Paladin has MK3.9bn environmental bond for Malawi uranium mine -Walker
Australian Miner Paladin Energy Limited, operators of the Kayerekera Uranium Mine in Karonga district have a US$10 million Environmental Performance Bond with two commercial banks in Malawi to among other things cater for rehabilitation costs for signs of default during and after mine life.
“Paladin has a MWK 3.9 Billion (US$10 Million) Performance Bond in place to satisfy the environmental obligations of Clause 18.14(a). This comprises a US$ 5 Million Performance Bond with Standard Bank Limited and US$ 5 Million Performance Bond with Nedbank Malawi Limited,” Paladin General Manager for International Affairs Greg Walker told Nyasa Times in an email response.
The bond, in the form of irrevocable letters of credit, will deal with issues like water and environment contamination and the eventual clean up.
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
The bond further obliges the company to sensitize people on the potential dangers associated with radioactive substances and prevention procedures.
Clause 18.14(a) of the Development Agreement states that the Environmental Performance Bond “is to be in the form of an irrevocable letter of credit, with a commercial bank in Malawi and is to be in favour of the Director of Environmental Affairs.”
Walker said therefore under Clause 18.14(a) his company is obliged to establish the Environmental Performance Bond with a commercial bank in Malawi and not the Central Bank.
“It is not at all surprising therefore that the RBM could find no trace of such an agreement. The reason that the Reserve Bank of Malawi (RBM) has no record of an Environmental Performance Bond is because there is no requirement for PAL to establish such a bond with RBM.” Walker said.
Walker was reacting to media reports which erroneously insinuated that Paladin Africa Limited, and the Reserve Bank of Malawi are yet to establish the Bond, six years after signing the mining deal.
RBM spokesperson Ralph Tseka told local media that the Central Bank could not trace the bond.
“The Nedbank Malawi facility has been in place since 30 June 2009 and the Standard Bank Performance Bond has been in place since 02 September 2009.These facilities have been continuously in place since that time; have been renewed annually as per the Development Agreement and are currently in force until 31 December 2013,” Walker said.
He said he has written the Minister of Mines John Bande to reassure government that Paladin is compliant with its requirement for an Environmental Performance Bond.
“There is therefore no question of non-compliance by Paladin on this issue. It is regrettable that the Minister for Mining, Hon. John Bande, did not appear to be aware of this fact,” Walker said.
There is growing belief among some sectios of the society that Malawi is losing out onn the Kayerekera mining and have since called on the government to renegotiate the deal.
Leader of Malawi’s opposition People’s Transformation Party (Petra) Kamuzu Chibambo — who is also a prominent lawyer— said unless the deal were renegotiated, Malawi would continue to lose out in the mining sector and called upon all Malawians to galvanise their voices to press government to enter into negotiation with the miners.
Karonga Business Community, a local non-governmental organisation, also threatened to hold demonstrations against the mine if their demands, among them turning Karonga District Hospital into a referral facility, were not met.
Civil society activists and Members of Parliament have in past also urged government to re-negotiate its contract with PAL., which owns 85 percent of Kayelekera Mine. Government owns the remaining 15 percent.
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