Multinational miners: magnanimous or malevolent?

In his speech Minister Carr praised the work of Australian mining company Paladin, referring to its strong corporate social responsibility. Paladin operates Malawi’s biggest uranium mine, the Kayelekera.

In June 2008, The Bench Marks Foundation released a report ‘Corporate Social Responsibility and the Mining Sector in Southern Africa’ which suggested that when Paladin struck its deal with the Malawi government to mine uranium, it was agreed that it would get a 100 per cent capital write off, a reduction in corporate tax from 30 per cent to 27.5 per cent and a scrapping of the 10 per cent resource rent tax. Paladin was also to be exempt from the standard 17.5 per cent import VAT or duty and a royalty rate reduced from 5 per cent to 1.5 per cent in the first three years and 3 per cent thereafter.

Now Malawi’s opposition party, the People’s Transformation Movement (PETRA), have given the Malawi Government a 14-day ultimatum to explain why the Kayelekera deal cannot be renegotiated. However, there are reports that the agreement with the previous government (of late President Mutharika, a former World Bank economist) includes a clause that the government will not take any action that will seriously change the financial aspects of the project for the period of 10 years. Residents are also concerned that the Malawi Government retains only a 15 per cent equity in Paladin (Africa) Limited (PAL) a subsidiary of Paladin and has given “breathing space” on taxes for 10 years.

A 2009 U.S. embassy cable reports Paladin (Africa) Managing Director Neville Huxham telling the Ambassador that ‘Paladin plans to ramp up to full production by the end of 2009. At full production the mine will produce 3.3 million pounds of uranium yellow-cake per year. At USD 40 to 70 dollars per pound this translates to at least USD 132 million per year. With Malawi’s exports in 2007…equal to USD 693 million, this represents an increase of roughly 20 per cent in total value. Paladin expects to break even on its USD 200 million investment in three years. The Government of Malawi stands to generate nearly USD4 million per year in royalties alone, plus corporate taxes and revenue from its 15 per cent stake in Paladin..’

No doubt the Malawi Economic Justice Network has compared this cable with Paladin Africa’s General Manager, Greg Walker’s comment late last year that “the project [Kayelekera Mine in Koronga] has never made money”.

Robert Chasowa, student activist and critic of the late Malawian president Mutharika, raised serious allegations in a newsletter including reference to Paladin Africa banking money into the late President Mutharika’s Australian bank account.  Chasowa was later murdered.

In 2011 it was reported that Malawians made contact with Australia’s Petitions Committee Secretariat calling on the House to require Paladin to open its books.  They were told to take the matter up with the Australian Federal Police.

All allegations of bribery in this case, and in a more recent case, have been denied by Paladin.

PETRA also included in their ultimatum a review of the health and environmental risks posed by the operations at the mine. They want to know which health facility workers are being taken to for treatment when they are exposed to radiation, and confirmation that the treatment is adequate.  They also want to know what measures have been put in place to stop pollution seeping into Lake Malawi. Others have referred to the serious issues raised in ‘Yellowcake Rising’, the documentary by Assistant Professor Marty Otanez of the University of Colorado, Denver, about the mine.

Environmental concerns were raised in 2007 on the ABC’s Lateline program, particularly in relation to the rehabilitation of above ground uranium tailing stamps and their potential to contaminate local drinking water supplies.

There’s little help to be expected for problems like these from the big international financial institutions. Although Malawi desperately needs financial aid, former president Bingu wa Mutharika did at least resist calls by the International Monetary Fund to devalue the Malawian Kwacha. That resulted in the loss of “donor support”. But since Malawi’s new president, Joyce Banda, agreed to devalue the currency by nearly 50 per cent and untied it from the US dollar, prices of basic items have gone up by as much as 50 per cent, including a significant spike in food prices. This has occurred in a resource rich country where over 65 per cent of the population live below the poverty line and 74 per cent live on less than $1.25 a day.

Cameroon