Page 20 - DMA Malawi Report 2013

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Investing In Malawi
alawi hosts a variety
of minerals – including
niobium, rare ear th
elements (REEs) and graphite – of which
only two, uranium and coal, are currently
mined. Malawi is generally under-explored
but in recent years a growing number of
foreign firms and local Malawian investor
par tners have been granted prospecting
rights, and exploration now underway
is likely to result in the development of
several new mines, especially for niobium
and REEs.
Mining currently accounts for only around
2% of GDP, with tobacco, sugar and tea
remaining the main exports by value.
However, the start of uranium production
in 2009 by the Kayelekera mine has
diversified Malawi’s export base: uranium
exports were worth Kw19.4bn (US$76
mn) in 2011, an 8% share of total exports
(Kw236bn), and will have further increased
in 2012 due to higher production that year.
Geological data indicates that Malawi also
hosts potentially large recoverable oil and
gas deposits beneath Lake Malawi (Lake
Nyasa), and three exploration licences
have been granted so far. However,
drilling for hydrocarbons will not proceed
until an agreement has been reached
with Tanzania on the delineation of their
common border through the lake. Malawi
claims it runs along the Tanzanian shore,
while Tanzania claims the border should
run through the middle of the lake.
Thankfully, both governments have
agreed to mediate the territorial dispute;
in January 2013 the Forum of Former
African Heads of State and Governments
chairperson and previous Mozambiquan
President Joaquim Chissano accepted
the Malawi and Tanzania governments’
December 2012 submission of a joint
application of mediation for negotiation
of the Lake Malawi boundary. Both
governments have committed to finding
a peaceful solution to the dispute.
For oil and gas exploration purposes, the
government divided Lake Malawi into
six blocks and invited bids for acreage
in 2010. Two four-year exploration
licences have been awarded so far : to
South Africa’s SacOil (Block 1) and the
UK’s Surestream Petroleum (Blocks 2
and 3). Surestream is initially conducting
an environmental and social impact
assessment (ESIA), while SacOil plans
to spend US$2mn on the acquisition
of gravity and magnetic to evaluate the
petroleum potential of its block.
to revamp
current laws
Exploration and mining licences are
granted in accordance with the provisions
of the Mines and Minerals Act, 1981;
exclusive prospecting licences (EPLs)
are allocated for an initial three years,
renewable for fur ther two year periods.
Mine production rights are negotiated
Extractive Industries
by Roger Murray