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, nonresidents 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
What newspapers said on August 9,
2012
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