Mining & Trade News

“Delays in formulating supporting regulations for mining laws costing Malawi”

Though over three years have elapsed since the Mines and Minerals Act 2023 came into force and about eight months since State President Arthur Peter Mutharika declared a ban on exportation of raw minerals, the Malawi Government is yet to gazette regulations for both pieces of legislation.

Government’s delay in formulating the regulations has attracted concerns from stakeholders in the mineral sector who feel it is a stumbling block to Malawi’s ambitions to transform mining into a major driver of economic growth.

National Coordinator for Natural Resources Justice Network Kennedy Rashid says Malawi’s mining sector is operating on a fragile foundation because the strength of any law depends on the existence of clear rules for implementation, and that although the Mines and Minerals Act provides a modern framework, its effectiveness remains largely theoretical without detailed regulations.

“The Act’s provisions are broad principles that require operational rules to be effectively implemented and enforced,” he says, adding that the continued reliance on old frameworks creates uncertainty in the sector.

Rashid warns that unclear rules create room for discretionary decisions, which may increase risks of corruption, weak enforcement and poor oversight.

“Where detailed rules are absent, decisions on licensing, compliance and penalties can be left open to interpretation,” he says.

Malawi is currently using the 2013 Mines and Minerals policy alongside regulations dating back to the 1980s, a situation critics say does not reflect the current direction of the mining industry, especially as the country positions itself as a destination for critical mineral investments.

This situation also raises concerns for communities living around mining areas. Although the mining law provides for Community Development Agreements, stakeholders argue that regulations are needed to define how communities negotiate benefits, receive compensations, and participate in decisions affecting their land and livelihoods.

Coordinator for Chamber of Mines and Energy Grain Malunga says the delay in gazetting the  regulations for both the 2023 Act and the ban on raw mineral exportation  presents a challenge because any law requires supporting regulations to guide its implementation. He says while government has a responsibility to ensure business continues and revenue is generated, operating without fully developed regulations risks creating uncertainty in the sector.

“The government needs to maintain open communication and ensure that stakeholders understand how decisions are being made. A responsible mining sector depends on clear rules, access to information and systems that protect both investment and interests of citizens,” he says.

Seasoned geologist and mineral sector consultant Ignatius Kamwanje says the delay in implementing mining regulations is also affecting projects’ transition from exploration to production.

Kamwanje explains that as a largely greenfield mining economy, the country still has many companies at the exploration stage, stressing that the move towards commercial production depends heavily on a clear and unpredictable regulatory environment.

The stakeholders also point out that the regulatory gap is creating missed opportunities for government revenue mobilization because without updated concrete frameworks, the country risks losing out on taxes, royalties, insurance obligations, possible equity benefits and community benefits expected from mining agreements due to failure of projects to move to production stage owing to unpredictable operating environment.

The delay has also facilitated illegal/ informal mining taking place in the country due to government’s failure to speed up and implement Artisanal and Smallscale Mining formalization process with clear licensing and regulatory guidelines.

The stakeholders observe  that the results of this delay include rampant illegal mining activities that are leading to health and safety risks and accidents in illegal gold mining hotspots, smuggling of precious minerals and severe environmental damage.

The delay in implementing regulations on Mutharika’s ban on exportation of raw minerals has, meanwhile, created confusion and resulted in former Director General of Mining and Minerals Regulatory Authority (MMRA) Samuel Sakhuta authorizing ASX-listed Lindian Resources to export monazite concentrate from Kangankunnde Mine.

Lindian has consequently purchased a refinery for downstream processing of the concentrates in Kazakhstan. However, there is uncertainty that Government will authorize Lindian to kickstart commercial exportation of monazite concentrates as government sources confided to Mining & Trade Review  that the regulations for the ban awaiting gazetting contain thresholds to which all minerals must be processed before being cleared for export.

Monazite concentrate is the immediate step in downstream processing as the concentrate is further processed to mixed rare earth concentrate and later mixed rare earth oxide before the production of the separate high value rare earth elements for the production of strong magnets used by the high tech industry.

But Minister of Mining Thoko Tembo told Mining & Trade Review that he will follow up the issue of the formation of the regulations to ensure that the formulation process is expedited.

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