Mining & Trade News

Despite the prevalence of the coronavirus (Covid-19) pandemic, Malawi’s publicly listed conglomerate Press Corporation Limited (PCL) says it has registered a profit of K38.22-billion largely buoyed by the energy and financial sectors.

In a summary of audited results for the year ended December 31, 2020, signed by Group CEO George Partridge and Chairman Randson Mwandiwa, the Group says the energy sector comprising ethanol producers PressCane and Ethco delivered excellent results registering 116% growth in its profit after tax.

It says: “The performance was driven by the improved margins following the agreement of a new pricing model with the Malawi Energy Regulatory Authority (MERA).”

“Results were further buoyed by an upside from the production of hand sanitizers, a new product line, in the wake of Covid-19 pandemic, supported by the availability of additional feedstock carried over from the previous year.”

In the financial sector, PCL subsidiary National Bank of Malawi delivered strong results with a 31% growth in its profit after tax. The results were driven by a 17% growth in non-interest income and a 27% and 6% growth in customer deposits and the loan book respectively.

‘’The Bank’s efforts to improve the quality of the loan book saw a 45% reduction in net impairment losses. Going forward, the focus is to reduce the level of Non-performing Loans to be within the bank’s risk appetite,’’ state Partridge and Mwandiwa.

However, poor performance of brewer Castel Malawi negatively affected the growth of the conglomerate with the Directors concluding that it would be in the best interest of the Group to divest PCL’s remaining 20% stake in the company.

“Negotiations to that effect have now been concluded at a price of USD12 million, and the proceeds will be realized in 2021,’’ reads the statement.

In the consumer goods segment, PCL’s subsidiary PTC also continued to make losses mainly due to working capital constraints which is also undermining the implementation of the revised strategic plan.

‘’The board is considering several strategic options to improve the wellbeing of the company by inviting other new investors into the group,’’ the statement reads.

On the macroeconomic outlook, the statement reads that with the presence of Covid-19 vaccines, Directors of PCL envisage improved economic prospects for 2021 with GDP growth of 3.5% projected up from the 0.6% achieved in 2020.

It says: “Management is confident of delivering planned results. The prevailing foreign currency shortages and the related impact on exchange rates, however, remain a major downside risk. The significant increase in public debt poses another major challenge to economic growth.”

‘’The Group continues to search for profitable investment in the power segment. Negotiations for a Power Purchase Agreement are underway. Leveraging on its position in the market, the Group is well positioned for continued growth.’’

Despite businesses being whipped by the global coronavirus pandemic, about 30 Malawian firms have expressed interest to participate at the 2021 Dubai International Expo that will take place in Dubai in United Arab Emirates (UAE).

A statement by Malawi Investment and Trade Centre (MITC) indicates that the trade fair will run from October 2021 to March 2022.

Responding to an emailed questionnaire MITC Investment Promotion Manager Modie Chanza said companies from different sectors of the economy have expressed interest in both exhibition, participation and also sending goods for retail at the Malawi pavilion.

Chanza said participation at the expo is free and that the participants will only be responsible for transport and accommodation of which she said MITC has already courted airline and hotel owners to offer fair prices.

“The expo organizers have negotiated for discounts on flights with Emirates Airlines and also selected hotels in order to make participation more affordable.”

“Participation at the expo is going to be beneficial to both the country and for the businesses that take part.”

“It provides an opportunity for Malawi to sell her brand and position herself on the international market with her unique investment and trade opportunities,” Chanza said.

Chanza also said strategic marketing is a necessary factor to the success and growth of businesses especially in difficult times of the Covid-19 pandemic.

She believes the 2021 Dubai Expo will provide the needed strategic platform understanding that it is the first large scale international business and trade event to take place during the era of the pandemic.

Chanza said the expo will be an eye opener to local investors and exporters to start thinking outside the box in order to excel and compete even in difficult times.

She said: “Furthermore, such platforms provide opportunities for exposure and impactful relationships created through networking.”

“We expect that there will be strong growth in the global economy once the pandemic is fully under control and by taking part in this important global event we anticipate that Malawian businesses will be in a position to take advantage of opportunities in Trade, Investment and Tourism.”

Amongst the expected participants is a local gems and jewelry firm, Nyasa Mining Cooperative (NMC) which will carry unprocessed stones and jewelry for retail and exhibiting. 

Speaking in separate interview, NMC Chairperson Percy Maleta said the expo will also act as platform to sell their ideas planned for the Year 2021.

According to Maleta, NMC plans to open Nyasa Unique Gallery in May 2021 in Area 43 Lilongwe; Nyasa Lapidary and Jewelry Centre to start last quarter of 2021 also in Lilongwe and; Nyasa Tile Making and Ornaments Factory to start operating in the last quarter of 2021 in Mzimba district.

“We will be selling these businesses at the Expo; the idea is to get strategic partners. We are also taking to Dubai a tone of different varieties of gemstones and minerals including gold produced by Artisanal and Small Scale Miners (ASMS) across the country; these will be showcased and some given as samples to potential investors.”

“The Expo is a platform where Malawi gemstones and other minerals will be showcased and to announce to the world that the country is ready and inviting those that are looking for investment in the mining sector especially the sub sector,” Maleta said.

From the list of the participants, NMC is the only ASM cooperative expected to showcase at the international trade event.

Responding to why many ASMs are reluctant to take part in international expos of which some can be answers to their challenges, Maleta said players in the subsector have a mindset of taking the expos as expensive ventures to participate using their own resources.

Maleta said the majority of ASMs have the tendency of participating in international events that are fully sponsored.

He said: “This is where Nyasa Mining is different from the word GO. We funded our own training to be taught by the Ministry of Trade on cooperative education, got registered and started participating in all the international events with our own resources except for the time Export Development Fund partially supported us when we went to the Beijing 2019 Expo in China.”

“I should also mention that MITC sponsored our accommodation for 30-days in Beijing and the booths in Beijing and Shanghai otherwise all other expenses like air tickets, accommodation and yet all was on us.”

“This alone scares most ASMs yet these events are the place where we meet and interact with the best of the mining industry; these are the events that teach us new ways of doing things in the sector; these are the events where we network and promote our products as they are normally attended by tens of thousands of people and chances of clinching deals are high.”

The expo is organized under the auspices of the World Expo and the next event is expected to be held in Yokohama, Japan in 2025.

Independent Power Producers (IPPs) pursuing solar power generation projects are expected to add about 121 MW to Malawi’s power grid by the end of this year, it was learnt in Parliament.

In a ministerial statement, Minister of Energy Newton Kambala informed the house that 60MW Salima project and 20MW Golomoti project both owned by JCM Matswani will be ready by April and December respectively while the 20MW Atlas Kanengo Project and the 21MW Phanes Energy Nkhotakota Project are expected to be functional by September.

“Malawi Government through Electricity Generation Company (EGENCO) is diversifying its energy sources and is pursuing installation of a solar PV plants in Salima, Nkhotakota, Lilongwe and Dedza which are at advanced procurement stage.”

“The Single Buyer, Power Market Limited, has approved the projects to be implemented. The projects will commence in the second half of the year 2021,” Kambala said.

Currently, EGENCO generates about 300MW of electricity from the installed electricity generation capacity of 508MW against projected demand of 719MW from the growing population and industry.

If the solar IPPs successfully commission the power plants, the country will raise the energy generation bar to 421MW by the end of this year.

Power Purchase Agreements (PPAs) have been negotiated with Power Market Limited as the licensed agent for buying power from all the producers.

The single buyer, independent as required, was still housed in Electricity Supply Corporation of Malawi (ESCOM) hence, the PPAs were signed by ESCOM as the single buyer at the time of amendment of the Electricity Act.

In the statement, Kambala also said despite opening up of the power sector to the IPPs, Government continues to participate in the market through the state owned company Electricity Generation Company (EGENCO). 

Kambala said: “In order to sustain the power supply from the existing power plants, there are maintenance and rehabilitation to existing power plants.”

“The plants that have recently been rehabilitated include Tedzani 3 and currently work on the rehabilitation of Tedzani 1 and 2 is in progress. EGENCO has also rehabilitated Nkula A.”

“Apart from the maintenance and rehabilitation, new projects are being planned and executed. One such project is the 18MW hydro power plant at Tedzani which started in 2018 and is expected to finish in 2021 with funding from the Japanese Government.”

Though Malawi’s new energy policy advocates for diversification of sources of power, hydro power remains the most attractive source considering its least cost operating cost despite its high investment cost.

EGENCO is currently planning to construct the Mpatamanga Hydro Power Plant, expand the Wovwe Power Plant, and set up the Kammwamba Coal Fired Power Plant.

MyBucks Banking Corporation says it expects Malawi’s macroeconomic stability to continue in 2021 supported by the stable food prices and lower than prior year project global oil prices.

In a financial statement signed by Board Chairperson Francis Pelekamoyo, the Banking Group explains that it expects the impact of the novel corona virus (Covid -19) on certain sectors of the economy to be felt in the medium term.

The statement reads: “Despite that the Covid -19 Pandemic is with us here, the group will remain vigilant in monitoring and managing risks related to Covid -19.”

‘’The group has implemented a new digital banking system after year end. With the new system in place, will drive the digitization agenda to grow the business as well as enhance customer experience.’’

‘’We will also focus on cost rationalization, prudent management of risk and liquidity, diversification of the balance sheet, whilst maintaining a healthy capacity position.’’

During the year, the Group conducted the acquisition of Nedbank Malawi and fully integrated the operations of Nedbank into MyBucks. This acquisition has enabled the group to serve its stakeholders from additional points of representations and also continue to offer unique products to its focus customer segments.

Meanwhile, the Group will continue to focus on achieving growth through acquisitions, mergers and organic means where necessary.

However, the group continues to show strong performance year on year. The revenue grew by 26% driven by a 65% growth in loans and advances and 25% in treasury investments.

 ‘’The group’s profit after tax of Mk2.2 billion was 53% above prior year. This was due to growth in interest generating assets, mainly the 65% growth in the loan book,’’ the statement reads.

Beverage manufacturer Castel Malawi has launched a new beer brand dubbed “Doppel Munich”.

Speaking to Mining and Trade Review at the launching ceremony  held at Amaryllis Hotel in Blantyre, Castel MD Hervé Milhade said the launch of the new brand is part Castel’s positive strides to ensure maximum satisfaction to its customers.

Milhade said: “As you are aware, in Castel’s history we always yearn for consumer’s satisfaction through wide range of products and the launching of this brings solely echoes all the forces we have embarked on to serve our customers better.”

He also explained that they have launched the new brand during the time the country is suffering from the aftermaths of the novel coronavirus (Covid-19) pandemic which has left many people seeking new varieties of beverages.

“This beer is very strong, tasty and unique in a special way from ingredients to packaging to satisfy consumer’s tastes,” he said.

A customer, who was available during the launch, Stela Kulemeka hailed the company for introducing the Doppel Munich beer sayng it has come at a right time to offer an opportunity to customers to choose from range of beverages available.

Tourism Group, Blantyre Hotels, says it is advancing with preparations to construct a five star hotel in Lilongwe to be called Lilongwe Ryalls Hotel.

The Group says in a financial statement for the year ended September 2020 that it will own the Lilongwe Ryalls Hotel through its subsidiary Oasis Hospitality Limited.

The hotel is to be on a piece of land which is part of the land owned by the Lilongwe Golf Club.

“During the year, the freehold land was acquired from Lilongwe Golf Club at a consideration of K2.1 billion,” reads the statement.

Blantyre Hotels registered a loss a loss of K454 million after tax in the financial year as compared to previous year’s profit of K467million representing a decrease of 197%.

The hotel group says in the statement the coronavirus (Covid-19) pandemic posed a challenge to the operating environment and its impact might be for a longer period than anticipated.

The total revenue for the group amounted to K2,077 billion which was 49% for the year 2019 of K4,066 billion.

“The drop in revenue was due to the impact of the Covid -19 pandemic which had an adverse effect in the hospitality industry worldwide. Ryalls Hotel, occupancy levels were at 30% compared to 61% achieved for the same period last year,’’ says the Group.

It, however, says business has remained resilient as the Group has continued to focus on the safety of its guests and associates to improve the guest experience and service delivery.’’

 ‘’The board is confident that business will return to normal once the Covid -19 is contained through effective administration of vaccines which has commenced,’’ it says.

MINING & SOCIAL ISSUES with Ignatius Kamwanje
The Author is a Consulting Geoscientist with experience
in Mineral Exploration, Mining Geology, ESIA, Ground
Water Resources and Occupational Safety, Health and
Environment.

In 2015, United Nations (UN) member states adopted the 2030 Agenda for Sustainable Development which includes a set of Sustainable Development Goals (SDGs) for 2015-2030 after relinquishing the Millennium Development Goals (MDGs). The SDG agenda provides a successor framework for the Millennium Development Goals (MDGs) that covered the period from 2000-2015. The SDGs represent the world’s comprehensive plan of action for social inclusion, environmental sustainability and economic development. Mining companies will be called on to extract responsibly, waste, use safer processes, incorporate new sustainable technologies, promote the improved wellbeing of local communities, curb emissions, and improve environmental stewardship. Mining companies committed to the SDGs will benefit from improved relationships with governments and communities, as well as better access to financial resources. Those that fail to engage meaningfully with the SDGs will put their operations at risk in the short and long term.

Meeting the SDGs by 2030 will require unprecedented cooperation and collaboration among governments, non-governmental organizations, Civil Society Organisations, development partners, the private sector and communities. Achieving the SDGs will therefore require all sectors and stakeholders to incorporate the SDGs into their own practices and operations.

Mining companies will be called on to extract responsibly, waste, use safer processes, incorporate new sustainable technologies, promote the improved wellbeing of local communities, curb emissions, and improve environmental stewardship. Mining companies committed to the SDGs will benefit from improved relationships with governments and communities, as well as better access to financial resources. Those that fail to engage meaningfully with the SDGs will put their operations at risk in the short and long term.

The mining industry has the potential to positively contribute to the SDGs. Mining can foster economic development by providing opportunities for decent employment, business development, increased fiscal revenues, and infrastructure linkages. Many of the minerals produced by mining are also essential building blocks to technologies, infrastructure, energy and agriculture.  However, mining has contributed to many of the challenges that the SDGs are trying to address – environmental degradation, displacement of populations, worsening economic and social inequality, armed conflicts, gender-based violence, tax evasion and corruption, increased risk for many health problems, and the violation of human rights. In recent times, the industry has made significant advances in mitigating and managing such impacts and risks, by improving how companies manage their environmental and social impacts, protect the health of their workers, achieve energy efficiencies, report on financial flows, and respect and support human rights. Importantly, mining companies’ positive contributions to the SDGs include both improvements towards the SDGs and the corresponding targets as well as preventing or mitigating negative impacts.

While the mining industry is diverse, the scope and nature of typical mining activities highlight some common opportunities to leverage and contribute to the SDGs. Opportunities for mining companies to positively contribute are found across all of the goals and individual companies will need to do the analysis to understand how their business can make an impact. A company’s specific actions and opportunities will depend on the local social, political and economic context, the mineral resource base, the phase of mining activities (mineral exploration, development, production, mine closure).

Three key areas, where sustainable development can be applied in mining assert the cooperation and integration of technical and economic activities that were agreed as necessary to ensure economic growth, ecological protection of natural resources and environment, and social development including safety at workplaces and community development.

(A). Mapping Mining to Sustainable Development Goals (SDGs)

1. Social Inclusion

Mining can significantly impact local communities, bring economic opportunities, but also brings challenges relating to livelihoods and human rights:

(a) SDG1 (End Poverty), SDG5 (Gender Equality) and SDG10 (Reduced Inequalities):

 Mining generates significant revenues through taxes, royalties for governments to invest in social-economic development, in addition to opportunities for jobs and business locally. Mining companies can take an inclusive approach by working with communities to understand the mines’ actual and potential positive and negative impacts. Companies can also support participatory local decision-making processes regarding the mining operations, the equitable allocation of benefits and the resolution of grievances, and identify and expand opportunities to strengthen the voice and influence of marginalized groups, including women, to ensure that inequalities are reduced, rather than reinforced, by the economic opportunities a mine may bring.

(b)  SDG16 (Peace, Justice and Strong Institutions)

 Mining can contribute to peaceful societies and the rule of law by preventing and remedying company community conflict, respect for  human rights and the rights of indigenous peoples, avoiding illicit transfers of funds to public officials or other persons, ensuring transparent reporting of revenue flows, and supporting the representative decision making of citizens and communities in extractives.

2. Environmental Sustainability

Mining activities normally cause impacts on land, water, flora and fauna, climate and people that depend on these resources:  

(i) SDG6 (Clean Water and Sanitation) and SDG15 (Life on Land)

 Mine development requires access to land and water, presenting significant adverse impacts on lands and natural resources that can be mitigated or avoided.

(ii) SDG7 (Energy Access and Sustainability) and SDG13 (Climate Action)

 Mining activities, are energy and emissions intensive, presenting opportunities for greater efficiency as well as expanding access to energy

3. Economic Development

Mining can have a local, regional and national impact on economic development and growth that can be leveraged to build new infrastructure, new technologies and workforce opportunities

(a) SDG8 (Decent Work and Economic Growth)

Mining can generate new economic opportunities for citizens and members of local communities, including jobs, training, and business development relating to mining operations, associated service providers, or new local economies linked to the mine.

(b)  SDG9 (Infrastructure, Innovation and Industrialization) and SDG12 (Responsible Consumption and Production)

Mining can help drive economic development and diversification through direct and indirect economic benefits and by spurring the construction of new infrastructure for transport, communications, water and energy. Mining also provides materials critical for renewable technologies and the opportunity for companies to collaborate across the supply chain to minimize waste, and to reuse and recycle.

Achieving sustainable development is challenging and the mining industry must ramp up its engagement, partnership and dialogue with other industry sectors, government, civil society and local communities. To realize the full potential for contributing to the achievement of the goals, mining companies must continue to work to integrate changes into their core business and, along with the mining industry as a whole, bolster collaboration, partnership and meaningful dialogue with government, civil society, communities and other stakeholders.

(B). Aligning mining issues to Sustainable Development Goals( SDGs)

(i) Mining and Poverty eradication (SDG1)

• Disclose details of payment to host governments(PWYP) through royalties and taxes
• Supporting non mining Social Livelihoods like food security and water supply to communities
• Championing inclusive employment by engaging locals.
• Provide training and  mining expertise to locals for a successful succession plan

(ii) Mining and zero Hunger (SDG2)

• Explore synergies through agriculture and innovations and transparent management of water resources
• Keep land/ farms free of pollution
• Partnering with agriculture to support food security and prevent malnutrition

(iii) Mining, good health and well-being (SDG3)

• Championing Occupational Safety and Health  in the mining workplace
• Prevent occupational  diseases like TB, Cirrhosis and prevalence of STIs etc through counselling and other programs
• Prevent toxic pollution in air and surrounding environment

(iv) Mining and quality education (SDG4)

• Upgrading local skills thru provision of training, apprenticeship and graduate programmes. etc
• Provide opportunities for collaboration with universities to design mining programmes in their curricula
• Train for sustainable livelihood opportunities beyond mine closure

(v) Mining and Gender equality (SDG5)

• Provide opportunities for women in mining
• Practice gender inclusion across the project life cycle
• Establish gender sensitive grievance mechanisms and health related issues

(vi) Mining, clean water and sanitation (SDG6)

• Water conservation and recycling of wastewater
• Water/air quality monitoring
• Water management through alignment with government policies.
• Support local participation in capacity building of water management practices.

(vii) Mining and affordable clean energy (SDG7)

• Improve energy efficiency
• Incorporate renewable energies
• Explore co financing programmes in energy

(viii) Mining decent work and economic growth (SDG8)

• Provide steady income through employment.
• Enhance trade and create small companies to supply products to the mine
• Create mining towns/urbanization.

(ix). Mining Industry, innovation and infrastructure (SDG9)

• Transfer technologies and introduce new innovations
• Develop infrastructure like water systems, buildings road upgrades
• Support surrounding and local industries in supply chain.

(x) Mining and reduced inequalities (SDG10)

• Establish inequality related risks and establish baseline welfare statistic before mining commences
• Champion inclusivity by employing, training and employing even the vulnerable, marginalized people
• Encourage participation of communities in revenue collection, budgeting etc.

(xi) Mining and sustainable cities, communities (SDG11)

• Discourage chemical, physical and water pollution from urban mining activities through unnecessary waste disposal occurring close to cities
• Establish rehabilitation of mined areas through re-afforestation and create urban green cities.
• Provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, notably by expanding public transport with special attention to the needs of those in vulnerable situations, women, children, people with disabilities and the elderly.

 (xii)Mining and responsible consumption, production (SDG12),

(xiii)Mining and climate action (SDG13),

(xiv)Mining and life below water (SDG14),

(xv)Mining and life on land(SDG15)

(xvi)Mining, peace, justice strong institutions (SDG16),

(xvii)Mining and partnerships for goals (SDG17)

Malawi’s Ministry of Foreign Affairs has advised Malawians who make online vehicle importation transactions with Japanese dealers to ascertain credibility of the firms before making any financial commitments.

In a Press Statement, the Ministry expresses concern over the increase in the number of complaints Malawi Embassy in Japan receives in relation to failed or mishandled processes of importation of used vehicles.

The failed transactions have apparently been leading to importers being duped or being sent wrong vehicles.

The Ministry, therefore, advises Malawians intending to import vehicles from Japan to ensure that they get right information about dealers they are transacting with, to avoid being duped by unscrupulous merchants.

The statement says investigations Malawi Embassy in Japan has conducted have revealed that some firms Malawians deal with in the importation of vehicles from Japan are either non- existent or unregistered with Association of Dealers of Used Vehicles in Japan.

It says most of the unscrupulous dealers involved in the malpractice cannot be accessed through any means of communication, and usually provide false information to their unsuspecting victims.

 “It has further been observed that in majority of the cases, such unscrupulous dealers deliberately offer very low and attractive prices for their vehicles to attract unsuspecting buyers,” reads the statement in part.

Most of the car dealers Malawians transact with through on line media, the statement reads, feign to be Japanese but are from South West Asia.

The ministry has therefore advised vehicle importers to use reputable dealers rather that those who are unrecognized and unregistered.

 “In view of this, the Ministry wishes to advise that, while online trade provides a great opportunity for less costly business transaction, every caution has to be exercised when using the digital platform.”

Malawi Minister of Tourism and Culture Michael Usi says strategic packaging and marketing of local tourism products and services is necessary to revamp the tourism industry which has been seriously affected by the novel coronavirus (covid-19) pandemic.

During an interactive session with industry players on the base of Malawi’s highest mountain, Mulanje Mountain, famed for its tall-standing Sapitwa peak, cider trees, “spirit” infested forests and its garden-of-Eden beauty, the Minister challenged tourism business captains to be innovative, remain optimistic and to leverage on the pandemic as well as to plan ahead when the pandemic is gone.

“Let us start strategizing on how best to sell Malawi and its natural and cultural heritage. How can we package Mulanje Mountain, Lake Malawi, Nyika and Zomba mountains as well as antiquities, music and dance even our hospitality services?” he challenged the operators

He urged the tourism players to be focused and explore innovative ideas that will revitalize their businesses once the Covid-19 restrictions that have crippled the industry are lifted.

“Indeed tourism sector is among the key sectors that have seen the worst of covid-19 impact and as government relevant cushioning strategies such as soft loans for both small and medium enterprises and soon these loans shall soon be dispersed.”

Chairperson of Tourism Association of Mt. Mulanje, Nancy Chinyanya Longwe, hailed the minister for giving them hope amidst pandemic saying a good number of tourism players have closed their operations due to unfavourable business environment.