining & Trade Review last month published the two letters both dated Octobers 28, 2025 signed by Sakhuta, with one rejecting the exportation of raw monazite concentrate owing to the ban on exportation of raw minerals declared by State President Arthur Peter Mutharika and another one giving consent to the raw mineral exports by claiming that processing monazite mined at Kangankunde to monazite concentrate stage is value addition, according to the ban.

In the letter that rejected export of raw monazite concentrate, Government encouraged Lindian to process the monazite to rare earth oxides locally citing provisions for the ban and Kangankunde mining licence terms.

Lindian the following day published a Press Statement on the Australian Stock Exchange announcing that Malawi Government had authorised it to export monazite from Kangankunde . The positive announcement culminated into the junior miner signing multimillion-dollar offtake agreements with foreign processors and raising over a US$100-million to finance its operations at Kangankunde and the Kazakhstan refinery.

On both letters, there are indications that they were copied to the Office of the President and Cabinet and the Ministry pf Mining.

Sakhuta said in a telephone interview with Mining & Trade Review that Malawians must not blame him solely for the letters because they were the Ministry of Mining’s decision.

“You can see that they were copied to OPC (Office of President and Cabinet) and the Ministry of Mining which shows that they were not solely the work of Sakhuta,” he said.

When put to him that the Ministry of Mining denied any knowledge of the letters, he said it could be that the Ministry does not want to commit itself to the letters since the Minister and a number of senior officials are new.

Minister of Mining Honourable Thoko Tembo said his Ministry is waiting to receive comprehensive briefings from relevant technical and regulatory authorities before commenting on the alleged irregularities in the development of Kangankunde Rare Earth Mine.

Tembo said: “I will refrain from commenting on operational details of the Kangankunde Project until I have received comprehensive briefings from the relevant technical and regulatory authorities.”

“Once that process is complete, the Government will communicate its position where appropriate.”

“Our objective is to ensure that Malawi’s mineral resources are developed responsibly, transparently and in manner that delivers maximum benefits to our citizens.”

Kangankunde, scheduled to start commercial raw monazite exports this November,  is  set to become the first ever rare earth producing mine in Malawi.

Lindian has been exporting raw monazite concentrate from Kangankunde to test its refinery that it has bought in Kazakhstan for the project.

The Company conducted the first blast at Kangankunde last month marking the official start of mining at the site.

The Minister of Mining and senior officials at the Ministry missed the ceremony as they were touring the Kasiya Rutile-Graphite Project in Lilongwe on the same day. 

As reported in our main article, government is finalising formulation of regulations for raw mineral export ban declared by State President Arthur Peter Mutharika soon after taking over power in last year’s elections.

It is unfortunate that it has taken long to develop the regulations leaving the sector chaotic but we commend government for moving with speed after stakeholders  raised concerns about the impacts of the ban on the sector.

We have published articles about exploration firms failing to export mere samples for their scientific studies because of the ban with security officers or authorising personnel applying their own understanding of the ban to bar the exports due to lack of supporting regulations.

We have written about small-scale miners failing to export their gemstones for processing outside the country due to the ban despite that the country lacks facilities for gemstone processing.

The situation has not only led to declining income and increased hardships for small scale miners but also a drop in mining revenue for the Malawi Government as reported in the latest annual economic report published by the Ministry of Finance and Economic Affairs.

We believe the coming of the long-awaited regulations will be a remedy. 

Equally, as reported in the article, we believe the regulations will deal with uncertainty on the export of the Kangankunde Rare Earth monazite concentrate. In scandalous circumstances, the Mining and Minerals Regulatory Authority (MMRA) issued two contradicting letters. In one letter, the MMRA rejected Lindian to export the concentrate owing to the ban while the other gave consent to the company with the signatory former Director General of MMRA Samuel Sakhuta claiming that converting monazite ore to monazite concentrate is full-scale processing possible in Malawi in accordance with the ban.

Certainly, the regulations will tell us what the ban means on processing of rare earth ore. Is production of monazite concentrate full-scale beneficiation accepted by Malawi Government as reported in the letter that Lindian presented to Australian Stock Exchange or is processing to rare earth oxides full-scale processing, according to the thresholds of the ban?

CONGRATULATIONS HONOURABLE THOKO TEMBO
On a different note, we join stakeholders in congratulating Honourable Thoko Tembo for being sworn in as Minister of Mining following his appointment several weeks ago. We wish you all the best Honourable in this signifiant role for Malawi’s economic revival!!!

The 
Kangankunde case:  
A missed 
opportunity for Malawis’ Rare Earths.

News that Lindian Resources, a mid-tier company mining rare earth in Malawi at Kangankunde hill, has entered into strengthening its trade, marketing and logistics in Singapore soon after first blast gives an insight into how mining companies operate having an advantage over a mineral host country to their advantage. Singapore is not a traditional, classic tax   haven like the Cayman Island, Bermuda which include secrecy, minimal taxation and lack of economic substance. It is   classified as a tax haven because of its high, competitive tax regime, zero capital gains and other incentives that ultimately lower effective corporate taxes for foreign investors although it claims that it is legally compliant, transparent in its dealings and internationally recognized. This type of open tax policy and locality makes it a gateway for mining companies wanting to expand into emerging multinationals rendering Singapore a global hub for international investment and trade.
 

Possible reasons why Lindian chose Singapore

• Singapore is a centre for international
  trade and finance.
• Favorable policies for people living and
  doing business.
• It offers several tax breaks, relatively low
  corporate tax rate and top personal tax
  bracket and there is no any levy/tax on
  capital gains. 
• Its’ territorial tax system allows certain
   foreign-sourced income to be exempted
   under specific conditions
• Qualifying companies may receive 
   partial exemptions on a certain amount 
   of  chargeable income,

Unlike traditional tax havens, Singapore requires companies to demonstrate real economic activity, such as hiring local employees and maintaining local operations, to qualify for tax incentives. This ensures that businesses are not merely briefcase companies and contributes to the country’s reputation as a legitimate financial hub. Such incentives have also attracted global multinationals who use Singapore for regional headquarters and strategic tax planning.
 

What does this mean for Malawi as a mineral host country?

Critically, Malawi will somehow be disadvantaged in the following ways:

1. Base erosion and profit shifting (BEPS).
This is a situation where a mining company exercises tax avoidance strategies to exploit gaps in tax rules to artificially shift profits to low or no-tax location. This risks transfer pricing where Lindian may undervalue its rare earth export of concentrate and sell cheaply to its own Singapore marketing hub, effectively trapping the largest profits in a low-tax jurisdiction and leaving the host country (Malawi) with minimal taxable corporate income. This may shift the profits realized from Malawi as an extraction site to Singapore. Besides, the country has probably already been deprived of its taxes, royalties and other community benefits after being allowed as a Mid-tier miner (medium scale mining). Furthermore, the host nation (Malawi) also bears all environmental and social costs.

2. Tax Incentive Asymmetry

Generally, when a country trades with a tax haven, it avoids high/standard corporate tax rates in a host country opting for these countries that offer specific incentives in form of schemes thereby reducing the tax rates on trading income. There is an inherent tax gap where a company (Lindian) will maximize its profits in Singapore.
 

3. Information and Asymmetry 
Obscurity
Singapore has physical trading with complex financial institutions and has capacity for hedging (a risk management strategy used in finance and business to offset the risk of adverse price movements in an asset) than in Malawi. In another aspect, Malawi as a host country, tax authorities lack the data or capacity to audit these complex offshore transactions and with creation of hidden margins, the true commercial profit margins remain obscured.
 

Proposed solutions for Malawi to do 
better (win-win situation)

a). Review and Reduce Tax Incentives
Host countries often lose revenues from overly generous tax holidays and accelerated depreciation. An example is the Kayelekera Uranium Mine which was mining uranium under Paladin Energy and was given a 10 year tax holiday where price downturn forced the mine to be under Care and Maintenance just after operating for 5 years. Malawi must balance these incentives with primary infrastructure investments to support domestic value addition. It is unfortunate that while the agreement showed that Lindian would be exporting rare earth oxide, the mining sector has learnt that the company is exporting monazite concentrate according to some documentation released to the public

(b). Direct State Participation
Host governments secure a direct share of revenues and mitigate tax-avoidance risks through equity stakes and direct licensing. Through MAMICO (Malawi Mining Investment Company), the government must brace itself for the upcoming   mining companies to get involved in equity sharing and  also with time, localize the mines.
 

c)Mandatory Disclosure Rules
Mining companies are obliged to submit standardized data on production, subcontracting, procurement, local content and offshore transactions in alignment with mining frameworks. Malawi must make sure that these frameworks are adhered to and embraced as mandatory.

(d). Joint Mandate Traceability, 
Monitoring and Data Exchange
Malawi must intensify inter-government collaboration) and non-state actors in monitoring, tracking and verification of mineral exports, point of sale, imports for use by the mining company. The Ministry of Mining including its’ Departments, Mining and Minerals Regulatory Authority (MMRA), Malawi Revenue Authority (MRA) while the non-state actors like MWEITI, Natural Resource Justice Network (NRJN) have to check on accountability and transparency in exercise of this collaboration.

(e). Implement the Sixth Method
 Some countries like Zambia implemented mandatory use of publicly quoted commodity market values as a benchmark like from London Metal Exchange based on shipping date/loading for related-party mineral sales to prevent deliberate underpricing. This is a transfer-pricing rule used to prevent multinational mining companies from artificially reducing taxable profits by selling minerals to offshore, related-party marketing hubs at undervalued prices where it is called the Sixth Method. Malawi must adopt the same because these mining companies avoid internal pricing formulas to run away from taxes.