The Malawi Mining Investment Company (Mamico) plans to venture into gold mining and processing next year. This move aims to curb rampant smuggling and increase foreign exchange earnings from the country's mineral resources. Mamico executive director Grey Kalindekafe announced that geological investigations have identified seven primary gold-bearing deposits. This discovery paves the way for the state-owned enterprise to establish its own mining and processing operations.
Minister of Mining Thoko Tembo recently toured Mamico's gold-trading facility in Lilongwe to assess its readiness to buy gold from registered cooperatives and licensed artisanal miners. During the visit, Kalindekafe shared that Mamico is studying mining and processing models in Zimbabwe and South Africa. The company is also exploring technologies for extracting gold from ore. This research will inform Mamico's own operations, which are expected to commence next year.
The planned investment coincides with government preparations to establish a formal gold market. This market will channel locally mined gold through official buying arrangements, reducing revenue losses caused by illicit smuggling. According to Kalindekafe, Malawi loses approximately $700 million annually in gold proceeds. However, the true scale of informal trade remains difficult to quantify independently.
Artisanal gold mining activities have been identified at over 100 sites across 26 districts. However, most miners lack access to reliable formal markets, driving them to sell to smugglers. Kalindekafe noted that fewer than five sites are currently selling to the government through the Export Development Fund at the Reserve Bank of Malawi. The majority of miners have expressed a desire to sell their gold through official channels.
Mamico's immediate priority is establishing gold-trading centers where artisanal miners can sell their output directly to the company. The company will then sell the gold to the Reserve Bank of Malawi. Mamico already possesses equipment for three initial centers and is awaiting final documentation from the central bank. The company estimates it will require K85 billion to purchase gold during its first three months of operations.
The government is collaborating with financial institutions, the Ministry of Finance, and Mamico to create a competitive and attractive formal trading ecosystem. Authorities have benchmarked prevailing market prices and are confident that their proposed buying rates will rival those offered by alternative buyers. The government will also inject direct funding into the initiative. Additionally, authorities are tackling environmental hazards associated with artisanal gold mining.
Mamico is set to begin purchasing gold, with initial trading hubs slated for Kasungu, Lilongwe, and Nkhotakota. The government ultimately intends to expand the network to seven centers following the pilot phase. Despite widespread artisanal activity, Malawi's formal gold market remains in its infancy. The Reserve Bank of Malawi bought 293 kilogrammes of gold valued at K34 billion by December 2024.
Key points
- Mamico to start gold mining and processing next year to curb smuggling and boost forex earnings.
- Malawi loses approximately $700 million annually in gold proceeds due to illicit smuggling.
- Government aims to establish a formal gold market to channel locally mined gold through official buying arrangements.
