Indian Council of World Affairs

Abstract: This paper explores Malawi's rare earth mining potential, its opportunities and challenges, alongside India’s critical mineral interests, highlighting bilateral cooperation prospects and a possibility of third-party collaboration to strengthen global rare earth supply chains and promote sustainable economic growth. 

The global shift toward green energy has intensified geopolitical competition for critical minerals, with rare earth elements (REEs) at the forefront due to their indispensable role in clean technologies like electric vehicles (EVs) and wind turbines. Malawi, a landlocked nation in Southeastern Africa, has emerged as a potential hub for REE supply, prioritising its untapped mineral wealth under its Agriculture, Tourism, and Mining (ATM) Strategy. This commitment was reaffirmed during the Critical Minerals Africa Summit 2024[i], positioning the country as a promising investment destination. With aspirations to become one of Africa’s leading rare earth suppliers, Malawi has witnessed various nascent projects with foreign investments, including mining companies of Australia, Canada and the UK. Similarly, India, recognising its strategic importance in this domain, has launched the Critical Minerals Mission 2024, to enhance domestic production capacity and secure access to overseas mineral reserves.[ii] This aligns well with Malawi’s approach towards capacity building in this sector and opens avenues for cooperation for mineral resource development. 

This paper examines Malawi’s emerging rare earth mining sector, discussing its strengths and challenges alongside India’s interests in the country’s mining and the potential for the two countries to engage actively to bridge the critical gaps. 

Introduction 

The surging global transition towards renewable energy and advanced technologies has dramatically increased the demand for REEs from 125,000 tonnes in 2021 to 315,000 tonnes by 2030.[iii] Among the 17 essential REEs, neodymium, praseodymium (NdPr), dysprosium, and terbium dominate the market, comprising 91% of its value.[iv] These elements are crucial for producing permanent magnets in clean energy, electronics, and defence technologies. Neodymium, in particular, is significant for computer hard disks, wind turbines, solar power, and electronic vehicle (EV) systems.[v] In 2020, approximately 6-9 kilotonnes (kt) of neodymium alone was consumed in the production of EVs, highlighting its significance in the green energy transition.[vi]

REE supply chains are categorised into upstream, midstream, and downstream processes.[vii] The upstream segment involves sourcing from primary and secondary ores. Primary ores, such as monazite, originate from deep within the Earth's crust and often contain a mix of heavy and light REEs. Secondary ores, like ion-adsorption clays, form through weathering processes and are typically enriched in high REEs.[viii] Both types of REEs are crucial for modern technologies. While heavy ones, particularly dysprosium and terbium, are essential for high-performance magnets used in EVs, wind turbines, and other applications, light REEs such as neodymium are indispensable in the production process, for the transition to a low-carbon economy.[ix] The significance of REE mining and supply chains has influenced countries such as Malawi to navigate and reflect on their mining postures to upgrade. 

Malawi’s Mining Landscape 

The Government of Malawi (GoM), since the late 2000s has focused on developing its mining sector, recognising its potential for contributing to economic growth. Through its Ministry of Natural Resources, Energy, and Environment (MNREE), the government has implemented strategies to establish a robust critical minerals sector, including REEs. A significant milestone was the approval of the National Mines and Mineral Policy in 2013, which paved the way for mining sector expansion. Since 2020, mining has contributed approximately 1% of Malawi’s GDP, with aspirations to increase this to at least 10% by 2063, according to the 2022 National Economic Report.[x] The country is endowed with a diverse range of minerals, including uranium, phosphate, graphite, coal, and rare earths, the latter placing Malawi among the five African nations with significant REE reserves. With the developing global interest in Malawi, it is poised to become the continent’s largest rare earth miner by 2029, underscoring its growing importance in the global critical minerals landscape.[xi]

Malawi is positioning itself as a key player in the global rare earth market amidst rising global demand for REEs, for the green energy transition. With its potential reservoir, Malawi has attracted foreign investments in two landmark projects that promise to provide 30% of Africa’s REE supply in Malawi.[xii] The Songwe Hill Project, led by Canada’s Mkango Resources, which recently signed a Mining Development Agreement (MDA) with the Government of Malawi. This agreement ensures the government holds a 10% equity stake in the project, promoting economic growth, job creation, and local benefits. Additionally, the project integrates Malawi into the global supply chain through downstream processing planned in Poland, aligning with international goals for clean energy.[xiii]

The second is the Kangankunde Project, operated by Australia’s Lyndian Resources, is among the largest REE mines outside China. It is known for its low costs, high-grade deposits of NdPr oxides, and low-radioactivity by-products, aligning with global environmental, social, and governance (ESG) standards. This project is vital for green technologies like EVs and wind turbines and aims to diversify global REE supply chains. By investing in the community while honouring traditional Malawian customs, the project has the backing of the local business and rural community while also benefitting them.[xiv]  Lyndian Resources has also signed a 60-month agreement with the UK’s Gerald Metals to supply 45,000 tons of monazite concentrate, providing mutual benefits such as run-of-mine financing for Australia[xv] and foreign investments, employment, and technology transfer for Malawi. Both projects underscore Malawi’s potential to transition from a traditional pit-to-port model[xvi] to a resilient and integrated mining industry. 

Despite this progress, Malawi faces significant challenges in realising its mining ambitions. The country’s infrastructure particularly in power supply, transportation, and water management remains underdeveloped, limiting the full potential of its mineral wealth.[xvii]  Socioeconomic difficulties persist, with Malawi ranked among the world’s poorest nations, even as the government implements reforms to diversify the economy.[xviii] Agriculture still accounts for over a quarter of GDP, highlighting the need for diversification into sectors like mining and tourism.[xix]  The government has set ambitious targets, to achieve lower-middle-income status by 2030 and upper-middle-income status by 2063.[xx] However, achieving these goals requires overcoming the gaps and managing environmental sustainability concerns. Rare earth mining, while economically promising, often produces radioactive by-products, necessitating robust measures to mitigate ecological risks.[xxi]

In 2024, the government of Malawi intensified its efforts to address challenges in its mining sector and position the industry as a cornerstone of its economic diversification strategy. Recognising the potential of its vast mineral wealth, the launch of Agriculture, Tourism, and Mining (ATM) Week in April, emphasised the importance of mining as a primary pillar of economic growth aiming to attract substantial investments and underlining the transition from reliance on agriculture to a diversified economy, leveraging other significant sectors such as mining.[xxii] The Mining Investment Forum, held the following week brought together stakeholders like the Malawi Energy Regulatory Authority (MERA) to address the sector’s challenges, particularly the need for reliable energy infrastructure.[xxiii] Public-private partnerships and regional collaborations were underscored as critical drivers for sustainable development, aligning with the national goal of creating a resilient economy. [xxiv] Moreover, the Mining Regulatory Authority(MRA) established in October aims to streamline licensing processes and provide incentives such as duty-free equipment imports and long-term licensing, reinforcing Malawi’s investor-friendly approach.[xxv]

This led to the Mining Development Agreements (MDAs) signed with foreign investors reflecting Malawi’s commitment to sustainability by ensuring that projects focus on local employment, infrastructure development, and environmentally responsible practices. 

At the Critical Minerals Africa Summit 2024, Malawi sent a loud and clear message about its potential to become a mining destination. The Minister of Mining, Monica Chang’anamuno, reaffirmed these efforts as part of the ATM Strategy[xxvi] to elevate the mining sector from a pit-to-port model to a more integrated and value-added industry. Together, these measures showcase Malawi’s proactive approach to overcoming mining challenges and leveraging mineral wealth to drive long-term economic growth in cooperation with other countries for the betterment of its people.

Potential for India-Malawi Engagement in the REE Sector

India’s path towards resilience through the Critical Minerals Mission launched in 2024 which aims to strengthen domestic production and overseas acquisitions of minerals. India’s mission includes a list of 30 critical minerals including REEs, given their significance for the global green transition. [xxvii] In addition, the government is encouraging private players to invest through its recent amendment, the Mines and Minerals (Development and Regulation) Amendment Act, 2023. [xxviii] This aligns with Malawi’s push to attract investment at the Critical Minerals Africa Summit to harness its rich REEs, helping the country address its domestic challenges. The recent visit of Indian President Droupadi Murmu to Malawi in October 2024, marking a historic milestone as the first by an Indian Head of State to the country, reaffirmed India’s position on strengthening cooperation to find synergy in various sectors, including mining.^[xxix]

The India-Malawi efforts towards collaboration, in the critical minerals resource development, date back to 2010 when both countries signed a memorandum of understanding (MoU), fostering cooperation in this sector. The agreement aimed to promote development cooperation in the field of mineral resource development. Under the agreement, a joint working group was established and convened meetings in 2011 and 2017 respectively to discuss potential joint ventures.^[xxx] As a result, India leveraging its experience and expertise, offered to assist Malawi in capacity-building in mining, geo-sciences, mineral exploration, data processing, interpretation and management while the latter promised to create an investment-friendly environment to attract Indian investment.[xxxi] India is the fourth largest trading partner of Malawi with over $500 million in investments in various sectors[xxxii] including mining as India buys $13 million worth of minerals from Malawi annually.

Considering the significance of electricity, water and infrastructure for mining, India has provided lines of credit (LOC) to Malawi since 2008 for various infrastructure development projects within the agriculture sector, including the Green Belt Initiative, and drinking water supplies.[xxxiii] Similarly, the 19th CII India Africa Business Conclave was evidence of India’s pivotal role in revolutionising Malawi’s agricultural sector, aligned with the Malawi 2063 agenda.[xxxiv] Malawi is actively seeking India’s investments for its technical expertise to address water shortages and energy deficits and drive its economic growth as mentioned during the Malawi-India Business Dialogue held in Lilongwe.[xxxv]

The increasing global demand for REEs and export restrictions imposed by key players have underscored the strategic importance of securing alternative sources. This mutually beneficial collaboration is symbolic of the evolving 60-year-old India-Africa partnership, addressing global and domestic challenges while strengthening bilateral ties.

Way Forward

Malawi’s proactive approach to attracting investors in its rare earth element (REE) sector, highlighted at the Critical Minerals Africa Summit 2024, positions the country as a potential investment hub looking to improve its sectoral capabilities and economic well-being. Building on the India-Malawi bilateral partnership and the ongoing Kangankunde project in Malawi by Australia’s Lyndian Resources, a trilateral collaboration between India, Malawi and Australia presents a promising opportunity. India contributes its developing country's pivotal expertise, while Australia brings its developed country’s resources and perspectives to foster mutual interdependence. India’s established partnership with Australia, marked by a 2022 MoU between Khanij Bidesh India Limited (KABIL) and Critical Minerals Office (CMO)[xxxvi], and their alignment in the U.S.-led Minerals Security Partnership (MSP)[xxxvii], which aims to diversify and strengthen supply chains, clean energy, and resilient infrastructure, provides a framework for a possibility of cooperation in a third country. This collaboration has the potential to offer an integrated global supply chain of rare earths where each country brings unique strengths that can be synergised for mutual benefit. The cooperation also has prospects to go beyond mere extractive nature, involving investments for value-addition in the host country to help it move up the value chain. 

Malawi can utilise this partnership to transition from the traditional pit-to-port model and build a more resilient mining sector, benefiting from investments and capacity-building. India, with its Critical Minerals Mission 2024, can domestically strengthen its supply chain, while Australia, as a global leader with the fourth-largest production and sixth-largest reserves of REEs worldwide,[xxxviii] can enhance its downstream capabilities, diversify markets with the help of India and Malawi, and reduce dependence on China’s near-monopoly. Together, this trilateral framework can foster mutual economic growth and bolster sustainable, diversified and integrated supply chains critical to the global energy transition.

*****

*Nandini Khandelwal, Research Intern, Indian Council of World Affairs, New Delhi
Disclaimer: Views expressed are personal. 

Endnotes

[i]“CMA: Malawi’s New Mining Regulator Accelerates Projects,” Energy Capital & Power. November 12, 2024. https://energycapitalpower.com/cma-malawis-new-mining-regulator-accelerates-projects/.

[ii] “Ministry of Mines to Organize Budget Seminar on National Critical Minerals Mission Tomorrow,” Pib.gov.ini, August 13, 2024. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2044914.

[iii] Mitchell, Jason. “China’s Stranglehold of the Rare Earths Supply Chain Will Last Another Decade.” Investment Monitor, April 26, 2022. https://www.investmentmonitor.ai/sectors/extractive-industries/china-rare-earths-dominance-mining/?cf-view.                

[iv] Liu, Shuang-Liang, et al. “Global Rare Earth Elements Projects: New Developments and Supply Chains.” Elsevier, 29 March 2023, pp. 1–11.

[v] “How Do We Use Rare Earth Elements?” American Geosciences Institute, March 17, 2016. https://www.americangeosciences.org/critical-issues/faq/how-do-we-use-rare-earth-elements.

[vi] Gielen, Dolf, and Martina Lyons. “CRITICAL MATERIALS for the ENERGY TRANSITION: RARE EARTH ELEMENTS”. International Renewable Energy Agency (IREA), 2022.

[vii] Upstream refers to the extraction and separation of rare earths into oxides. For instance, monazite being extracted from primary ores or ion-adsorption clays extracted from secondary ores;

mid-stream refers to the processing of metals. For instance, ion-adsorption clays further separated and converted into neodymium (metal) and further into alloys;

downstream refers to manufacturing the product, which can further be utilised for manufacturing high-tech products. For instance, making powerful permanent magnets, thus producing electric vehicles.

[viii]Wu, Zhenxiao, Yu Chen, Yan Wang, Yongzhi Xu, Zhuoling Lin, Xiaoliang Liang, and Huhu Cheng. “Review of Rare Earth Element (REE) Adsorption on and Desorption from Clay Minerals: Application to Formation and Mining of Ion-Adsorption REE Deposits.” Ore Geology Reviews, June 1, 2023. https://ui.adsabs.harvard.edu/abs/2023OGRv..15705446W/abstract#:~:text=REE%20are%20mainly%20adsorbed%20on,ion%20exchange%20and%20surface%20complexation.

[ix] Pistilli, Melissa. “Rare Earth Metals: Heavy vs. Light | INN.” Investing News Network, May 15, 2024. https://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/investing-in-rare-earth-heavy-vs-light/.

[x] “Malawi - Mining and Minerals,” www.trade.gov, February 20, 2024. https://www.trade.gov/country-commercial-guides/malawi-mining-and-minerals.

[xi] “Rise of African Rare Earths Bolsters Supply Pipeline for China and the West | Benchmark Source,” Benchmark Source, June 24, 2024. https://source.benchmarkminerals.com/article/rise-of-african-rare-earths-bolsters-supply-pipeline-for-china-and-the-west.

[xii] Ibid.

[xiii] Barradas, Sheila. “Songwe Hill Rare Earths Project, Malawi.” Mining Weekly, August 2, 2024. https://www.miningweekly.com/article/songwe-hill-rare-earths-project-malawi-update-2024-08-02.

[xiv] Ramdass, Nadine. “Project among World’s Largest Rare Earths Projects.” Mining Weekly, August 18, 2023. https://www.miningweekly.com/article/explorers-mre-places-project-among-worlds-largest-rare-earths-projects-2023-08-03.

[xv] Rani, Archana. “Lindian to Supply Monazite Concentrate from Malawi Rare Earth Project.” Mining Technology, September 27, 2023. https://www.mining-technology.com/news/lindian-monazite-malawi-rare-earth/.

[xvi] Orlando, Adam. “Infrastructure Imperative: Redefining ‘Outdated Pit-To-Port Models.’” Mining.com.au, May 19, 2024. https://mining.com.au/infrastructure-imperative-redefining-outdated-pit-to-port-models/.

[xvii] Long, Kristin. “Malawi — ‘the Warm Heart of Africa’ Welcomes Miners - African Mining Online.” African Mining Online, January 9, 2024. https://www.africanmining.co.za/2024/01/09/malawi-the-warm-heart-of-africa-welcomes-miners/.

[xviii]The World Bank in Malawi. “Malawi Overview.” worldbank.org, 2023. https://www.worldbank.org/en/country/malawi/overview.

[xix] “Malawi - Agricultural Sector.” www.trade.gov, International Trade Administration, August 15, 2022. https://www.trade.gov/country-commercial-guides/malawi-agricultural-sector.

[xx] Chiyembekeza, Chikondi. “Minister Opens K438m Chilwa Minerals Testing Laboratory.” mwnation.com. Nation Online, December 2, 2024. https://mwnation.com/minister-opens-k438m-chilwa-minerals-testing-laboratory/.

[xxi] Nayar, Jaya. “Not so ‘Green’ Technology: The Complicated Legacy of Rare Earth Mining.” Harvard International Review, August 12, 2021. https://hir.harvard.edu/not-so-green-technology-the-complicated-legacy-of-rare-earth-mining/.

[xxii] Tembo, Fazila. “ATM Week: Malawi Opens Itself Mining Potential to the Entire World” Malawi Nyasa Times, April 23, 2024. https://www.nyasatimes.com/atm-week-malawi-opens-itself-mining-potential-to-the-entire-world/.

[xxiii] Mhone, Chembezi. “Energising the Mining Industry: MERA Participates in 2024 Mining Investment Forum - Malawi Energy Regulatory Authority.” Malawi Energy Regulatory Authority, April 24, 2024. https://mera.mw/2024/04/24/energising-the-mining-industry-mera-participates-in-2024-mining-investment-forum/.

[xxiv] “Malawi’s Energy Transition: PPPs & Regional Collaboration for Growth,” CNBC Africa, November 7, 2024. https://www.cnbcafrica.com/media/6364334779112/malawis-energy-transition-ppps-regional-collaboration-for-growth/.

[xxv] Gordon, Matthew. “Malawi’s Mining Potential Attracts Investor Interest” Crux investor, September 25, 2023. https://www.cruxinvestor.com/posts/malawis-mining-potential-attracts-investor-interest.

[xxvi] Op.cit.i

[xxvii] Op.cit.ii

[xxviii]“Mines and Minerals (Development & Regulation) Amendment Act, 2023,” International Energy Agency (IEA), March 25, 2024. https://www.iea.org/policies/17968-mines-and-minerals-development-regulation-amendment-act-2023.

[xxix] Op.cit.xxi

[xxx] “India-Malawi Bilateral Relations.” High Commission of India Lilongwe, November 2022. https://drive.google.com/file/d/17DHAw9tTkemBMhDXBB1bZBoQN9RG8T0S/view.

[xxxi] Jere, Chiku. “India Malawi to Cooperate in Mineral Resource Development.” High Commission of India, Lilongwe, Malawi, September 2017. https://www.hcililongwe.gov.in/docs/1507284425India,%20Malawi%20to%20Cooperate%20in%20Mineral%20Resource%20Development.pdf

[xxxii] “Transcript of Special Briefing by Secretary (CPV & OIA) on President’s Visit to Malawi (October 18, 2024),” Ministry of External Affairs, Government of India, October 19, 2024. https://www.mea.gov.in/media-briefings.htm?dtl/38439/Transcript_of_Special_Briefing_by_Secretary_CPV__OIA_on_Presidents_Visit_to_Malawi_October_18_2024.

[xxxiii] “India-Malawi Bilateral Relations.” High Commission of India Lilongwe, November 2022. https://www.mea.gov.in/Portal/ForeignRelation/Bilateral_Brief_Website_Nov_2022.pdf.

[xxxiv] “Malawi Seeks to Strengthen Agricultural Ties with India ,” Malawi Voice, August 21, 2024. https://www.malawivoice.com/2024/08/21/malawi-seeks-to-strengthen-agricultural-ties-with-india/.

[xxxv] “Malawi Woos Indian Investors,” Malawi Voice, May 9, 2024. https://www.malawivoice.com/2024/05/09/malawi-woos-indian-investors/.

[xxxvi] “India’s Efforts to Attain Self-Reliance in Critical and Strategic Minerals,” Pib.gov.in, March 29, 2022. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1810948.

[xxxvii] “Milestone in India and Australia Reach Critical Minerals Investment Partnership,” Pib.gov.in, March 11, 2023. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1905863.

[xxxviii] Op.cit. xxxvii