Chinese Bank agrees to finance Malawi’s Niobium mining project
One of China’s largest banks has agreed to provide US$520 million (MK144 billion) as credit to Globe Metals & Mining to finance its Kanyika Niobium Project in Mzimba district northern Malawi raising hopes of jobs among Malawians once production starts in 2015.
But locals think their major benefit will be in terms of infrastructural developments such as good roads, schools and health centres.
To justify their pessimism, they point to Kayelekera Uranium Mine in Karonga district which began operations in 2009 where few locals got non skilled jobs despite the hype that record jobs will be created.
“We have been farming this land for generations but we did not know that we were sitting on money. I think God answered our pleas because this area will enjoy tremendous economic growth,” said Tabonga Mafuleka, in whose village at Kanyika Niobium was discovered.
With a projected life span of 20 years and annual output of 3000 metric tonnes of Niobium metal, the Mine is expected to rake in US$180million (MK50 billion) per year in revenues and employ more than 600 Malawians in the construction phase and fewer when the Mine starts operations.
Ferro-niobium is a critical additive in the production of sophisticated steels.
The Kanyika Mining project will be the second major mining operation in the country after the Kayelekera Uranium Mine.
The government owned China Development Bank (CDB) expressed its intent to do business with Globe through a Letter of Intent (LOI) to the company on Monday.
“The expected growth in the consumption of both niobium and steel in China is significant, so the participation of the CDB in this Project makes sense,” the bank said in a statement.
A Letter of Intent is not a contract and cannot be enforced; it is just a document stating serious intent to do business with another company.
“We are delighted to be involved in this Project, and look forward to working with Globe to put final and binding financing arrangements in place, once the Definitive Feasibility Study for the Project is completed,” CDB said.
The continuous discovery of various minerals or rare earths in Malawi is a positive development for the country’s economic growth which is currently anchored by agriculture which contributes roughly 80 percent of the country’s Gross Domestic Product.
A burgeoning population and a soaring unemployment rate are exacerbating the country’s incessant turnaround strategy to catapult the economy that is slowly rising on its feet. Currently four out of ten Malawians have no jobs.
The country’s nascent Mining industry currently contributes 10 percent of GDP, according to the World Bank.
Last year in April, the East China Mineral Exploration and Development Bureau (ECE), a Chinese State Owned Enterprise with extensive mining operations in China and overseas bought a major stake in Globe hence becoming the largest shareholder and a key partner.
The Australian Exchange listed company says the LOI marks an important step towards eventually bringing Kanyika into production.
“One of the key rationales for the Globe-ECE strategic partnership and co-operation was to demonstrate to our shareholders our ability to bring Kanyika into production. Our association with CDB is a major step towards delivering on this objective…” Globe’s Managing Director Mark Sumich said.
Globe is an African-focused resource company, specializing in rare metals such as niobium, tantalum and rare earths, as well as other commodities including fluorite, uranium and zircon. The Company’s corporate head office is in Perth, Australia and is supported by African offices in Lilongwe, Maputo, Tete and Nacala.
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