MAC: Mines and Communities

Paladin's "good fight" leaves Malawi citizens cold

Published by MAC on 2009-09-01

When a foreign mining company says that its potentially highly-damaging operations will "clean up the environment" - apparently simply by virtue of taking a radioactive mineral out the ground - warning flags should fly.

That's the claim reportedly made by a representative of the most aggressive new uranium entrant to Africa: itself the region that's been most intensively targeted to provide this nuclear feedstock in recent years.

The company is Australia-registered Paladin Energy; the targeted country is Malawi.

Despite some "good works" credited to Paladin, it is accused of exploiting local workers. For its part, the Malawi government has given the company "liberal" tax and other concessions.

Paladin's director went on record, three years ago, as stating that: "[in] Australia and Canada...[t]here has been an over compensation in terms of thinking about environmental and social issues in regard to uranium operations in Australia" which  "forc[e] companies like Paladin into Africa."

It's little wonder, therefore that, despite the unsupportive attitude of the government, the four-year old civil movement to curb, if not, halt the company's activities, is continuing.

MALAWI: Activists Look Askance at New Mine

Campaigners say there is insufficient protection for the environment at Kayelekera.

By Jessie Boylan, IPS

22 August 2009

KAYELEKERA, Malawi - "We are serious about the integrity of the environment," says Neville Huxham, the country director for Paladin Energy Africa. "We're taking the uranium out of the ground, we're exporting it to be used for productive purposes, so we should be getting a medal for cleaning up the environment."

In the rolling hills 575 kilometres north of Malawi's capital city Lilongwe, lies Paladin's Kayelekera uranium mine, the first major mining development in Malawi, and the standard on which future mines will be based.

The narrow, winding road to Kayelekera is mostly unsealed, crossing the North Rukuru and Sere Rivers as it makes its narrow, winding way past numerous scattered villages hugging its edges.

"The road is much better now," Reinford Mwagonde, director of Citizens For Justice (CFJ), tells us on the way out to the village. "At least four trucks carrying sulphuric acid drive this road every day - what would happen if one of them had an accident?"

Mwagonde has been campaigning against Paladin's activities since 2005, when he became aware of the company's plans to develop the mine. CFJ and four other civil society organisations (CSOs) took Paladin to court in 2006, challenging the company's mining licence on a number of grounds including inadequacies in the Environmental Impact Assessment (EIA) process.

The case was later settled out of court but Mwagonde has never missed a beat since.

"The EIA didn't address serious environmental concerns around the issue of water contamination of the rivers that flow into Lake Malawi," says Mwagonde. The lake is a major source of potable water and fish for millions of people in Malawi, Tanzania and Mozambique.

"They say that we're anti-development," says Mwagonde, "because we're against the mine. But we're against the mine because of the long-term health and environmental implications that are unique to uranium mining that the community has not been properly informed about."

Creative legislation

CFJ has also raised concerns that the mine would not be operating in Australia under its current configuration, and that it is taking advantage of Malawi's minimal understanding or regulation of uranium mining.

John Borshoff, Paladin's director, was quoted in the Apr. 3, 2006 edition of Melbourne's Herald Sun newspaper saying "Australia and Canada have become overly sophisticated... There has been an over compensation in terms of thinking about environmental and social issues in regard to uranium operations in Australia, forcing companies like Paladin into Africa."

The Malawian government has drafted legislation dealing with radioactive materials but it is yet to be passed. Concerns have been raised by CSOs that Paladin's input into the draft legislation has been too great, and that the company should not have been granted a license to mine before legislation was in place.

"Paladin," according to Undule Mwakasungula, director of the Centre for Human Rights and Rehabilitation, "cannot be held accountable if something happens."

For example, the closure plan outlined by Paladin in the EIA lacks an appropriate strategic, long-term tailings management plan. Rather than moving the tailings back into the mine-pit at closure, as would be required in Australia, Paladin plans to leave them in the tailings dam exposed to erosion and extreme weather conditions.

On the ground

Paladin Energy Ltd. is a junior Australian mining company with only one other operating mine - the Langer Heinrich uranium mine in Namibia. Although Paladin started mining and stockpiling ore at Kayelekera in June 2008, the mine wasn't officially opened until April of this year by Malawian president Bingu wa Mutharika... and won't be in full production until the end of 2009.

With a long list of shareholders anxious to being exporting 3.3 million pounds of uranium-oxide per annum from Kayelekera, it isn't surprising that Paladin was in a hurry to start digging.__

Paladin have committed to, and started, various social development projects in the Kayelekera and Karonga region, which have been generally welcomed by the community. Malawi's minister of mines, Grain Malunga, noted that Paladin has been "training the villagers to undertake agricultural activities to empower the people there, like to produce vegetables to sell to the mine."

The company has also renovated the existing primary school and are paying locals to make the bricks for a new classroom; a secondary school will be built in five years, once they start receiving revenue from exports.

Once a week doctors from Chitipa visit the Kayelekera clinic to provide health services including HIV/Aids tests and counselling. Paladin also capped a bore in Kayelekera, and a water project for Karonga is under construction to augment the existing inconsistent water supply.

The population in the area around the mine is growing rapidly, placing a greater demand on minimal government services. One community member in Kayelekera expressed the view that had the government provided the village with the basic services that Paladin are offering, he would never have supported the mine.

However, Minister Malunga argues that as many people have migrated to the area since the mine began construction, the company has a responsibility to augment the basic services the government could provide.

Workers' rights

The opening of the mine has seen a huge expansion in the local population as people move to the area looking for work. This has put pressure on housing supply in both Kayelekera and Karonga with rents increasing significantly. Prices for food and other essential items have also shot up.

Gertrude Mwalwenje's family is one of the many who came to the village after hearing about potential work. She came with her husband and two year old daughter before they knew if he would even get a job at the mine. Their home is small and basic, one among the other recently constructed mud houses, a "slum village" for contract workers and their families.

Gertrude's husband now works as a pipe fitter in the processing plant. "He doesn't get paid well," she tells me on the path leading to the clinic, "just 6000 kwacha (roughly 43 U.S. dollars) a month, and he works seven days a week, from 6 am to 6 pm."

This was a common story given by several MotaEngil workers, a company contracted by Paladin. During the construction phase employment peaked at 2000 workers, over 80 percent Malawi nationals. Approximately 300 Malawians and 50 workers from overseas are expected to be employed once the mine is in full production.

"People coming from outside (from the Philippines or South Africa) who are working the same positions (as Malawians) get paid more." Mwalenje continues shyly. With an extremely high unemployment rate, poverty is the driving factor for Malawians' willingness to work long hours for little pay.

Poverty may also explain workers' reluctance to ask questions despite concerns over occupational health and safety.

"Paladin told us that radiation is bad for us, but they didn't tell us much," says James Kantukule standing in front of the MotoEngil village on the main road in Kayelekera.

"They put protective gear on us only when visitors come and when they leave they take it off again," he claims.

Kantakule has been demobilised since major construction ended and mining began and, like many others in his position, is waiting in Kayelekera hoping to be employed again.

Early this year, a welding spark ignited fumes in an enclosed area killing two workers and seriously injured a third. Workers say there have been three other unexplained deaths at the mine site, for whish the families of those who died have not been informed of the cause.

Paladin's operations and conduct, along with the legislation the company has been closely involved in drafting, are likely to set the benchmark for future mining developments of this kind in Malawi.

Paladin have expressed willingness to be fully open and transparent but have yet to provide access to monitoring data to enable independent analysis. "[Paladin] really needs to be held accountable and monitored," Mwakasungula said.

There is hope that moves to develop a mining workers union in Malawi will help to improve workers occupational health and safety. However, while Paladin claims they are operating in line with international best practice, the questions and concerns raised by local NGOs and community members are still unaddressed.

Sweetheart dealing

President Bingu wa Mutharika has said the Kayelekera uranium mine will contribute as much as ten percent of Malawi's gross domestic product and 20 percent of total export earnings. Paladin chairman John Borshoff says the country can expect 45 million dollars in taxes and royalties from the mine each year.

But over the expected 11-year lifespan of the project, Malawi will lose more than $120 million in various taxes due to the terms agreed with Paladin. The government traded a 15 percent stake in the project in exchange for favourable tax rates for the company. Paladin will pay 27.5 instead of 30 percent corporate tax, and be completely exempt from a ten percent rent tax. Royalties - ordinarily five percent - have been dropped to 1.5 percent for the first three years, and three percent thereafter; the company will also be exempt from paying value added tax for up to ten years.

The terms of the tax regime are also frozen for the next decade.

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