Malawi mineral-gate scandal: K69.5bn awarded to South African geologist – paper ‘buries’ story

Malawi’s daily newspaper was criticised of “burying” a  billion dollar mine scandal on page four instead of lead headline about the order of High Court awarding  Rift Valley Resources, owned by South African geologist Michael Saner,$100 million (about K69.5 billion) as compensation for the deliberate acts of the Ministry of Natural Resources and Environmental Affairs in denying him the renewal of his Exclusive Prospecting Licence (EPL).

Former editor-in-chief of media giant Times Group, Charles Simango took to Facebook to note that the article The Nation carried on page four deserved to be a lead story.

“Court awards SA geologist K69.5bn,” headlined the newspaper story which Simango cited.

The paper reported that in his March 15 2016 judgement, High Court Judge Rowland Mbvundula said  the decision was arrived at considering that any difficulties the process of assessing damages suffered were created entirely by the ministry (now known as the Ministry of Natural Resources, Energy and Mining) in that it has prevented feasibility studies from being undertaken.

“You are looking at probably the biggest story since cashgate,” noted Simango.

“ The story is not about the amount rather it is how we are all going to end up paying all that money because some not -so-junior civil servant, renewed an EPL for someone who did not have one in the first place. What we want to know as readers, therefore, is: who signed the fake renewed EPL? And who issued the instructions for the renewal of a non-existent EPL? That is the story we want to hear,” Simango pointed out.

Social activist Ben Chiza Mkandawire pointed out that ‘mineral-gate’ story was first published in the Mining Review which  reported that poor decision making by the government is  proving costly to the nation and the investor for the Kangankunde Rare Earth Mining Project in Balaka as the investor, Australia’s Lynas Corporation, is failing to develop the resource it purchased for US$4-million (about K2.5-billion) due to legal complications.

It reported that 2000 when the ministry granted Saner the EPL for Kangankude Mine, which is valued at over US$1-billion and at that time the tenement was held by a local consortium, Rare Earths Company.

However, a previous tenement holder, South Africa’s Rift Valley Resources, sued the Malawi Government and obtained an injunction against the development of the mine on the grounds that government erred by not renewing its exclusive prospecting licence for the Kangankunde resource, whose rights at that time were with Rare Earth Company.

Seemingly for fear that it will lose the mineral rights, Rare Earths Company sold the resource to Lynas Corporation at US$4-million in 2007 and surprisingly government allowed the deal to go through despite the prevailing court case, reported Mining Review.

Lynas says the purchase agreement contained a number of conditions precedent that were satisfied before completion, including approval by the Malawi Department of Mines for the transfer of the Kangankunde tenement to Lynas, approval by the Malawi Investment Promotion Agency for the Lynas project proposal and approval by the Malawi exchange control authorities for Lynas to make payment as a foreign investor.

The local daily said court judgement said the level of damages was “ improper”  when the ministry kept the applicant [Saner] away from his mining area.

“This court is satisfied that the applicant’s submissions encompass the correct exposition of the legal principles applicable to the case,” reads part of the ruling to a judicial review of the ministry’s decision to refuse renewing Saner’s EPL.

Economics Association of Malawi (Ecama) president Henry Kachaje,  commenting on the story said  K69.5 billion compensation  is going to be a “serious drain” on Malawi budget.

He wrote: “ K69bn ($100m) awarded is about three  times the amount which was cashgated in 2013. Here the court has awarded three times the amount we lost in cashgate to just one South African geologist.”

According to Kachaje, K69.5 billion is almost equal to the amount Malawi  spend on Farm Input Subsidy Program ( FISP).

“ Imagine awarding the whole FISP budget that targets 1.5m rural farmers to one individual as compensation,” wrote Kachaje.

He also observed that the amount can build at least 40 new secondary schools, almost two per large district. Or 5,000 classroom blocks. Or over 500 girls hostels. Or educate at least 6 million primary school children for a year based on UNESCO minimum rate of $15/child.

“Good people, fellow patriotic citizens, this is but just one of the examples of how we allow ourselves to remain a poor country, in this case, just because of actions of a few civil servants who  neglected to do their job.”

Kachaje also concurred with Simango that the ‘mineral-gate’ scandal did not even make it to the front page of the newspaper.

“And it might die quietly while for years, a big hole created in our budget will keep some millions trapped in poverty.”

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