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Uranium Mining: Whose Interest? Malawi Case. Investigating Extractive Industry Regional Conference Lusaka Zambia By Rex Chikoko 13-15 August 2012. Background. Kayelekera Uranium Mine (KM) is located in northern Malawi, 575km north of the capital city, Lilongwe.
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Uranium Mining: Whose Interest?Malawi Case Investigating Extractive Industry Regional Conference Lusaka Zambia By Rex Chikoko 13-15 August 2012
Background • Kayelekera Uranium Mine (KM) is located in northern Malawi, 575km north of the capital city, Lilongwe. • Uranium was first discovered in the 1980s Central Electricity Generating Board of Great Britain (CEGB) • The study then indicated the project was uneconomical and was abandoned in 1992. • In February 2007 Paladin Africa Limited (PAL) ,a subsidiary of Paladin Energy, took over and offered 15% of equity to the Government of Malawi under the terms of the Development Agreement.
‘Malawi losing out in Kayerekera Mine deal’ • The story was published in May, 2011 in Malawi News, one of the weekly newspapers in Malawi • During the course of investigating the story a lot of information was uncovered albeit some of the information was sourced unofficially • Some of the discoveries included:
Weak Law and Poor Governance • No legal and policy framework regulating the uranium mining industry in Malawi • Mines and Minerals Act, • the Uranium mining legislation • the Atomic Energy Bill and Explosives Act
Malawi, Paladin deal • Paladin agreed to invest MWK60 billion (US$400 million) • Paladin agreed to spend MWK2.25 billion (US$15 million) on community development projects including improving water system. • Paladin agreed to build or upgrade schools and teacher housing in Karonga and improvements to the Karonga District Hospital. • The company has also committed to spend MWK240 million (US$1.6 million) upgrading Karonga Airport.
Malawi promises • Malawi offered tax exemption as an incentive • Paladin to pay 27.5 percent instead of 30 percent corporate tax • A 10 percent exemption on rent tax. • Royalties — ordinarily 5 percent — were dropped to 1.5 percent for the first three years and 3 percent thereafter. • The company will also be exempted from paying value added tax for up to 10 years.
Status as in 2011 • More than 2 million lbs of uranium oxide (U3O8) has been exported since the commencement of production. • In a full operating year, Kayelekera will produce 3.3 million lbs of uranium oxide (U3O8) per year • In a full operating year, Paladin will pay more than MWK1.4 billion (US$9.5 million) in royalties and various taxes (payroll, non-residents tax and withholding tax) to the Government of Malawi.
Status as in 2011 (cont’d) • This means Malawi, despite gaining expected US$45 million in taxes and royalties from the mine per year, will lose about more than US$120 million in various taxes, due to the terms agreed with Paladin. • The Malawi government traded a 15 percent stake in the project in exchange for favourable tax rates for the company.
Way forward • Next course of action for the Kayelekera Uranium Mine: • There is a growing call for Economic impact assessment to ascertain whether the mine is benefiting local communities as the cost of living has increased ten-fold in the area; • A thorough study indicates somehow that the mine is impacting on general health of the people surrounding the area • Formulation of Independent monitoring of the uranium mining project and its effects on the community and the environment—training of local cadres to take part in the monitoring;
Way forward (cont’d) • Tax justice campaign to curb capital flight and transfer pricing; • Continued community awareness of the impact of the uranium project; • Lobbying for stringent mining policy and legal frameworks or the industry to export best practical technology from Australia and Canada
Role of journalists • Government and Paladin insist: “The terms of the Development Agreement signed between Government and Paladin are confidential” • Officials are unwilling to provide information on record. • Inconsistent information available from sources • Journalists have to take a strong stand to investigate the Kayerekera deal
Conclusion • Malawi’s poor handling of the deal is putting the country at a very awkward position financially • Risk the lives of many Malawians who are directly or indirectly exposed to radiation of the uranium
ZIKOMO!!! BY Rex Chikoko