Paladin’s Malawi uranium mining headache comes into light, rejects deal negotiations

Paladin (Africa) Limited has come out blazing on suggestions to renegotiate its deal with the Malawi government warning that such tampering will be breach of contract and would have economic consequences on the country.

Paladin General Manager for International Affairs Greg Walker issued the warning in an emailed response to Malawi’s two leading dailies The Nation and Daily Times newspapers respectively.

He said any bid to renegotiate the contract would scare away potential foreign investors.

This was in direct reference to calls by People’s Transformation Party (Petra) president Kamuzu Chibambo to have the deal renegotiated so that the country have a 40 percent equity in the mine from the current 15 percent it gets annually.

Ben Botolo: To renegotiate the deal will be a tall order

Deal non-negotiable

“No, it is not possible (to renegotiate deal) and it would be very unfortunate for Malawi to attempt to press the issue. A key prerequisite of the very substantial foreign investment in Kayelekera was the signing of the Kayelekera Development Agreement, [which] provided a 10-year stability period to provide comfort to project lenders and shareholders, given Malawi’s lack of track record as a host nation for a major resource investment,” The Daily Times quoted Walkers as saying.

“It was to protect against the risk that government in an untested jurisdiction would seek to change the rules once a substantial investment has been made [and] this is now precisely what some people are suggesting, which sends a very negative message to potential foreign investors in the country,” Walker was quoted.

According to the paper, Malawi was required to contribute US$21.75 million to meet its 15 percent proportionate in order to keep the Kayelekera mine open.

Likewise, for the 40 percent stake then government would have been required to cough US$58 million.

Policy formulation a possibility

Principal Secretary in the Energy and Mining Ministry Ben Amigu Botolo, says while policy formulation is possible; to renegotiate the deal will be a tall order and complicated situation.

He however observed that any form of negotiations can take place once the investor has recovered all the money spent during exploration stage.

On his part, Energy and Mining Minister Dr. Cassim Chilumpha told The Nation  that government has no desire to increase its stake in Kayelekera as it is moving away from running companies.

“If individuals and private companies want, they should raise the money and come to government and say we want to invest in Kayelekera Mine then that would make sense. If we raise such money, then we would invest into health, public, universities, agriculture, and such other areas,” explained Chilumpha.

Editorial Comment

Meanwhile, in its editorial The Daily Times argued that the deal can be renegotiated amicably saying the Malawi government gave too many concessions on the project and negotiated the deal from point of ignorance.

The editorial further reminded the government how it refused to take heed of an advice from Malawi Confederation of Chambers of Commerce and Industry (MCCCI) to negotiate for adequate loyalties and not owning shares.

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