Mining to become main FDI source - World Bank

World Bank country manager for Malawi Sandra Bloemenkamp made this revelation in Lilongwe on Thursday, 31 March 2011, as the bank's board of directors approved US$25million credit to support the Malawi government improve management and governance of its nascent mining sector.

She said the funds will be provided through the Mining Governance and Growth Support Project.

Growing interest in Malawi's minerals

The bank said with the opening of the Kayelekera Uranium Mine in northern Malawi in 2009, which is owned by Australian Paladin Africa, there has been growing interest in Malawi's minerals which include deposits of heavy mineral sands, bauxite, rare earths, nickel, niobium, gemstones and coal.

"Transparency and other good governance measures are the foundation of the new policy that the sector ministry has been formulating which should soon be endorsed by the government. The World Bank is excited to be able to support implementation of the policy," said Bloemenkamp.

The bank said planned investments by mining companies underpin the country's long-term goal of increasing the contribution of mining to GDP from less than 2% to at least 10% annually.

With such rapid growth taking place, the bank's project aims to help the government improve the efficiency, transparency and sustainability of mining sector governance.

Government licenses Lynas Corporation

Barely three days after the World Bank project launch, natural resources minister Grain Malunga announced that government has licensed another Australian company Lynas Corporation which will be mining rare earth minerals in the Kangankunde Hills in Balaka, southern Malawi.

"Over the past three years, government has awarded exclusive rare earths exploration licences to five foreign companies," he said.

Malunga said some of such companies are now at bankable feasibility studies while others are at basic exploration.

"We are expecting other companies like Lynas to start actual mining as soon as possible," he said.

Yet another Australian company - Blobe Metals and Mining Company is scheduled to start extracting a mineral called niobium at Kanyika in Mzimba, northern Malawi.

Niobium mineral, which is widely used in optical lenses, water pipes and sewage systems as a metal alloy among others, is extracted from the crust of the earth.

Managing mineral rights and operations

The World Bank said therefore, the project will support the government in building a sustainable framework for managing mineral rights and operations which respects environmental and social management best practices.

A news release on the project issued by World Bank headquarters in Washington DC says it will also support the development of transparent arrangements for optimal generation and use of mineral revenues.

"Consultations on the project showed that stakeholders are interested in ensuring that tangible benefits flow from mining, and this includes being confident that government institutions have capacity to collect the royalties and taxes that are owed and make wise use of them. So the project will help build such capacity," says Bryan Land, the World Bank's manager for this Mining Governance and Growth Project as quoted by the news release.

Acquiring and managing geo-data

The project will support the Malawi government to acquire and manage geo-data thereby strengthening management of the resource endowment and its hand in negotiations with investors.

"To increase the supply of Malawians qualified in mining-related disciplines in order to meet the skills required for this growing sector in the country, the project will support the launch of degree-level and other tertiary education courses in mining," reads the news release in part.

The bank also disclosed that the European Union will co-finance the project with about US$5.66million bringing the total value of the project to US$30.66 million.

Project implementation will be managed by the Ministry of Natural Resources, Energy, and Environment. The project is expected to close in September 2016.