Energy, Industry and Mining Policy Brief

Good Practices in the Energy, Industry and Opportunities Existing in Energy, Industry Mining Sectors and Mining Sectors Policy Brief  Promotion of alternative energy sources such  Stimulus in the energy, industry and as rocket stoves, biomass briquettes to improve mining sub-sectors, will promote Malawi State of Environment efficiency in the use of natural trees as firewood socioeconomic development. Ministry of Environment and and Outlook Report particularly in tobacco curing. This will prevent  Successful implementation of the Climate Change Management depletion of natural stocks of firewood due to Greenbelt Initiative Programme (GBIP) population pressure. intending to irrigate more than one million December, 2013  Diversifying the location of hydropower and hectares of land across the country. The electricity sources into other rivers. Potential GBIP will be highly dependent on the availability of electricity and petroleum hydropower sites identified at Lower Fufu products to operate motorized pumps on South Rukuru and Manolo on Songwe for irrigation. among others could be utilized sustainably  Use of clean and efficient biomass in accompaniment of afforestation and conversion technologies such as comprehensive conservation programmes. production of bio-fuels from biomass Energy, Industry and Mining  Generation of electricity from coal using cleaner principally from agriculture and forestry production technologies. e.g. ethanol by Press Cane and Ethco. Pathway to Malawi’s Socio-Economic Development  Expanding the exploitation of solar and wind Recommendations renewable energies 1) Harmonize institutional, policy, and Executive Summary  Develop the capacity of MBS in implementation regulatory frameworks to present a Energy, Industry and Mining is one of the priorities in the Malawi Growth and Development and enforcement of internationally recognized more even playing field for investors Strategy (MGDS 2011 – 2016) signifying the key role the sectors have and play in the standards. particularly in the sector sustainable development of the country. The Malawi State of Environment and Outlook  Government coordinate and collaborate 2) Develop a very detailed database on Report (MSEOR) highlights in detail the trends, challenges, opportunities and policy with private institutions such as the Malawi all existing, abandoned and artisanal framework in the sector. Exploring the opportunities and mitigating the challenges is quite Confederation of Chambers of Commerce and and small scale mines and industries instrument for sustainable development of Malawi. Industry (MCCCI), Consumer Association of to promote the management of Malawi (CAMA), Centre for Environmental environmental impacts. Develop Policy and Advocacy (CEPA) in improving institutional capacities in various Introduction services in the sector. aspects of energy, industry and Current Trends in Energy, Industry and Mining in Malawi mining sector including enforcement The Malawi energy sector comprises electricity, biomass (fuel wood), petroleum products, of environmental, health, and safety coal and other renewable energy forms. Table 1 shows how Malawi energy needs are derived. standards 3) Intensify the pursuit of the sustainable Biomass accounts for 88.5% of the total energy demand. This will result in over exploitation energy alternative programmes of forests and natural resources which are dwindling (Yaron et.al., 2010). The other sources 4) Intensify Environmental Impact of energy are hydrocarbon fuels, electricity and to a small extent other renewable sources Assessments in all key projects in the of energy such as wind and solar energy. Electricity is hydro-power generated mostly from sector. Shire River. Although electricity generation from solar and wind have been initiated, their Figure 5: Solar geysers at Chancellor College contribution to aggregate supply is insignificant. The country’s total installed capacity of References electricity is estimated at 284 MW falling short of its peak demand put at 344 MW. Inadequate Government of Malawi (1997). National Sustainable and Renewable Energy Programme, Ministry Energy and Environment, Lilongwe. Government of Malawi (2002). State of the Environment Report, Environmental Affairs Department,Lilongwe. and discontinued electricity supply and generation has led to further environmental degradation Government of Malawi (2010a). Annual Economic Report, Half Year, Ministry of Economic Planning and Development, Lilongwe. resulting from forests and natural resources use for energy. Government of Malawi (2010b). (Unpublished) Coal Washability Characteristics of Chiweta, Mean Jawale and Nkhachira Coal, Department of Mines, Lilongwe. Government of Malawi (2010c). Malawi Electricity Investment Plan, Department of Energy, Lilongwe. Malawi is heavily dependent on imported petroleum products mainly used in the transport Maluwa A. (2010). Progress report of the ethanol driven vehicle project, Lilongwe. sector accounting to 89.99% of the total consumption of hydrocarbons (figure1). However, National Statistics Office (2005). Integrated Household Survey, 2004–2005, NSO, Zomba. Yaron, G., Mangani R., Mlava J., Kambewa P., Makungwa S., Mtethiwa A., Munthali S., Ngoola W., Kazembe J. (2010). Malawi’s petroleum is mainly blended with ethanol whose current production is estimated at Malawi Poverty and Environment Initiative Economic Study. PEI, Lilongwe. 18 million liters per annum. This Policy Brief is produced with support from the United Nations Environment Programme (UNEP) and the United Nations Development Programme (UNDP) through the Malawi Poverty and Environment and Initiative Project (MPEI). For further enquiry contact: The Director, Environmental Affairs Department, Private Bag 394, Lilongwe 3, Malawi. Tel (265) 1 771 111, Email:[email protected] This has led to inadequate power generation Energy Source % Contribution deforestation; land degradation; soil erosion and river siltation; air pollution; land use capacity. Overall, these result in persistent Biomass 88.5 change; and in recent years water weeds such long hour of black-outs or brown-outs and Electricity 2.8 as water hyacinth. According to Yaron et.al, limited connectivity. Malawi Confederation of Chambers of Commerce and Industry – Hydrocarbon Fuels 6.4 (2010) the annual cost of mitigating the effects of soil erosion and water weeds by ESCOM is Business Climate Survey rates electricity as the Coal 2.4 estimated at USD10 million. major obstacle to doing business in Malawi. Table 1: Contibution of energy sources in Malawi Coal exclusively used in tobacco, textile and sugar processing, and beer brewing has had its production increase from 52, 000 tons (2005) to 59,000 tons (2009). Generally, manufacturing has not significantly grown. Figure 1: Shares of Large-scale manufacturing is concentrated mostly petroleum products by sector in cities. Nonetheless, there has been an upsurge in the small-scale manufacturing enterprises. Even Note: if the MGDS prioritizes production and processing It should be noted that domestic use of paraffin fuels in the country is generally on the decline of tea, tobacco, sugar, wheat and cotton, Malawi’s export base continues to be narrow mostly reliant on agriculture accounting for 34% of the GDP. tobacco, tea and sugar. Employment in mining sector has also Mining contribution to the Malawi’s GDP is currently increased in Malawi. This is due to a estimated at 10% due to the effect of Kayerekera generally moderate increase in mineral Uranium Mine operations. It is, however, expected production between 2006 and 2009. Small- to rise to 20% in full operation of the new projects. scale and Artisanal Mining (ASM) have This will ease pressure of the country’s reliance on had a bigger share.

Challenges Limiting Energy Productivity in Malawi The country’s energy sources are apparently under pressure from

• Rapidly growing population Figure 4: Rating of Obstacles to doing business in Malawi • Increasing demand from a diversifying and growing industrial Challenges Limiting Mining  Unregulated artisanal and small scale sector, particularly the mining industry Sub-sector Performance in Malawi mining activities which are environmentally • Degraded environment and socially harmful. Figure 2: Employment in Mining sector 2004 – 2009 • Fewer alternative energy options.  Inadequate geological data acquisition • Extreme weather events such as droughts and and mineral exploration has failed to unveil the full extent of Malawi’s Challenges Limiting Industry floods mineralization. Sub- sector Performance in Malawi For instance, in the electricity sub sector alone,  Un-harmonized institutional, policy, the demand is projected to increase to 740MW and regulatory frameworks  Current standards of some products in by 2015 and 1374 MW by 2020 due to growth  Inadequate definition of fairly and Malawi are not internationally recognized as a result of the Malawi Bureau of Figure 3: Kayerekera Uranium Mine in urbanization, industrialisation and increased wisely managed resource rent sharing Standards (MBS) not being internationally Challenges facing the Industrial, Energy and Mining Sec- prospects in the mining sector.  Weak capacities in establishing and accredited. tors in Malawi enforcement of environmental, health, Electricity generation has been challenged by and safety standards  Un-harmonized investment policies 2 3