JOINT BASELINE STUDY ON Malawi’s Mining ... - WordPress.com · 3. 0 LITERATURE REVIEW.1 L eg a lf...

JOINT BASELINE STUDY ON

MMaallaawwii’’ss MMiinniinngg SSeeccttoorr

NNCCAA,, AAccttiioonnaaiidd aanndd CCEEPPAA

MARCH, 2014

CCOONNTTEENNTTSSContributors

Peter Ndilowe, BenjaminBanda, Abdulla Chilungo and

Richard Kusseni

Contact Information Peter Ndilowe:

[email protected]

Benjamin Banda:[email protected]

Abdullah Chilungo:[email protected]

Richard Kusseni: [email protected]

Acknowledgements

The authors recognize thecontributions of several

parties, without which thisstudy would not have been

possible.

Our appreciation goes toTilitonse, Norwegian ChurchAid, Action Aid, and Centerfor Environmental Policy and

Advocacy.

Many thanks to the fieldresearch team comprising

Simon Banda, CeciliaKambwiri, Pachalo Zgambo,

and Francis Kamungu.

Thanks also to the all theindividuals that took part inthe perception study, FocusGroup Discussions and the

Key Informants for their timeand interest for this study.

Graphic LayoutCallisto Sekeleza

Nowergian Church Aid

i Map showing mineral resources and occurrence

ii Acknowledgements

iii List of Acronyms

iv Table of Content

vii Executive Summary

1.0 INTRODUCTION

1.1 Background

1.2 Tilitonse

1.3 Action Aid International Malawi

1.4 Centre for Environmental Policy and Advocacy

1.5 Norwegian Church Aid

1.6 Objectives

2.0 METHODOLOGY

2.1 Study Design and Sampling

2.2 Data collection and entry

2.3 Survey instruments

3. 0 LITERATURE REVIEW

3.1 Legal framework and policy

3.3 Review of print media articles

4. 0 RESULTS

4.1 Response Rate

4.21 Accountability

4.21.1 Mining Companies

4.21.2 Government

4.22 Responsiveness

4.22.1 Mining Companies

4.22.2 Government

4.23 Community Inclusiveness

4.23.1 Community engagement by government

4.23.2 Community engagement by Mining Companie

4.23.3 Community involvement in monitoring of mining activities

4.23.4 Community Concerns on Mining, Challenges and Some Resolutions

4.23.5 Community Awareness

4.24 Structure and functions of stakeholders

4.24.1 Government

4.24.2 Political and Social influence

4.24.3 Media Involvement

4.24.4 CSO involvement

4.25 Former Employees.

4.26 Current employees

4.27 The benefits realized from mining activities

4.28 Contribution of mining to the economy

4.28.1 Revenue and Employment

4.18.2 Mineral Resources and Occurrence

5.0 LIMITATIONS OF THE STUDY

6.0 KEY FINDINGS

7.0 RECOMMENDATIONS

8.0 CONCLUSION

REFERENCES

APPENDIX

Baseline Study on Malawi’s Mining Sector22

CCJP Catholic Commission for Justice and PeaceCDSS Community Day Secondary SchoolCEPA Center for Environmental Policy and AdvocacyCSO Civil Society OrganisationDC District CommissionerEIA Environmental Impact AssessmentEPL Exclusive Prospecting LicenseGDP Gross Domestic ProductIDI In-Depth InterviewsMGDS II Malawi Growth and Development Strategy IIML Mining LicenseMP Member of ParliamentNCA Norwegian Church AidUN United NationsUNIMA University of MalawiVAT Value Added Tax

LIST OF ACRONYMS

Baseline Study on Malawi’s Mining Sector 33

This baseline report of the study on miningsector in Malawi was commissioned by theconsortium comprising Norwegian Church Aid(NCA), Action Aid and Center for EnvironmentalPolicy and Advocacy (CEPA) to implementingmining through governance and related projectsover a two year period with funding fromTilitonse.

The objective of the survey was to collectbaseline data for both qualitative andquantitative that will be used to establish thestatus quo for indicators in the project specificResults Frameworks and also relevant indicatorsin the Tilitonse log frame.

The baseline study used mixed methods thatincluded desk reviews, individual perceptioninterviews, former or current employeeinterviews, qualitative in-depth interviews, andfocus group discussions. The individualperception design consisted of randomly selectedhouseholds in the surrounding mining sites inwhich an adult member of the household wasselected. The individual perception and theemployee instruments had both qualitative andquantitative questions. The desk review shows that mining activities inMalawi are still taking place in a fragilelegislative and policy environment. Althoughlaws related to both solid and liquid mineralsexist, they are outmoded thereby serving nomeaningful purpose to the local citizenry in thenew socio-political, economic and investmentclimate.

A review of the print media stories on miningover the last ten months revealed a number ofissues ranging from mineral reserves, rightsawareness, lack of accountability, capacitychallenges, community engagement,environmental concerns, corporate socialresponsibility, and benefits coming from themining sector. As highlighted in the PoliticalEconomy Analysis of Mining in Malawi, the majorchallenges in the print media is that at times thestories are not balanced. This could be due tobureaucratic tendency and the veil of secrecy inthe provision of data from government, and lackof transparency from the mining companies, andalso lack of knowledge of the miningenvironment which presents a capacity challengefor the media.The general perception on issues ofaccountability was that mining companies arenot accountable to the communities. The

communities, district officials, CSOs had no ideaon how much production and revenue the minesgenerate. The study also shows that thegovernment fails to satisfy communities onlevels of accountability as there are gaps in thegovernment structure on mining at district level.

Mining companies were perceived as non-responsive on a greater scale over the sample.Communities complained that the investors havenot attended to most of their concerns such asfailure of miners to compensate the localcommunities over land relocation, failure toprovide business opportunities, and also failuremeet the agreed social corporate responsibilities.

While mining activities have created a number ofchallenges such as loss of land, inflationaryeffect, health hazards, and environmentaldegradation, a few benefits have accrued to thelocal communities besides. The communitiesindicated that mining companies createdemployment to members of the community,improved road networks, provision of schoolmaterials and health infrastructure. The influx ofpopulation to mining areas has increasedeconomic activities leading to creation of incomegenerating activities as part of positiveexternalities.

The contribution of the mining sector to thegross domestic product has steadily increasedover the last few years rising from 3 percent to10 percent due to the opening of Paladin’s minein 2009. The prospects are high for furtherinvestments into the sector as evidencedthrough influx of investors into the sector.

Civil Society Organisations are taking an activerole in addressing community challengesaffecting the mining sector such asempowerment to lobby, citizen’s rights, and thecreation of community action groups. Thecurrent and former employees indicated absenceof workers union in all the districts except inPhalombe where it is not properly organizedhence workers do not have a platform todemand better conditions of service as a unit.

In conclusion, much the Malawi has been one ofthe destinations for the investors, there is needto revise the regulations and the enforcement oflegal and policy frameworks. More importantlythe local community should be involved at everystage of the mining process for a win-winsituation.

EXECUTIVE SUMMARY

1.1 BackgroundThis baseline report of the study on miningsector in Malawi was commissioned by theconsortium comprising Norwegian Church Aid(NCA), Action Aid and Center for EnvironmentalPolicy and Advocacy (CEPA) to implementingmining through governance and related projectsover a two year period with funding fromTilitonse. The projects are aimed at achievinggovernance of the mining sector that isincreasingly inclusive, accountable andresponsive. The mining sector falls under themeone on sustainable socio-economic developmentunder the Malawi Growth and DevelopmentStrategy II (MGDS II).

The Malawi Growth and Development Strategyidentifies mining as one of the sectors that couldpotentially generate economic growth for thecountry. The contribution of the mining sector tothe country’s GDP has grown from as low as 1percent in 2001 to 10.8 percent by 2010 as aresult of the Kayelekera Uranium Mine (Mines &Minerals Policy, 2013). Furthermore, the strategyprojects that a well-managed mining sectorcould increase to at least 20 percent of the GDPby 2016. In 2011, Malawi produced mineralsworth MK 23.7 billion while exports amount toMK 18.6 billion in 2011. Uranium produced byPaladin at its Kayelekera mine accounts for mostof the production and exports.The available and recognized mineral resourcesin the country include uranium, heavy mineralsands, strontianite, rare earth minerals,phosphate, bauxite, gypsum, vermiculite,precious and semi-precious stones, limestone,dimension stone, silica sand, sulphides and coal.There is also a potential for discoveries ofprecious minerals in the country. To this effect,over the last few years, Malawi has beenattracting investors into its mining sector.Currently, there are over twenty miningcompanies engaged in mineral exploration withexclusive prospecting license or mining license.

However, the Mines & Minerals Policy (2013)reports that there is inadequate empowermentof local people, gender inequality in the workplace and low participation of Malawians inmining projects. Similarly, Tilitonse PoliticalEconomy Analysis of Mining in Malawi (2013)reports some shortfalls in the mining sector.These include (a) weak and out dated legislative,policy and institutional frameworks; (b) weakand fragmented role of civil societyorganisations; (c) lack of a framework forstakeholder engagement at community level;and (d) absence of robust revenue management

and transparency mechanisms. This calls for Malawi government’s commitmentto embark on formulating a policy on localparticipation. Furthermore, there is need tostrengthen the capacity of the responsiblegovernment departments so that the gains fromthe mining sector to the economy is achievedwhile bearing in mind the environmental, healthand social costs.

1.2 TilitonseTilitonse is a multi–donor pooled grant-makingfacility for Malawian-based civil societyorganisations supporting more accountable,responsive and inclusive governance. Tilitonse isin-line with the Malawi Growth and DevelopmentStrategy and is working with other key partnersin the Government’s Democratic GovernanceSector Working Group. Tilitonse has fundedthree Malawian civil society organisations; ActionAid International Malawi, Centre forEnvironmental Policy and Advocacy (CEPA) andNorwegian Church Aid for implementing a miningproject over a two year period.

1.3 Action Aid International Malawi It is implementing a project on ResponsiveMining Governance for Equitable and SustainableDevelopment of Malawi. The main goal of thisproject is promoting transparency andaccountability in the extractive sector forequitable and sustainable development. Theproject seeks to enhance improved collectiveaction amongst CSO actors and communities foreffective advocacy on accountability andtransparency in the extractive industry inMalawi. The Action Aid project will beimplemented in Karonga, Mzimba, and Phalombedistricts and has the following result areas:Improved collective action amongst CSOs topursue advocacy on mining issues; increasedtechnical capacity of member civil societyorganisations on issues of mining; increasedcapacity and voice of the poor communitiesespecially women to influence decisions onissues of mining at community level.

1.4 Centre for Environmental Policy andAdvocacy Centre for Environmental Policy with fundingfrom Tilitonse is implementing a two year projecton strengthening mining governance in Malawi.The project’s overall goal is that governance inthe mining sector in Malawi is more inclusive andaccountable, with the purpose of engagement ofCSOs, private sector and citizens in miningpolicy processes. To achieve the goal, the projecthas three major outputs which include:


1. INTRODUCTION

i) Review of policy and institutional frameworkfor regulating the mining sector influenced byCSOs; ii) Increased cohesion of CSOs in policyadvocacy on mining; iii) increased public understanding of miningissues.

1.5 Norwegian Church AidNorwegian Church Aid is implementing a projectcalled Tonse Tipindule – Promoting IncreasedInclusions, Accountability, and Responsiveness inMalawi’s Mining Sector. The main goal of thisproject is contributing to improved socialinclusion, accountability and responsivenessamong duty bearers in Malawi throughstrengthened citizens’ voice. The project seeksto improve citizen participation and positiveengagement between CSOs, citizens, mininginvestors and government. Tonse Tipinduleproject is being implemented in 10 districts ofMulanje, Phalombe, Mwanza, Balaka, Ntcheu,Mangochi, Dowa, Karonga, Mzimba and Chitipa.Tonse Tipindule project has the following resultareas: Policy, institutional and legal frameworkreforms initiated in the mining sector; acomprehensive stakeholder engagementframework established at community level; civilsociety organisations mobilised and supported toeffective support affected communities andengage the mining sector and government;improved capacity among coalition partners toeffectively implement and monitor interventionsthe mining sector.

1.6 ObjectivesThe objective of the survey was to collectbaseline data for both qualitative and

quantitative that will be used to establish thestatus quo for indicators in the project specificResults Frameworks and also relevant indicatorsin the Tilitonse log frame. This will also be usedas bench marks against the projects outputs,outcomes and impact.

1.6.1 Specific Objectives• To study the existing Legal Frame works.• To determine levels of inclusiveness,accountability and responsiveness in themining sector. • To assess the extent of stakeholders’participation understanding of policyformulation processes, advocacy andengagement in development and review ofmining laws and policies.• To study levels of community influence,knowledge on mining issues and level ofinvolvement in decision making and nature ofbenefits that communities are deriving frommining activities• To Identify Corporate and SocialResponsibility (CSR) activities implementedby mining companies and level of dialogueand engagement between district councils andcommunities• To study the extent of engagement ofmining Companies and the Executive(Government) by Parliament, also asses therole played by individual MPs and CSOs.• To assess contribution of mining to thecountry’s economy.• To assess the role of media in theresponsive mining governance.• To study issues of rights, awareness incommunities and access to information inmining communities.


2.1 Study Design and Sampling The baseline study used mixed methods thatincluded desk reviews, individual perceptioninterviews, former or current employeeinterviews, qualitative in-depth interviews, andfocus group discussions. The individualperception design consisted of randomly selectedhouseholds in the surrounding mining sites inwhich an adult member of the household wasselected. The individual perception and theemployee instruments had both qualitative andquantitative questions. In-Depth Interviews (IDI) were administered toCommunity leaders, CSO leaders, Members ofParliament, Businessmen, the Media, and DistrictCouncil officials. The Focus Group Discussions(FGDs) were done with community-based actiongroups surrounding the mining sites and weredisaggregated by gender and age.

The perception study included 160 individualsacross the five study districts of Karonga,Mzimba, Ntcheu, Balaka and Phalombe. Thestudy districts were purposely selected sincethey are part of the program districts for theconsortium. The allocation of households tospecific districts was based on the scale ofoperations of the mining companies in thedistricts since in some the actual mining has notyet commenced. The selection for the IDIs andthe key informants was based on list of activeCSOs, Faith based organisations (FBOs), andindividuals involved in mining obtained from theDistrict Council, NICE offices and CCJP offices inthe study sites.

2.2 Data collection and entryTraining for the research assistants was done on11th and 12th January and the two teams weredeployed to begin fieldwork on 14th until 24th

January 2014. Due to unavailability of keyinformants in Ntcheu and Phalombe, a revisitwas done from 14th to 16th February 2014. Theconsultants selected the research assistantsbased on experience in conducting qualitativeand quantitative surveys. There were two teams,one in the North and the other in South.

Conditions in the field varied greatly. In generalthe field teams were well received by the localcommunities however the major hindrance wasthe rains that affected data collection in Karongaand Mzimba Districts, while in Ntcheu andPhalombe it was difficult to book an appointmentwith the key informants during the initial periodhence the revisit.

Data entry commenced soon after fieldwork anda data manager was employed and three dataentry clerks to accomplish the task. CSPro wasused for the quantitative part while for thequalitative exercise, each interview wassummarized, then transcribed and translated bythe research assistant that conducted theinterview to provide for maximum detail.

2.3 Survey instrumentsThe baseline consisted of three majorcomponents:

1. The individual perception interviews:Administered to adult members of thehousehold2. The In-depth interviews guide for Projectsoffices in CSOs, Businessmen, MPs, localleaders3. Former or Current employee questionnaire4. Focus Group Discussions withknowledgeable communities in thesurrounding mining sites.

2. METHODOLOGY


3.1 Legal framework and policyThe main statutes and policies that regulate theMining Sector in Malawi are: The Mines andMinerals Act 1981 (under review); Petroleum(Exploration and Production) Act 1983 underreview; Petroleum Production SharingAgreement (being Developed); The ExplosivesAct (CAP 14:09; the Mines and Minerals Policy2013; Artisanal and Small Scale Mining Policy(being drafted) and the Geothermal Policy (beingdeveloped).

Some of such laws and policies which have animpact on mining are as follows:

i. Water Resources Act (CAP 72:03) whichdeals with water pollution control regulations,effluent discharge permits/water rights forabstraction, storage and use

ii. Occupational Health, Safety and WelfareAct (Number 21 of 1997)

iii. Land Act

iv. The Decentralization Act 1998

v. Workers’ Compensation Act

vi. National Parks and Wild Life Act

vii. Investment Promotion Act 1991

viii. Environmental Management Act (No 23 of 1996)-EIA Guidelines.

ix. Atomic Energy Act 2011

A review of these laws has revealed that theminerals sector in Malawi is principally governedby an outdated 19811 statute namely the Minesand Minerals Act. The Mines and Minerals Actdefines the rules under which players in theminerals sector conduct business. It outlines therights, duties and obligations of Government andof the exploration and mining investors as wellas the applicable restrictions.

Ownership of Mineral rights under the Act ispredicated on the principle of social trustwhereby the entire property in, and control overminerals in land in Malawi are vested in thePresident on behalf of the people of Malawi

subject to the Act2. Further any powers oragreements with respect to the granting ofmineral rights to any person is reserved for theMinister subject to the Act3. As a result allapplications for the same is made to the Ministerwho has all the discretionary powers in thegranting of the mineral rights subject to the Act.Any consultation or investigation with regard tothe same by the minister is not mandatory butmay be made if the minister consider itnecessary4.

The scope of who may be consulted is notdefined under the Act. Most notably there is noprovision for the mandatory involvement of thelocal community or other any other stakeholderin the process. The Minister, amongst manyother powers as given in the Act, can

i. Appoint the Commissioner of Mines andMineralsii. Enter to agreement with prospective mininginvestors on behalf of the Republiciii. Grant, limit, amend or cancel licensesiv. Approve License transfers and registrationv. Request information from license applicantsand mineral right holders

The Mines and Minerals Act prohibits disclosureof any mining information to a Third Party5.

Under Section 105 the Act makes provision forthe compensation for disturbance of rights of thelawful occupier of any land or damage to anycrops, trees, buildings, stock, or works by aholder the authority of mineral rights or carryingon the operations. The compensation is requiredto be fair and reasonable according to therespective rights or interests of the lawfuloccupier concerned. However, the amount ofcompensation is totally left to the agreement ofthe parties. Only in cases where there is no suchagreement may the commissioner make anassessment. Effectively this entails that thecommissioner may only get involved if there is adispute and a claim lodged by one of the parties.The Petroleum (Exploration and Production) Act6

makes similar provisions with regard to theexploration and production of petroleum. ThePetroleum (Exploration and Production) Act 1983is also overdue for revision. Since the review ofthis Act may await the development of apetroleum policy, it is imperative that the latterprocess should be speeded up. The only law


3. LITERATURE REVIEW

___________________________________1 Chapter 61:01 of the Laws of Malawi2 Section 2 (1)3 Section 10 and 114 Section 125 Section 66 of the Act6 Chapter 61.01 of the Laws of Malawi

that has been recently passed is directly relevantto the uranium mining. On 31 May 2011,Parliament passed the Atomic Energy bill intolaw, marking a first step on the introduction ofcomprehensive legislation to provide foradequate protection of people as well as theenvironment against harmful effects of radiation,nuclear material and radioactive materials. Thelaw is relevant in view of the uranium miningactivities in the country which have the potentialof not bringing in wealth alone, but harmfuleffects on people who work there and insurrounding communities.

The Mines and Mineral Policy 2013 acknowledgesthat the country has inadequate institutionalstructures and capacity for managing andcoordinating the mineral sector and that itsmining laws are outdated and legislations whichaffect mining activities need to be harmonized.The policy also acknowledges that Governmentneeds to consider international experience inregulatory reform. Furthermore, the policyrecognizes that there is inadequateempowerment of the local community in themining sector, while on environmentalmanagement there is need adhere to principlesof sustainable development since that extractionof minerals from the earth has an impact invarious degrees on the air, land and water, aswell as plant and animal life.

3.2 ImplicationsFrom the fore going it is evident that miningactivities in Malawi are still taking place in afragile legislative and policy environment.Although laws related to both solid and liquidminerals exist, they are outmoded therebyserving no meaningful purpose to the localcitizenry in the new socio-political, economic andinvestment climate. Quite clearly reliance isplaced on piece meal legislations that were notdeveloped with a vibrant mining sector in mind,and all of which may not be taken into accountwhen necessary.

A review of the Mining Act was commenced in2005 and has not been finalised. This is negativedevelopment given the fact that the country hasmade tremendous strides in the sector since theenactment of the said law yet the mainregulatory framework governing the sector haslagged behind.

The heavy involvement of the presidency andthe minister in the extractive operations makesthe licensing powers highly prone to abuse andcorruption more so in the absence of any

provision for mandatory inclusion of technicalexpertise or other stakeholder consultativeprocesses. Although it is stated that in 1982, thegovernment established a Mineral LicensingCommittee as an administrative arrangementcomposed of professionals in mining, geology,environmental issues, physical planning, policeand customs responsible for scrutinizing allapplications for mineral rights and miningconcessions and making recommendations tothe Minister responsible for mining7 it is doubtfulthat approvals for issuing of various licenses formineral rights and mining concessions aretreated objectively and professionally withoutany political considerations or interference.

There is no provision for model guide linespremised on the shared vision of all stakeholderson mineral agreements and as such they aredecided on a case by case basis. As such there isa risk that this may degenerate into arbitraryterms and conditions and is prone to abuse.There is no provision on how mining ventureswould address the needs of the vulnerablesegments of society such child and women, aswell as promoting value addition and localdevelopment.

District offices have no powers over large scalemining ventures and even small scale andartisanal mining. The central government fromCapital Hill handles all issues related to licensing,EIA assessments, land rental collection, royaltiesand taxes from the companies. However, in linedwith decentralization policy, the communities stillexpect the District Commissioner to address themining disputes that arise due to landdisplacement, resettlement and compensations.A clear policy needs to be put in place tofacilitate decentralization in the Ministry of Minesand also allow district offices to have clear rolesin mining as well as having share of revenuefrom mining ventures situated in the districts. The Act also accords mining companies exclusiverights without taking into account the livelihoodsof the people displaced or communities affectedby mining projects.

There is need for the enactment of legalprovisions which stipulate strict environmentalobligations on the part of mining operatorsconsistent with internationally recognizedsafeguard standards. For instance, theEnvironmental Management Act 1996, makes atransparent and accountable EnvironmentalImpact Assessment (EIA) a mandatoryrequirement before any mining activity iscommissioned8. A similar approach as the one


___________________________________7 Chapter 61:01 of the Laws of Malawi8 Section 24 of the Environmental Management Act, 1996

adopted on the Uranium Act should as a matterof urgency be extended to the rest of the Miningstatutes.

Since current laws and policies in the sectoroverlap or work hand in hand with other piecesof legislation with respect to mining activities,there is need to harmonize or consolidate thesestatutes and policies for ease of reference. Inaddition, much as the policy tackles relevantissues with regard to mining, there has beenlack of dissemination of the policy to the locallevel hence might not serve its intended purposeas the local community will not be able todemand their rights from an informed point ofview.

Finally clear provision on transparency in miningagreements and activities should also beintroduced in the statutes. On the need forbusiness confidentiality, a distinction could bemade between a Development Agreement orMining Contract and Confidential Matters relatedto the company which if put in public domainmay jeopardize the company’s businessinterests, reputation and integrity as is the casein the Model Mining Agreement, 2010.

3.3 Review of print media articles A review of the print media stories on miningover the last ten months revealed a number ofissues ranging from production, awareness,accountability, capacity, communityengagement, environmental concerns,legislation, corporate social responsibility, andbenefits coming from the mining sector. TheDaily times and The Nation newspapers wereused to solicit information coming from the printmedia as depicted in Box 3.1.

The media highlighted the environmentalhazards such as loss of fertility, change in waterdrainage systems, radiation, dust, loss of floraand fauna. Case in point is the alleged radiation-induced blindness that was reported aroundKayelekera. One of the major challenges thathas been pointed out has been the lack ofgovernment capacity to monitor compliance ofmining companies on best practices and alsolack of specialized equipment to measure theradiation-related-hazards.

On the revenue part, government gets loyaltiesfrom the mining companies which are currentlyat five percent of gross sales. Much that the rateis low, the government is also failing to regularlydo inspections hence some companies have beendefaulting payment of such loyalties. It isestimated that the country may lose billions dueto the provision of tax incentives to the foreigncompanies. Furthermore, there is no clearguidance on revenue collection, usage as well asauditing of the proceeds from the sector. However, it was noted that the Ministry ofFinance and Malawi Revenue Authority hasrecently embarked on capacity buildinginitiatives aimed at equipping officials withknowledge and skills necessary to understandthe fiscal issues and mining legislation which willensure that subsequent mining agreements arenegotiated effectively. Currently the guiding legalinstruments under the taxation system are theCustoms and Excise Act, Taxation Act and ValueAdded Tax (VAT) which guide the assessmentand collection of legitimate revenues for thegovernment. One element in tax calculationsthat need to be thoroughly checked is transferpricing which is the major tool for corporate taxavoidance in multinational corporations.

On community engagement, the media was ableto point out the lack of knowledge on miningpolicies and the role of the community to beengaging mining investors and the governmentto ensure that mining activities contribute to thedevelopment of rural communities. Furthermore,the print media focused on lack of accountabilityon the part of mining companies since thecommunities are not benefiting from thecommercialization of the mining resources muchas in some cases MOUs have been signed butnot yet fulfilled by the mining companies.

As highlighted in the PEA9, the major challengein the print media is that at times the stories arenot balanced. This could be due to bureaucratictendency in the provision of data fromgovernment, and lack of transparency from themining companies, and also lack of knowledge ofthe mining environment which presents acapacity challenge for the media. The passing ofaccess to information bill.


___________________________________9 Political Economy Analysis of the Mining Sector, 2013, Tilitonse


The Nation The Daily Times

Outdated mining laws annoy CSOs February 7.Canadian Mining firm to finance the developmentof prospecting activities at a Malawian mine,February 04

Communities trained on Mining Policy,6February

Government of Malawi summoned by locals overmining activities, January 31

Government Assesses mining sector January25

Globe Metals and Mining pulls out of Mozambique,November 29

Malawi Asked to follow mining legislationJanuary 22

CCJP calls for uranium mining water impactassessment, November 01

Malawi Seeks fair returns from MiningInvestment Jan 3

Malawi’s Salima Community blame contractorover sand mining, September 21

Airborne Survey to Woo Mining InvestorsDecember 21

Malawi’s mineral geographical survey 45 percentcomplete, 13 February

UN Wants Positive mining policies October 31 Malawi government backs shut-down of uraniummine, 10 February

Chitipa, Rumphi Communities petitiongovernment over mining concerns October 27

Malawi’s Kanyika Mine niobium samples in Chinafor testing, 17 January

CCJP joins Kyungu in Paladin Mining BattlecOctober 18

Miner for deal with Central East African Railways,12 November

UNIMA to Introduce mining engineering courseSeptember 26

Kanyika miner wants agreement review, 24October

Corporation Committed to Helping LocalMining Industry Jun 1

Malawian community seeks more benefits fromPaladin

Malawi Mining Deals Need to be fair-Japan,May 28

No profits from Malawi’s Kayelekera mine, 27September

Review Laws on Mining, May 22 Malawi MPs grill government over KayelekeraUranium Mine, 26 September

Mining industry not regulated-Judge May 22 Malawi government demands K15million fromMchenga Coal Mine, 20 September

DC Mediates Mulanje Mining Wrangle, May 20 Kayelekera uranium production up 20%, 5September

Box 3.1: Newspaper headlines over the last 10 months

This chapter presents the key findings from thebaseline survey as a primary source. It also in-cludes the national level data sourced from vari-ous government departments as secondarysources.

4.1 Response Rate Table 4.1 below depicts the number of interviews

conducted in the study sites. More interviewswere conducted in Karonga, Mzimba and Ntcheudue to the large scale of operations and also theknown long history of mining. In addition, fourmedia interviews were done to editors of MalawiBroadcasting Corporation, Zodiac BroadcastingCorporation, Radio Islam and Nation PublicationsLimited.

4.21 Accountability

4.21.1 Mining CompaniesThe general perception on issues ofaccountability was that mining companies arenot accountable to the communities. Most of theFocus group discussions reported that they hadno idea on how much revenue the minesgenerate. There were common reports acrossthe sample regardless of the region of the minesite. A participant in a focus group discussionwith businessmen and women in Karonga wasquoted, “No revenue information has ever beenmade available to the community.” Similarcomments were made in Mzimba, Ntcheu andBalaka. Some key informant interviews showedthat lack of revenue information was due to thefact that the mining companies only collectsamples and not actively extract minerals.Interviews with community members however,indicated that there is lack of trust from thecommunities. The community members feelcheated. There is a common perception thatminers are doing active mining but lie to thecommunities so that they are not taken to taskto account for the proceeds which, as thecommunity believes, are meant to benefit thelocals as well.

In a focus group discussion in Mzimba, it was

reported that 87 metric tonnes of samples havebeen collected so far. They believed that theamount were too much for sample purposes. Theinformation was reported to have been accessedinformally through workers at the mine site.

A lime extraction site operator in Balakareported that the mine makes 1.2 millionkilograms per month and products are used forconstruction, poultry farms for Agora andHuafeng. The company pays 16.5% VAT permonth to government, however there is noevidence that the information is not madeavailable to the communities.

4.21.2 GovernmentThe study shows that the government fails tosatisfy communities on levels of accountability.One aspect that came out from the qualitativeinterviews was the gaps in the governmentstructure on mining. The district level reportedthat issues to do with mining are directlycontrolled by the Ministry Of Energy and Minesheadquarters and that information on revenuesis not made available to the district level. A CSOrespondent in Mzimba commented, “The MiningAct vests all powers on the presidency.” Aninterview with a media person in Karonga had asimilar implication and was quoted, “Not eventhe government knows the revenue information.

4. RESULTS


Table 4.1 Summary of interviews conducted by district

IndividualPerceptionInterviews

No of FDG KII Former/CurrentEmployee

Karonga 49(30.68) 4 9 2

Mzimba 20(12.5) 5 12 0

Ntcheu 35(21.88) 1 2 4

Balaka 26 (16.25) 1 3 3

Phalombe 30(18.75) 0 2 4

Total 160 11 28 13

Information can be accessed by direct contactwith the workers in thecommunity.”Furthermore, an MP in Mulanjelamented that “there is the lack of inclusion oftechnical experts in the drafting of mining lawssuch as economists, geologists, surveyors whowould provide the cost benefit analysis in themining sector, and that the vesting of too muchpower in the president results in makingdecisions without regard to the contrary voicescoming from the CSOs and other stakeholders’

4.22 Responsiveness

4.22.1 Mining CompaniesMining companies were perceived as non-responsive on a greater scale over the sample.Communities complained that the investors havenot attended to most their concerns. In a focusgroup discussion with business people inKaronga, it was reported that they wanted to besupplying fish. Requests were presented to theminers but the tender was given to otherbusinessmen not even from around thecommunity. Failure of miners to compensate thelocal communities even after several meetingswhere concerns have been raised bycommunities was reported by the communitiesin Karonga, Mzimba and parts of Ntcheu.

4.22.2 GovernmentThe government was perceived as non-responsive by having policies that do notaddress the people’s needs. They study showedthat people had mixed opinions over the policiesaddressing people’s needs. Others, thoughagreeing that the government was non-responsive, they noted that there is poor policyimplementation.

In a key informant interview with a TIDECOfacilitator, he was quoted, “The Policy doesaddress the needs of the locals. The governmentshould have ensured that people have what theyneed most to be provided by the investors as acontribution to community development.” Someof the development aspects that were commonover the sample included piped water, betterschools, hospitals, good roads and bridges.

There was a general outcry that the governmenthas failed in facilitating compensations. In afocus group discussion in Mzimba, theparticipants had complained that they would becompensated by December 2013 but, this hasnot materialized. In one incident in Mzimba, themining company officers under a Chinese firmthat were conducting a research were chased bylocal community members due to delays incompensations

4.23 Community InclusivenessThe study found that in most cases, the localcommunities were never involved during theinitial stages or else the level of engagementwas more selective. Involvement was limited toa few individuals who were in most casestraditional leaders. In Mzimba, it was reported ina focus group discussion with women at theKanyika mining community that local people andtheir chiefs were only told that the miners hadcome to plant their mining machinery. However,there was no resistance because the communitywas promised employment, compensation andresettlements. There were similar trends in theother mining communities. In Karonga, a focusgroup discussion revealed that only TA karongaand a few other chiefs were involved on thediscussions. The local community members werenever consulted but rather notified that therewould be mining activities in the area. Themining companies then started clearing andconstructing roads. Key informants from thedistrict council offices and CSOs such as CCJP,TIDECO and FOCUS in the northern regionconfirmed the sentiments reported from thevarious mining communities. It is perceived bylocal communities and district officials thatcontacting the district offices and the fewindividuals in the local mining communities ismore of a means to achieve an end rather than aconcern and the recognition of the communitiesand the respect of human rights.

In contrast from the northern region wherecommunities reported some level of notificationor consultation through chiefs, Communities inNtcheu, Balaka and Phalombe reported that noformal communications were made with thechiefs. In Phalombe, the DPW reported, “There ismining at Songwe but we are not properlyinformed what it involves. The people from theministry just came with the miners and told usthey want to start inspection of the area. OurHealth, water and Environment people just wentto check the area to gauge if there are anyhazards.”

There were mixed reaction on who to blame onthe lack of community involvement. Others putthe blame for low levels of communityengagement on the government by not makinginformation available. A shadow MP in Mzimbacommented, “The communities were notinvolved in policy formulation hence they areunaware if their needs are being addressed. Inaddition, mining policies are not even available”Interviews with the district level officersconfirmed lack of information provision bygovernment but there was tendency of thedistrict level blaming the national levelgovernment structure. A government official in



Ntcheu said, “No community engagement wasdone. The mines at Katsekera have been therefor sometimes but recently there has beengrowing interests in mining in the district.Unfortunately these issues are handled at theministry level. We don’t have an officer whocoordinates mining activities at communitylevel.” The concern on lack of miningdepartments at district and community levelswas common in all the mining communitiesacross the sample.

Interviews with CSOs highlighted communityawareness on rights and providing a platform forcommunity engagement with other stakeholdersas a key role they are playing. There was notmuch that confirmed the CSOs’ claims. Therewere one-off reports from interviews withcommunity members. In some cases, it wasreported by local community members thatCSOs were involved in the discussion with

Investors but not the local community members.CCJP, Church and Society and FOCUS were themost common CSOs that were reported in theNorthern region. A media person in the northsaid, “CCJP, Action Aid, Church and Society, T.A. Mabulabo and other DEC members wereinvolved during the initial meetings”

4.23.1 Community engagement bygovernmentThe study collected data on the role ofGovernment to seek views of its citizens andalso for them to have their needs addressed andprotected. The data was collected throughindividual interviews, FGDs and KIIs. Thus thefocus was to assess the level of consultation onmining issues since mining is an emergingsector. The findings show that there is lack ofconsultation of the citizens on mining issueseven in areas where the mining activities aretaking place.

Table 4.2: Percentage10 distribution of individuals by whether government sought views(consultations) of its citizen on policy, planning and implementation arrangements

District Moderateconsultation

Little consultation

No consultation Don’t know Total

Balaka 25 (96.15) 1 (3.85) 0 (0) 0(0) 26

Karonga 0 (0) 3 (6.12) 45(91.8) 1 (2.04) 49

Mzimba 0(0) 2(10.0) 18(90.0) 0(0) 20

Ntcheu 6 (17.14) 1(2.86) 28 (80.0) 0(0) 35

Phalombe 1(3.33) 2 (6.67) 26 (86.67) 1(3.33) 30

Total 32 (20) 9 (5.63) 117 (73.13) 2 (1.25) 160

The artisan miners in Balaka werepreviously consulted by Government atthe launch of a USAID funded projectcalled Chemkumbi Lime MakersAssociation that focused on limestoneminers in the area. The mining communitywas engaged in the process of registeringthe association and seeking materialsupport. Most of the miners work withinthe mine on an agreement that theproduce will be sold to BRISCO Lime.

The association also engagedGovernment through the Ministry ofForestry to develop programmes thatwould mitigate deforestation as a result ofmining activities. Mining activities requiresfirewood in breaking large rocks using theweathering principle. The lime stone isburnt after that they add water whichcauses cracks and it disintegrate intosmaller pieces and it is grinded intopowder.

Thus about 73 percent of the respondents across themining areas reported lack of consultation (Table 4.2).Lack of consultations is highly reported in Karonga,Mzimba, Ntcheu and Phalombe. Almost all respondents inBalaka reported being consulted11, this is due to the factthat the local miners merely collect lime stones and thensell to Brisco Lime Company which came about after aUSAID project.

The key informant corroborated the same that thecommunities have not been consulted during policy reviewor formulation. They indicated that due to lack ofconsultations, the policies do not address their needs. Thecommunities complained that the Government does notprovide enough information concerning mining issues.They indicated lack of awareness on the mining andrelated policies. In case of Karonga, the mining companyhas failed to fulfill the Social Corporate Responsibility and

___________________________________10 Percentages are in parenthesis11 USAID project and Chemkumbi Lime Makers Association

communities feel that Government is not doingenough.

The communities also indicated that they werenot aware of the agreements betweengovernments and mining companies. Thecontract agreement has not been made public assuch they are not aware of the extent of miningthat is taking place.

The communities believe that the miningcompanies have obligations to the communitiesaround the mining areas but they are not sure ofthe specific responsibilities. In Mzimba,Participants pointed out that the following aredevelopment agreements/contracts:compensation in form of money or buildingimprovement or construction of roads, healthyand school facilities i.e. building a fence aroundthe school perimeter. They further disclosed that

all information pertaining to the contract is notpublicized to the community. Participantsemphasized that they had not seen the contractsor development agreements in writing but onlyhear that they will improve the living standards.This lack of consultation is across the spectrumof citizens including women.

4.23.2 Community engagement by MiningCompaniesThe study also collected data to find out if themining companies make consultations with thecommunities they are working in on issues ofpolicies, budgets and implementationarrangements. As was the case with governmentconsultations, the levels of consultations inBalaka by mining companies is high compared toother districts due to the close workingarrangements between the local miners and themining companies (Table 4.3).

Table 4.3: Percentage distribution of individuals by whether mining companies soughtviews (consultations) of citizens on policy, planning and implementations arrangements


District A lot of consultation

Moderateconsultation

Little consultation

No consultation

Don’t know Total

Balaka 18 (69.23) 1(3.85) 2(7.69) 4 (15.38) 1(3.85) 26

Karonga 0 (0) 2 (4.17) 5 (10.42) 41 (83.67) 1 (2.08) 49

Mzimba 1(5) 0(0) 1(5) 18 (90) 0 (0) 20

Ntcheu 0 (0) 0 (0) 4(11.43) 28 (80) 3 (8.57) 35

Phalombe 0 (0) 0(0) 2 (6.9) 27 (90) 1 (3.45) 30

Total 19 (12.03) 3 (1.9) 14 (8.86) 116 (73.42) 6 (3.8) 160

The increased engagement inBalaka between miners and themining company, Brisco Lime isbased on the businesspartnership. Brisco Lime is themain buyer of lime productsfrom Chemkumbi Lime MakersAssociation and hence there isstrong engagement as pricesand quality of the products haveto be agreed upon. However, theengagement does not extend tosharing information of financing,turnover, rights, externalmarkets and training in miningamong others. The two partieswork independently.

In general, communities bemoaned the lack oftransparency by the mining companies on how much theyare realizing from their business activities. Furthermore,the companies do not enter into written agreements withcommunities on Corporate Social Responsibilities and thisis a challenge in terms of follow ups and enforcement. Thekey informants indicated that there is little involvement ofdistrict councils and hence companies lack closermonitoring.

One key informant noted that there is lack of knowledgeon existence of mining policies and there are no structureson grievance handling of mining issues. However, CSOs arenow empowering communities through various programson mining rights.

4.23.3 Community involvement in monitoring ofmining activitiesThe Mining Companies have a role to monitor developmentactivities if they are taking place in line with the policies inplace. In view of the decentralization policy and widercitizenry involvement, the study collected data to assess ifcommunities are involved in monitoring mining activities in

their areas. Monitoring of activities by thecitizens helps to curb malpractice by the miningcompanies follow best practices with regard toenvironmental hazards that could culminate into

health problems. Across the districts, the miningcompanies do not involve the community inmonitoring (Table 4.4).

Table 4.4: Percentage distribution of individuals by whether mining companies involvedthe community in monitoring of the mining activities.


District Moderate involvement

Little amountof involvement

No involvementat all

Don’t now/Noresponse

Total

Balaka 2 (7.69) 3(11.54) 18 (69.23) 3(11.54) 26

Karonga 2(4.08) 1(2.04) 46(93.88) 0 (0) 49

Mzimba 1(5.0) 1(5.0) 17(85.0) 1(5.0) 20

Ntcheu 2(5.71) 18(51.43) 14(40.0) 1(2.86) 35

Phalombe 1(3.33) 5 (16.67) 22(73.33) 2(6.67) 30

Total 8(5) 28(17.5) 117(73.13) 7(4.38) 160

The lack of binding contracts between miningcompanies and communities do not bind them toengage the citizenry. In some instances, mininginspectors from Government and the Minister forMining were not allowed to visit Kayerekera onthe pretext that they had not followed properprocedures. In Phalombe, EvangelicalAssociation of Malawi has failed to hold aconsultative meeting involving communities withMkango Resources. The lack of knowledgesharing by the mining companies to thecommunities on contract agreements, roles andresponsibilities by the investors providesincentives for lack of transparency.The mining communities and employees nevergot any training in mining so as to strengthentheir knowledge and capacity in the trade. Thishas been a major source of dissatisfaction acrossthe mining sector. This also applies to the artisanminers in Balaka and Ntcheu. In Ntcheu, crudemethods of mining are used despite the minebeing run by APEX mining company. These areless efficient requiring manual labour andsometimes detrimental to the environment.

4.23.4 Community Concerns on Mining,Challenges and Some ResolutionsThe study found a number of concerns andchallenges arising from mining related activities.Lack of Community consultations on all miningissues is the major concern to the six miningareas in 6 districts because it is the basis forlarger challenges affecting their welfare. Thesecond concern was the failure to meet verbalcorporate social responsibilities by the miningcompanies. The local chiefs and key membersfrom the communities in Karonga are not givenaccess to the mining sites to see the progress onmining. In addition, Paladin only allowed visiting

of the mining area upon booking. At oneinstance a Minister for Mining was denied accessto the mines as it was claimed that he has donecomplied with their visiting laid downprocedures. This applies to mining inspectorstoo. Failure by the mining companies to honouragreements with various parties such as localbusiness personnel was mentioned in Karonga.Paladin promised local fish and rice suppliersthat they would be providing them with fishhowever; they were duped as Paladin procuresfish and other food items from Republic of SouthAfrica.

Other concerns include lack of capacity buildingamong the minors in Ntcheu and Balaka whichaffects their progression in the sector; theproblems of low prices of lime offered by BriscoLime because it is the sole buyer from thecommunities. The problem of deforestation inBalaka resulting from use of fire in breakingrocks which consumes firewood. Deforestation isalso taking place because of opening up of newshallow mines that requires clearing the naturalvegetation. The miners use basic tools as suchhoes and axes, to break stones.

The opening up of the mining industry inKaronga has resulted in a general increase inprices of commodities due to increased demandfrom increased population moving in to work atKayelekera. Mining has also had a negativeeffect on the environment leading to degradationresulting from dumping of waste products anddestruction of natural vegetation. On the socialaspect, the mining industry has brought socialunrest through high prevalence of sexuallytransmitted diseases, land issues due torelocation and instability of family institutions.

On land issues, the displaced communitymembers have faced numerous challenges to thenew areas as they integrate into the newsocieties.

In some instances, mining has lead to watercontamination especially in Karonga aroundKayelekera as claimed by the communities.However this has not been independentlyverified as the company continued to deny theallegation. The compensation has either beeninadequate or delayed there-by affectingcommunity members’ livelihoods. For instance,the Gondwe clan of 6 families that wererelocated from where Kayerekera Mine standstoday have were unfairly treated. These familieswere only given MK80, 000 per family onlydespite the land size they were leaving behind.The clan moved out of good arable land toupland areas where the land is not good foragriculture. Efforts by local chiefs and CSOscalling for a review of the compensation packagefor these households to both Government andPaladin has not yielded any positive results. There is no well established conflict resolution/grievance handling mechanisms involving thegovernment and mining companies on one handand the community on the other. This has leadto unresolved issues between the miningcompanies and communities and hence affectingthe levels of benefits accruing to thecommunities.

In Karonga, some communities made efforts toengage government and mining companies toaddress the issues of compensation and socialcorporate responsibilities. The communitiesreported a number of changes that came aboutdue to the meetings. Compensation issues weresorted out by IRAND as a result of the meetings.At Kayelekera, the lack of communityinvolvement in monitoring activities in miningwas addressed by allowing Chiefs visit the mineonce in a while upon proper arrangements.In Mzimba, due to the strong disagreementsbetween the investors and the communities, ameeting was held (Chaired by Principal Secretaryof Mining) and resolved to have a committee toact as a bridge between community andstakeholders. This committee which is agovernment effort has not been formed. Therequest by communities to get more informationon mining has been addressed through leafletson mining issues by CSOs.

4.23.5 Community AwarenessThe study shows that community members inthe mining communities are not aware of miningpolicies that govern mining activities. FocusGroup Discussions and Key Informant Interviewsrevealed that local communities and even some

practitioners in different organizations includingCSOs are not aware of mining laws and Policies.A senior civil servant at a district level inKaronga was quoted. "I just know that Licensesare supposed to be issued to mining companiesbut, I am not aware of any laws." This wasgenerally perceived as a gap across the sample.The respondent continued, “Awareness on thelaws should be promoted at the district andgrass-root levels” In most cases the blame wason the government and CSOs in failing to makepeople more aware of Laws and Policies.On the rights front, mining communities weregenerally aware of basic rights. The mostreported rights included Rights to a cleanenvironment and access information

4.24 Structure and functions ofstakeholdersConsidering the risk of environmentaldegradation that mining can bring, it wasreported that government and otherstakeholders have come together in attempts toaddress the risk of environmental degradation.The organizations that were commonly reportedwere CCJP, ACCORD, Church and Society, ActionAid, FOCUS and NICE in the Northern region.CCJP, ACCORD, Church and Society werereported to promote the citizen voice throughrights and policy awareness and engaging withthe government to promote accountability. Inparticular, CCJP in Karonga provides civiceducation to community members andsensitizing them on the dangers of uranium onthe environment and the health status of thepeople. At the same time, FOCUS and NICE wasreported to provide linkage between governmentand community. In Mzimba, it was reported thatCCJP and Church and Society are activelyinvolved in encouraging community participationin the development stages of the mine. Theyalso provide a platform for communityengagement whereby the communities raisetheir tangible issues concerning mining industryin their area.

4.24.1 GovernmentThe government, as one stakeholder, wasblamed especially at the national level for nothaving a decentralized system in the miningsector. Mining communities expected that amining department at the district level shouldhave been in place to ensure that communityconcerns and mining policies are wellimplemented. A project officer for Church andSociety in Karonga was commented, “There areno district offices that deal with mining issuesspecifically.” He complained that decisions onmining activities are only made at the highoffices in government who have little knowledgeof the hurdles that mining communities face and


make decisions with less accord of them.Furthermore government was also perceived toplay a great role on hosting meetings thatattract participation from a wide range ofstakeholders. A media person in Mzimbareported, “The district council host DEC meetingswhich are chaired by the DC or Inkosi ya Makosi.The council provides a platform where miningissues are discussed and community grievancesheard through chiefs and ADC members ”Therewas a general outcry that though there aremeetings at the district level, there is lack ofaction which reflects response from the investorsand government. Key informant interviewsshowed that the government has theresponsibility to engage with chiefs to relayinformation from the local community membersto the government and Vice versa and alsoinvolve CSOs. Commenting on this, a TIDECOfacilitator commented,“ Government should haveclear and effective monitoring structures in themining communities specifically on how theinvestors are conducting their work” This opinionwas shared by other key informants in Ntcheu,Balaka and Pholombe.

4.24.2 Political and Social influence There are elements of political influence overmining aspects though they were not coming outvery clearly. In one KII in Phalombe, arespondent commented, “You won’t find detailedinformation about these mining activities here atdistrict level because these issues come directlyfrom the ministry.” There were concerns, thoughone-off, that the law vests too much power onthe President.

The study shows that there was some socialinfluence of mining activities. In some cases,people complained that only a few havebenefited from the mining activities throughemployment. This was common in Mzimba wherethe mining scale is not as high as that ofKaronga since they are still at their early stagesof collecting samples. In Karonga, Peoplecomplained that only those few have benefited.This gave an impression that the communityperceived the ‘beneficiary’12 households asbeing at an advantage and in a compromisedposition to voice out against the establishmentof the mine. This was noted as a social threat tothe employees.

The study also shows that there are issues onprice fluctuations on the market. From FocusGroup Discussions and Key Informant Interviewsin Karonga, it was noted that Price fluctuationand rise of commodity prices in general has

affected household planning especially forfamilies that have not had any direct benefitsfrom the mine activities. It was reported thatrenting costs for houses have generally risen.Similar concerns were reported in Mzimba. Therewere also concerns over the risk of disturbingthe soil structure. People were concerned thatholes that are dug up and usually not covered uplater destruct the soil structure rendering theirland more prone to landslides which willeventually affect their produce indirectly.

4.24.3 Media Involvement The media in-depth interviews were also done toeditors belonging to The Nation newspapers, TheDaily Times, Malawi Broadcasting Corporation,Radio Islam and Zodiac Broadcasting CorporationStation, and Mzimba Community Radio.

The study shows that that the media playgreater role in the responsive mining. Some ofthe common roles that the study found outinclude:� Gathering information related to miningissues from government, CSOs and thecommunity� Disseminating mining information to thepublic through radios, TVs and publications suchas newspapers, magazines and so on.� Provision of advocacy and civic education tothe community through mining programs on theradios and publications in the newspapers.� Unveil hidden information from the miners tothe community and the public at largeTo shade more light, in Mzimba FGD which wascomposed of males between 25-52 years, one ofthe participants was quoted saying “ZBSjournalist came to enquire about the miningissues on their community”.

This implied that the media actually go into thecommunity surrounding the mining industry tofind out the issues and concerns of thecommunity with regards to the mining.

However, TA Mabulabo of Mzimba district had alow opinion of the media. He was quoted saying,“the media does not play their roles in relation tomining industry; they are more interested inpolitics rather than development aspects”.

At a national level, there is now a network ofjournalists working on the mining sector which isbeing supported by Center for EnvironmentalPolicy and Advocacy. The study finds that thereis limited knowledge of the mining laws andpolicies among the journalists, and discussionson mining are rather on adhoc basis within the


___________________________________12 Those employed at the mine site

The study collected information from individuals on the role ofCSOs in making the citizens aware of their mining rights. About30 of the 160 respondents indicated that they were aware ofCSOs campaigns.


media houses. One of the major challengesreported in covering mining stories was accessto information from both the government andmining companies. It was noted that there is toomuch secrecy in diverging information in themining sector to the extent that speculation ishigh that top government officials and chiefs arebeing bribed by the mining companies at theexpense of local communities within the miningsites and Malawians in general. The passing of

Access to Information bill into law would go along way in addressing this problem.

4.24.4 CSO involvement The survey collected baseline data on the CivilSociety Organisations, their roles and source offunding from the individual perceptioninterviews. The results are show that there aremore CSOs in Karonga working on mining issuesfollowed by Mzimba and Balaka.

Catholic Commission for Justice and Peace,Church and Society, and other NGOs arepromoting the citizen voice through rightsawareness and engaging with government topromote accountability and corporate socialresponsibility by mining companies.Furthermore, CCJP provides civic education tocommunity members and sensitizing them onthe dangers of the mineral, uranium. All theCSOs are involved in advocacy to promote

community engagement in mining decisions andrights awareness. FOCUS, and NICE providelinkage between government and community.CCJP, and Church and Society were very activein encouraging community participation in thedevelopment stages of the mine. The CSOs alsoprovide a platform for community engagementwhere communities are able to raise issues ofconcern.

Box 3 : Names of CSOs involved in Mining

Box 4: Names of CSOs and their roles

Balaka Concern Universal, WALA, NAC, Moslem Association of Malawi

Karonga CCJP, CHRR, MACRO, MAZA, NICE, LISAP, Mother Group, Focus,OpharnCare, Plan, PSI

Mzimba CCJP, Church and Society, Action Aid, Tideco

Ntcheu Malawi Council of Churches

Phalombe Evangelical Lutheran Church and Action Aid

Karonga FOCUS, CCJP and NICE: Community awareness on rights; Citizen for Justiceand CHRR: Community awareness on rights and lobbying

MzimbaCCJP: Civic education and community empowerment, linkage; Action Aidand Church and Society, TIDECO: Civic education and communityempowerment, linkage

Ntcheu Malawi Council of Churches: Community empowerment

BalakaMuslim Association of Malawi: Provide Civic education; Tilimbikecooperative: Small scale mining as business activities; OVOP: loans tosupport cooperatives

Phalombe

Action Aid, Evangelical Association of Malawi and Institute for Policyinteraction: community awareness on rights, Advocacy on Policy,Community Monitoring on policy implementation. CCJP – advocacy andcommunity awareness on rights.

In terms of funding, CCJP has been gettingfunding from Norwegian Church Aid, NICE isfunded by European Union while CHRR getsfunding on mining issues from Open Society forJustice Initiative and Southern Africa LitigationCenter, and the Citizen for Justice gets fundingfrom the Dutch Government.

On closer collaboration and joint efforts areevident in most of the districts. In Phalombe, theEvangelical Association of Malawi works jointlywith NICE, CCJP (local communities) andInstitute for Policy Interaction (IPI) in advocacyand community empowerment programs. TheCSOs working tend to jointly work togetherwhen their catchment area is the same. TheCSOs also work hand in hand with the DistrictCouncil staff in all the activities. The CSOs thatare operating within the district but not in themining area receive reports through DistrictExecutive Committee Meetings.

In Mzimba and Karonga the CSOs jointly work onissues pertaining to mining activities. The CSOshave carried out a number of activities jointlywhen ever issues requiring informed action oraddress to the communities have arisen. TheCSOs indicated that they held 2 meetingsrecently on issues affecting the communitiesfrom the mining activities. In Mzimba, a meetingwas held involving the Government, CSOs andcommunities on knowledge sharing especially onmining policies. The CSOs responded bydistributing leaflets that presented parts of themining policy and how the communities benefitfrom mining activities. In Karonga, a meetingwas held with Government, CSOs, Communitiesand IRAND on delays in compensation. Themining company, IRAND responded positively bypaying off the outstanding compensation to theaffect ted families.

At national level, there is a mining networkcomprising the Citizens for Justice (CFJ), Centrefor Human Rights and Rehabilitation (CHRR),Institute of Policy Interaction (IPI), CatholicCommission for Justice and Peace (CCJP),Foundation for Community Support Services(FOCUS), Uraha Foundation Malawi (UFM),Action Aid, Norwegian Church Aid, Center forEnvironmental Policy and Advocacy. One of themajor achievements of the network was to pressgovernment on review and legislation of themining laws and policies.

4.25 Former Employees.The study collected data on former employees tounderstand how they understand mining issuesin line with policies affecting the sector. Theformer employees reported that they gotemployment through various means. In Karonga,

one respondent indicated that he went throughinterviews by sitting for an aptitude test whilethe other was recruited through a friend. InNtcheu, both respondents indicated that theywent through interviews. In Balaka, therespondent indicated that he just joined withoutinterviews. In Phalombe, the mining companyrequested the local Chiefs to ask people forrecruitment. The employees were scrutinized bythe company and recruited.The study also sought to understand how themining companies trained the employees. The 2from Karonga did not undergo through anytraining because they had the required skills inbricklaying and Clerk, respectively. In Ntcheu,the 2 former employees received on the jobtraining because it involved breaking stonesusing basic tools.

In Balaka no training was offered. In Phalombethey were oriented in using the machinerybrought by the company.

The study looked at the working conditions theformer employees were subjected to. It wasreported that the employees were just givensalaries and nothing else. In Karonga they alsohave to work on Sunday. They start work at 7am, break for lunch and knock off around 5pm.Only in Ntcheu and Balaka where the formeremployees reported that they were gettingsupport when sick in form of transportation andmoney.

This provision of transport in Ntcheu wasextended to the communities around the mine.The respondents bemoaned lack of materialssuch as boots, work suites among others. Theyalso indicated that overtime payment was notdone despite working beyond agreed hours.They also reported that the salaries weregenerally lower than the work load.The mining worker did not have workers union inKaronga, Mzimba, Balaka apart from Phalombewhere it was ineffective hence do not have aplatform to demand better conditions of serviceas a unit. In Balaka they have a cooperative thatunites the miners but its primary objective is tonegotiate for better prices.

The study also found out why the individualswere out of work. All respondents except thosefrom Ntcheu indicated that their contracts endedor the assignment closed. The two from Ntcheugot fired because they store rubies.

4.26 Current employeesThe study collected information from currentemployees (7) on the similar issues as formeremployees. The employees got informationabout job opportunities through friends and


relations except in Phalombe where the miningcompany consulted local chiefs. The employeesreceived training on the job.On working conditions, in Karonga, theemployees have better working conditions likesalaries, annual leave, protective clothing andleave grants. In Balaka, there are no definedworking conditions but they get a compensationof MK500 when they get injured. In Phalombeand Ntcheu the conditions are not clear apartfrom working hours and salaries. The otherbenefits the employees get in Ntcheu aretransportation to the hospital for employees andcommunity members. The current employees also indicated absence ofworkers union in all the districts except inPhalombe where it is not properly organized. Themajor challenge is low salaries that are notcommensurate with the work load.

4.27 The benefits realized from miningactivitiesWhile mining activities have created a number ofchallenges, a few benefits have accrued to the

communities besides the national benefits. Thecommunities indicated that mining companiescreated employment to members of thecommunity. The improved road networks thathave been made to facilitate mining activitieshave improved transportation for the communitymembers. There has also been an improvementin school and health infrastructure as a result ofmining operations. The influx of population tomining areas has increased economic activitiesleading to creation of income generatingactivities.

The mining companies have also providedsupport through food handouts to over 740 poorhouseholds within the communities. The miningcompanies have provided bursaries to supportschooling for children from poor families. Paladinhas also rehabilitated and extended the run-away for the airport in Karonga and invested inwater supply system. In Phalombe, MkangoResources provided 3500 kilograms of highyielding pigeon peas seed to the communities(each family received 4kgs, thus giving apopulation of 875 farmfamilies).


Karonga

1 Road rehabilitated from Karonga –Chitipa Road to the mine, 1 schoolstructures and 1 water supply system. Employment (493 Malawians – 98females),Upgraded a guardian compound at Karonga District Hospital,Extended and upgraded the Kayelekera and Nkungwe irrigation schemes

MzimbaEmployment, 1 health facilities, donation of school materials at KanyikaCDSS , rehabilitation of 1 road from Simlemba to Kanyika, construction of1 borehole.

Ntcheu APEX has employed 30 (6 females), support to education through provisionof 2 teachers, transport to health facilities and assist in funerals.

Balaka Income generation activities through mining proceeds. Brisco has employed33 (3 female workers).

PhalombeMkango Resources has provided employment to the local community.Provision of pigeon peas seed to 875 farm families, 2 water pumps for theschools around the mining site.

Box 2: Benefits realized from the mining activities

4.28 Contribution of mining to the economy

4.28.1 Revenue and Employment The mining sector has experienced tremendous growth since the2007/08 financial year to date in terms of revenue and employ-ment. Table 1 shows a steady increase in the of the sectoral con-tribution to Gross Domestic Product from as low as 0.8 percent in2009 and is projected to 5.3 percent in 2014 with high prospectsof around one filth of the GDP is expected to come from mining inless than a decade (MGDS-II).

In terms of proceeds emanating from mining, the averagerevenue has more than doubled over the reference period andmore significantly between 2011/12 and 2012/13 financial year(Table 2). The increase is on account of the increase ofproduction from Kayelekera Uranium Mine.

One of the major benefits of mining is employment is a source oflivelihood for many households in rural areas. It is estimated thatthe sector employs around 13,500 artisanal and small scaleminers scattered across the country wide where only 10-15percent are women. Table 3 below summaries the formalemployment in the mining sector from 2010 to 2012. However,the major challenge in getting the actual numbers of artisanaland small scale miners has been attributed to the fact that theyoperate in remote areas and are not regulated (Annual EconomicReport, 2013).


Table 4.5: Mining Contribution to Gross Domestic Product

Table 4.6: Revenue from mining

Source: 2013 Annual Economic Report: Economic Planning and Development (based on 2009 prices).* Projections13.

Source: 2013 Department of mines report.

2009 2010 2011 2012 2013* 2014*

Mining andQuarrying 7,156 (.8%) 44,705

(4.7%) 43,742(4.4%) 50149 (5%) 54436

(5.2%)

59361(5.3%)

Total GDPat constantmarketprices (inMillions)

868,304 950,918 986,832 1,004,184 1,054,571 1,119,080

Total GDPat currentprices (inMillions)

868,304 1,021,319 1,140,843 1,408,237 1,849,932 2,719,424

Financial Year Revenue (MK) Revenue Growth rate

2007/08 20,806,463

2008/09 44,019,919 53%

2009/10 105,726,394 58%

2010/11 304,186,259 65%

2011/12 385,016,545 21%

2012/13 1,618,490,931 76%

___________________________________13 It should be noted that the Malawi growth and Development Strategy states that thecontribution of mining to GDP rose from 3 percent to 10 percent due to the opening ofPaladin’s mine in 2009. The trend is upward in both estimates (2013 Annual Economic Reportand MGDS) but the rate of increase is different.

Table 4.7: Formal Employment in the Mining Sector.

2010 2011 2012

Coal 907 671 _

Uranium Mine 859 859 840

Cement Limestone 90 90 _

Agricultural, calciticand Hydrated Lime 1640 1640 665

Quarry Aggregate production

12030 12030 1024

Cement manufacturing 511 511 _

Gemstones/MineralSpecimens

1260 1260 _

Ornamental Stones 46 46 _

Terrazzo 2144 1340 _

Other industrial Minerals

1340 2144 _

Exploration activities 195 195

Total 21022 20786 2529


Source: 2013 Annual Economic Report

4.18.2 Mineral Resources and Occurrence Malawi’s mineral sector is still in its infancy stage. Currently,there is production of coal, heavy mineral sand, cement, dolomitelimestone, artisanal salt, and uranium. However there is huge po-tential for rare earth elements, bauxite, vermiculite, graphite,phosphate and others as depicted in Table 4 which also shows thestatus of the mining licenses from both international and nationalcompanies that are actively engaged in mineral exploration andmine developments.


Mineral Area Reserves(*million tonnes)

Status Company

Uranium Kayelekera 15.3 ML Paladin (Africa) Ltd

Bauxite Mulanje 25.6 EPL Gondo Resources Management Pty Ltd

Monazite/Strontianite

Kangankunde 11 ML Rare Earth Company (Mlw) Ltd

Corundum Chimwadzulu ML Nyala Mines Ltd

Graphite Katengeza 2.7 EPL

Chimutu

Limestone Bwanje 15 EPL Deans Engineering

Chenkumbi – Balaka 10 EPL Lafarge and Zagaf Cement Sales

Heavy MineralSands

Nkhotakota-Salima EPL Millenium Mining Company

Mangochi 800 Open

Chipoka 700 ML/EPL Allied Procurement Agency

Halala (Lake Chilwa) 15 Open

Vermiculite Mwanza 2.5 EPL Sachi Corporation Ltd

Phosphate Tundulu 2 EPL Optichem (2000) Ltd

Iron Sul-phides

Chisepo 34 EPL Sachi Corporation Ltd

Malingunde -Lilongwe 10 Open

Glass sands Mchinji 1.6 Open

Coal Ngana 65 EPL CPL-Mchenga Coal Mines Ltd

Batolwe Mining Ltd

North Rukuru 155 Open

Livingstonia 26.4 EPL/ML CPL-Mchenga Coal Mines Ltd

Chiweta Coal Mining and Mineral Company, -Kaziwiziwi Mining Company

AGD Investments

Consolidated Mining Industries

Lisikwa Investment

Lufira 0.6 EPL Eland Coal Mine Company

Mwabvi 4.7 EPL East Africa Mining Company Limited

Lengwe 10 Open

Dimensionstones

Chitipa, Large volumes ML Ilomba Granite Company Ltd

Mangochi, Large volumes EPL Lakeside Granite Company

Mzimba, Mchinji Open

Gypsum Dowa-LilongweDambos

450,000 tonnes Open

KaoliniticClays

Linthipe 15 Open

Senzani 0.5

Table 4.8: Summary of known mineral potential in Malawi

Source: 2013 Department of Mines Report. ML/EPL: Mining license/ Exclusive Prospecting License (*Tonnage is mostlyinferred, only in few cases is it proven)


5. LIMITATIONS OF THE STUDYData collection has its own challenges moreespecially in the mining sector where miningcontracts are done without full stakeholderconsultations, where there is lack oftransparency, accountability and in anenvironment with weak legislative framework. Detailed revenue data for a specific mineralcompany is considered confidential data and thatall the revenue data is centrally controlled at

Malawi Revenue Authority headquarters inBlantyre hence it was not possible to get hold ofdisaggregated data.

Due to lack of regulatory frameworks in theartisanal mining, it was difficult to get data onemployment, production and revenues that aredisaggregated by gender as the miners operatein remote areas.

The following key issues have been isolatedfrom the study in line with the ToR:

• There is low participation of the communityand women in particular in mining projects bothat artisan level and formal engagement by theMining companies as depicted from the baselinedata and Mines and Mineral Policy (2013)

• There is lack of institutional structures andcapacity in Government departments, CSOs,Media and community in managing the role ofmonitoring, supervising and engaging the miningcompanies and communities.

• The Mines and Mineral Act has the followingareas requiring address:

o The Act vests too many powers in the President and the Minister responsible in making cruicial decision in managing the mining sector.

o Act prohibits disclosure of any mining information to third party. This affects access to information by the general public. o The compensation provision in the Act gives more leverage to mining companies which has the potential for abuse and exploitation.o It awards exclusive rights to mining companies without regard to community needs.

• Lack of model guidelines premised on sharedvision of all stakeholders on mineral agreementunlike the current set up of case by casemanagement.

• The lack of decentralized structures in theMinistry of Energy and Mines affects the miningsector and communities.

• Lack of consultation by both the Governmentand Mining Companies on issues affecting thecommunities.

• Lack of properly laid down mechanisms toaddress issues arising from the mining sector atcommunity and district levels.

• Civil Society Organisations coverage is notadequate on the ground in supportingempowerment to lobby, promote transparencyon mining contracts, and corporate socialresponsibility. The key areas are the artisansmall miners and geographical coverage isinadequate.


6. KEY FINDINGS

The following recommendations have beenproposed if the mining sector is to contributesignificantly to economic development:

• There is great need to empower the localpeople and also to address the gender inequalityin the work place and low participation in miningprojects as depicted from both the baseline andthe Mines and Mineral Policy (2013)

• There is need to address the absence ofinstitutional structures and capacities inGovernment, CSOs, Media and communities. Thecapacity building will enable various players toadequately fulfill their roles for the benefit of thenation.

•There is need to further review of the Minesand Mineral Act based on the following areas:

o Revision of the provision that gives many powers in the President and the Minister responsible by creation of committees or councils to make decisions.

o Revise the close that prohibits disclosure of any mining information to third parties in order to increase transparency and accountability.

o Revise the provisions on compensation ofthe affected families to allow greater involvement of the Government and reduce leverage to mining companies.

o Revision of provisions that give exclusive rights to mining companies and protect the community needs

• Development of model guidelines premised onshared vision of all stakeholders on mineralagreement and move away from the current setup of case by case management.

• Creation and utilisation of decentralizedstructures in the Ministry of Energy and Mines tofacilitate greater involvement of districts andcommunities in the mining sector andcommunities.

• There is need to lobby for more consultationby both the Government and Mining Companieson issues affecting the communities.

• Development of proper laid down mechanismsto address issues arising from the mining sectorat community and district levels.

• Civil Society Organisations should continue,albeit at a larger scale in addressing thechallenges affecting the mining sector such asempowerment to lobby, promote transparencyon mining contracts, and corporate socialresponsibility.


7. RECOMMENDATIONS

The Malawi Growth and development Strategy IIidentifies mining as a sector that can spureconomic development and reduce povertythrough various pathways. However, the Mineand Mineral Policy does not support theinitiatives of the MGDS II. The Policy has anumber of grey areas as discussed under issuesfrom the study which need to be reviewed. Thesecond aspect is the increased visibility of theMinistry of Mining at grass root level throughdecentralisation of its responsibilities. Thirdly,the government and mining companies need to

appreciate the roles played by various CSOs inempowering the communities to activelyparticipate in the mining sector. Last but notleast, there is need to build capacity in themining sector across the various players such asGovernment, CSO, Media and communities sothat there is increased participation and greaterbenefits. Finally, there is need for increasedaccess to information to various players in themining sector so that informed decisions aremade.

8. CONCLUSION


Environment Management Act 1996Forestry Act (CAP 63:01) Amendment Rules 2006Forestry Act (CAP 63:01) Amendment Rules 2010Malawi Growth and Development Strategy I, 2006-2011Malawi Growth and Development Strategy II, 2012-2016Mines and Minerals Act 1981Ministry of Economic Planning and Development, EconomicRecovery Plan, 2012Model Mining Development Agreement, 2010National Mines and Minerals Policy 2013 Republic of Botswana, Mines and Minerals Act Chapter 66:01Political Economy Analysis of Mining in Malawi, May 2013Uranium Mining in Malawi, Policy and Legal Challenges,


REFERENCES


APPENDICES


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NOTES

Baseline Study on Malawi’s Mining Sector

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