Malawi Government renegotiating Niobium Mine deal

Globe Metals and Mining said the results of the definitive feasibility study (DFS) on its Kanyika Niobium Project in Mzimba district northern Malawi has delayed due to the ongoing discussion with the Malawi government on the development agreement.

“The primary objective of these discussions is to assess development joint venture opportunities that can assist the company to optimize its production process and significantly lower development related capital expenditure and ongoing operation costs once Kanyika is in production,” Acting CEO and Exploration Manager Fergus Jockel said.

Jockel said this in a in a statement released on the company’s website on March 1st, 2013.

“Globe’s immediate focus remains on completing the final DFS, and progressing its potential development plans at Kanyika. Despite the delay, the Company has achieved significant milestones with respect to the progress of the DFS,” he said.

In December 2012 the company disclosed that lies in the hands of the board of directors which met in February 2013 to review the project after five years of ground work spending a US$150 million (MK48 billion) .

The Malawi government came under fire from NGOs and civil society groups on the way it handled a similar agreement with Australian Miner for the Kayerekera Uranium Mine in Karonga district, which they said Malawi got a raw deal.

But Paladin Energy international affairs General Manager, Greg Walker is on record saying it will be impossible to renegotiate the deal because the agreement includes a ten-year stability period “to provide comfort for project lenders and share- holders” given Malawi’s lack of a record as the host nation of a major resource investment.

Globe Metals and Mining expects to be able to submit an application for a mining licence for the Project well before the expiry of the current exploration licence, which ends in December 2013.

“As we progress towards completion of the final DFS, Globe is evaluating all aspects of the development and refining process to increase efficiencies and lower costs. The Board remains committed to meeting the expectations of all stakeholders, and will update shareholders as activity continues on a number of critical fronts,” Jockel added

Once operational, the Kanyika Niobium Mine will be the first of its kind in Africa but the fourth in the world after two other mines in Brazil and one in Canada.

With a projected life span of 20 years and an annual output of 3000 metric tonnes of Niobium metal, the Mine is expected to rake in US$180 million (MK50 billion) per year in revenues and employ 2000

Malawians in the construction phase and 800 operations start.

Ferro-niobium is a critical additive in the production of sophisticated steels.

The Kanyika Mining project will be the second major mining operation in the country after the Kayelekera Uranium Mine in Karonga district.

According to village headman Moffat Phiri people have started splitting villages in anticipation of the compensation that the Mine will pay to those in the face off area.

The Kanyika Niobium exploration area covers an area of approximately 607sq km and will affect 244 households and 1360 people.

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