Killing Malawians through the rotten extractives deals: The case of Paladin’s uranium mining

Malawi has in the few weeks been engaged by a plethora of stakeholders discussing strategies to revive, or more on the ground, reclaim the benefits that Malawians are been milked of by the so-called extractive industry multi-national corporations.

They call themselves investors, and government believes that the Malawi Development Goals (MDGs – who cares if it’s the second phase) will be boosted, particularly that mining alone through Kayerekera of Paladin Energy Limited group of companies (trading as Paladin (Africa) Ltd in Malawi?) could provide a large economic base.

But that is all a fat lie. Paladin and many other foreign multinational mining countries are least interested to contributing to the Malawi economic growth. They are here to milk the country – exploiting all that it has rich in minerals and dump us when the time is right even poorer.

Imagine, to screw Malawians of their rightful economic gains, the company, incorporated in Australia first listed on the Australian Stock Exchange (ASX) on March 29, 1994 under code ‘PDN’, and quickly changed its name from Paladin Resources NL to Paladin Resources Ltd in 2000 and listed under the Toronto Stock Exchnage (TSX) in Canada April 29, 2005, and again changed its name to Paladin Energy Ltd in November 2007 and listed on the Namibian Stock Exchnage on February 2008.

Greg Walker, of Paladin Africa Limited explains to President Mrs Joyce Banda of the activities carried at Kayerekera Mining.

Greg Walker, of Paladin Africa Limited explains to President Mrs Joyce Banda of the activities carried at Kayerekera Mining.

By such trends, one is compeled to question the motive, considering also that in Namibia itself the company owns the Langer Heinrich Uranium Mine where it started production in 2008 and has Kayerekera Uranium Mine as its second largest mining venture in this part of Africa acting also as a good supllment to the Langer Heinrich Uranium Mine.

That understood, full ownership of Kayerekera was in 2005 following acquisition from Balman Resources Ltd, which acquired it from Central Electricity Generating Board of Great Britain. The project, as we speak, has also contracted all mining activites including blasting to Mota Engil, which is well feared for allegations of high corruption, paying hefty sums into late Bingu wa Mutharika’s personal accounts and getting almost all major government contracts in the process.

We need not talk about the late’s Ndata Farm mansion and what have you. The deal stunk around this period indeed.

For starters, the Agreements that these corporations enter into with poor countries like Malawi, in specific poor Malawi, lives a lot to be desired. Of the profits made, Paladin, for instance rakes in about 80% and has a paltry 1.5% for the Malawi nation – having exhausted the gross profits to smear us with that net percentage.

For a period of 8 years as commissioned with a potential of annual increment of 1.1 Mlb in another four year period against an estimated annual production of 3.3 Mlb of U308, it boils down that the company will enjoy Malawi’s resources for not less than 12 years with its licence expiring somewhere around April 2, 2022. Some 5,550 hectares of land have already been procured enough to extract uranium for the next 15 years – current reserves falling at 46.4 Mlb and expectedly to be exploited for not less than 9 years.

 

And thinking of how much they are making, the claim by the company that it has spent over U$796,032,617 at the site of which U$356,554,409 are in operational costs alone, having exported approximately 6,013,895 lbs of uranium oxide by October 2012 and fetching about U$329,846,669 makes me very sick.

Why? Because the company claims to have made a loss of –U$26 million and therefore the list of inductive incentives from government make the 1.5% they pay to us smell peanuts and daylight robbery.

Why we are giving this company 15% carried equity in project company to be transferred to government in return for either, corporate tax rate reduced from 30% to an effective 27.5%; and/or the 10% resource rent tax in Malawi reduced to a shocking ‘zero’ is almost Greek to me.

Again, we offer the Aussies reduced royalty rates from 5% to 1.5% (years 1 to 3) and 3% (years 3 plus) and yet our own struggling Small Scale or Mediaum Businesses have to pay through the nose that hefty taxes that the Malawi Revenue Authority (MRA) is feared for skinning out of local or indigenous businesses.

I also do not understand why we excuse these people of the ‘natural’ 17.5% import VAT (Value Added Tax) or import duty during the so-called stability period; and why there is this immediate 100% capital-write off for tax purposes? Yes, thin animal called ‘thin capitalisation’ (debt: equity) ratio of 80 against our 20 for the project is clear murder!

Stability period of 10 years? Hey, no increase to tax/royalty, regime and a commitment to provide the benefit of any tax/royalty decrease during the period? I can’t believe some sons and daughters of Malawi were party to this Agreement!

But it is not only Paladin, who claims have spent more than US$10 million in Corporate Social Responsibility (CSR) projects, who is to blame. We have our own sons and daughters that represented the most poor of the people of Malawi in engaging into the uranium mining deal.

Paladin alone has licences to pursue a further deals in Malawi in Chilongo in Chitipa; Mpata and Mlimbo in Karonga; and Chilumba in Rumphi districts in uranium explorations. We also have companies such as Mota Engil Engenaria that is gunning for Rock Agghregates, gold, platinum group of metals, base metals, uranium and phosphates in Malawi.

And yes, there is Eland Coal Mining Company in Karonga. There is Globe Metals and Mining Africa (GMMA); Njuli Quarry and many others that need to be equally checked for size.

Some of the precious resources that Malawians will suffer losses upon include limestone, heavy mineral sands, diamonds, and more. And government should be taken to task to make such exploration activities transparent as possible.

Cheats

Am told characters like Speaker of the National Assembly Hon. Henry Chimunthu Banda (HCB); lawyer and former parliamentarian and justice minister Bazuka Mhango (BM); and former minister of finance and later local government and now a suspect in a ‘coup’ following late Bingu wa Mutharika’s death, Goodal Gondwe (GG), were key to such a shoddy deal.

Shoddy a deal, yes, because years down the line, it is not known or there exists great discrepancies of how much the country is gaining from uranium. Paladin says in one breath it paid over U$5.6 million in taxes to the Malawi government, and in its other breath through its published annual report, indicates it paid about U$9.3 million in taxes.

The actual figure is not known and Paladin, relying on the shitty agreement they entered through HCB, BM, and GG, remains adamant it is not party to any transparency about how it deals with the profits and yet again the commission that goes to the national kitty.

And we are getting a raw deal, only because HCB, BM, and GG got what is called ‘incentives’ for been key to the dealings. HCB bought about twenty-two trucks for his business; BM upgraded his lodge or hotel in Karonga – with an agreed business deal all Paladin visitors would lodge at the place; and GG might as well have used part of his cut to construct his multi-million Kwacha mansion in the capital city, Lilongwe.

These are not the only suggested ‘culprits’ who were or are still in arms with the ‘foreigners’ killing Malawians by denying them their own resource-grown riches. I do not much care what the outdated Mines and Minerals Act says, about the President and/or minister been the custodian of land on behalf of Malawians, all I care about is that poor communities around Kayerekera are as poor as they have always been even before the mining started.

In my youth staying somewhere in Karonga, I saw some privately owned helicopters belonging to some British company carrying strange things towards the same Kayerekera direction. Now am told the British did their part under ‘study’ and left, and the Australians or Aussies came in to do the actual open mining.

So the British silently stole our uranium and left when their projections did not add up to their whims, and now we have the Aussies who are refusing to deal fairly.

For instance, it hurts so much to learn that Malawians are losing quite a lot of money to these ‘thieves’. And that our political leaders and other government officials are fattening their already fat bank accounts on the expense of poor Malawians.

Apart from the three ‘greedy’ politicians mentioned above, we have the likes of principal secretary of mining, whatever his position is in that ministry, one Kalindekafe, who is busy sitting on boards sanctioned by ill-intentioned ‘investors’ bent at milking the Malawian natural resources.

And that man cannot bat an eyelid, eating sausages and raising turkeys and rabbits at his farm, knowing pretty well people around Kayerekera, and millions of Malawians, would have gained more should he and some of those many bureaucrats sitting at Capital Hill acted more patriotic than serving individuals get-rich-quick attitudes they wallow in.

 

Approximately, Malawians are losing around U$10 plus million in unpaid loyalties as Paladin claims is operating on a loss. And counting the 9 mining years which translates 15 calendar years of mining, it is only five years of that deal that will see the company pay what is due to Malawians. And even then, 1.5% on net is not enough.

Malawians need a better mining deal – that draft Mines and Mineral Act that was launched this month April 2013 need careful revisiting before it becomes a sanctioned document to deal with. For instance, what about a 50% loyalties cash-in, or get out policy?!

Bolivia successfully dealt such greedy investors, asking them to go home if they were not interested in a 50-50 deal, and now people are reaping fruits of their ancestral resources – land and all.

Harmonisation of the water, land, environment and other Acts or policies, including the important element of desired and fair CSR framework will also do Malawians a great favour. But knowing our politicians and government officials like one Kalindekafe, it is almost a tall order that even President Joyce Banda’s moves to have the EITI (Extractives Industry Transparency Initiative) will see the light of day. But where the leadership and the peoples have a strong voice, Paladin and the many companies that are coming to Malawi and finding it an easy prey will have to think again.

Even civil society leaders like the once noisy Undule seem to have been silenced. Allegedly ‘palm-oiled’ for good  measure as some corners claim to have details our good activists were paid for air tickets by Paladin or their agents to travel to some corner of the world. And that can be an ‘incentive’ enough to shut down such loud mouths – it has been proved.

Whatever the case, it requires everyone in Malawi to be strong and deal the mining Agreements with a patriotic heart and feel. The short-changing that people like HCB, BM, GG, Kalindekafe, and Undule and company are giving Malawians is more than sin.

The loss that the country is experiencing would be enough to recruit almost double with undisturbed monthly pays to teachers, get adequate high quality latest type HIV medication; and improve all public services. That way mining would truly contribute to making Malawi’s GDP a good face and the MDGs become more meaningful for the majority of Malawians living below a dollar daily.

Government, in particular Mama Joyce Banda, must not be seen to have joined such ‘looters’ by not doing something about such lousy deals. She needs to bring in strong transparency strategies and tools such as the EITI and also ensure that the deals for niobium in Mzimba at Kanyika and other places , cement, and other notable great minerals, including coal up Chiweta and elsewhere, and quarry, are a better deal. And there are those oil prospects in Lake Malawi all to think about.

Our people own that land and the resources that come with that!

Otherwise, may Malawi revert to the belief late Dr. Hastings Kamuzu Banda managed to veil the nation – that it had not mineral deposits and that the people ought to work hard in the gardening. Kamuzu knew such ‘mineral plunderers’ were all over the globe and that to avoid them agriculture was the answer.

Unfortunately, he did not envisage a Ngwazi Part Two in the name of Mutharika would unlock that ‘secret’. Now all over sudden we have all these precious metals/resources and our people have to be moved from their settlements, land, water resources and what have you, just to enrich some foreigners through so called tax havens, price transferring, and the numerous other tricks the mining sector has managed to spin up just to steal from poor people.

The sickening part is also that our negotiators seem not to know or understand what we must include in those deals. We have given too much tax holidays, zero taxes, and so much ground and are benefiting nothing. We lack capacity and our legal experts are kids in this area, I guess.

Honestly  I loved Crocodile Dundee the movie but this Aussie corporation turning Malawi land into some ‘plunder outback’ is making me sick I could shoot some kangaroos in a game park! And it’s not just Paladin with its many companies used to screw us of our resources, we also have Surestream and many others including La Farge and et’al. We simply need a fair deal…

Whether I understand this extractives industry and the jargon that comes with it or not, I am not watching this plunder lying down… Perhaps someone will add to this information and help make Malawi a better and economically viable place through the extractives industry. Not the way matters are at hand.

It’s a great shame, indeed!

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