Antinuclear

Australian news, and some related international items

Report shows that Malawi gets a raw deal from Paladin’s KAYELEKERA URANIUM MINE

THE CASE OF PALADIN’S KAYELEKERA URANIUM MINE: REPORT RELEASED ON THE REVENUE COSTS AND BENEFITS TO MALAWI, Mining in Malawi, 23 May 13 The Australian mining company Paladin Energy and its subsidiaries along with the Malawi-based Kayelekera Uranium Project, in which it has an 85% stake, were the subject of much discussion this evening in Lilongwe at the launch of the report The Revenue Costs and Benefits of Foreign Direct Investment in the Extractive Industry in Malawi: The Case of Kayelekera Uranium Mine. The report explores what it describes as Malawi’s largest Foreign Direct Investment* and the extent to which Malawi is benefiting. It concludes that ”Malawi is getting a raw deal from the mining and exploitation of uranium by Kayelekera Mine”…….

diagram-Paladin-network

At the launch of the report, Dalitso Kubalasa and Collins Magalasi, the executive directors of MEJN and AFRODAD respectively, spoke briefly before AFRODAD’s Tafadzwa Chikumbu presented the research findings. This paved the way for a lively question and answer session with questions raised about whether or not parliament is ready to renegotiate the terms of the agreement with Paladin, what has happened to the man who lost his sight due to “kayelekera radiation” and if mining revenue in Malawi therefore “dirty money”.

This discussion was followed by the official launch of the report by the Second Deputy Speaker of Parliament Juliana Mphande who exclaimed that she was “appalled to note that incentives offered to Paladin have severe implication to Government revenue and require attention of parliament”. She outlined the areas requiring parliamentary investigation and debate…..

Below is a summary of the main findings:

  • ……….Corporate tax 27.5% reduced from 30%. Since the declaration of commercial production (2009), no corporate tax has been paid but an estimated MWK 4,55 billion has been received by the Government from payroll taxes, withholding taxes and non-residence taxes.
  • Royalty rate reduced from 5% to 1.5% (years one to three, 3% thereafter, with no increase for remained of life span of mine according to Mining Development Agreement). As of October 2012, Paladin had paid a total of MWK 800,856,231 in royalties (approx. USD 3 million given exchange rate fluctuations since 2009). If the royalties had been at 5%, the government would have received over MWK 1.3 billion more……Government has a 15% stake in the mine, but has not benefited as Paladin Africa (subsidiary of Paladin Energy) has been making losses since 2009. This means that the government would not have benefits from resource rent even if it had not been reduced to zero in the Mining Development Agreement……..
  • ……
    • Government has a 15% stake in the mine, but has not benefited as Paladin Africa (subsidiary of Paladin Energy) has been making losses since 2009. This means that the government would not have benefits from resource rent even if it had not been reduced to zero in the Mining Development Agreement…..
    • ……
      • Illicit capital flight is likely through suspected transfer pricing, the complex network of companies with subsidiaries registered in countries with low taxation regimes….

The challenges that are facing the mining sector in Malawi can be summed up as the lack of necessary human capital, poor linkages to the broader economy and the absence of a strong and consistently enforced legislative and regulative framework. Taxation is a problematic area highlighted by the report because the company can “avoid and evade tax and export capital through transfer mispricing using the large number of associated holding companies” (see image below); this explains how Paladin Africa is able to report that it is making a loss while Paladin Energy makes a profit…… http://mininginmalawi.com/2013/05/24/the-case-of-paladins-kayelekera-uranium-mine-report-released-on-the-revenue-costs-and-benefits-to-malawi/

May 25, 2013 - Posted by | AUSTRALIA - NATIONAL, politics international, uranium

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