World Bank warns Malawi's mining potential hinges on solving electricity crisis

Malawi's drive to build a mining industry around critical minerals is being held back by a chronic electricity shortage, according to a new World Bank report that warns the country's mineral wealth could remain largely untapped without urgent power sector reform.

The report, titled "From Potential to Prosperity: A Roadmap for Malawi's Energy Transition Minerals", estimates the mining sector alone could require an additional 120 megawatts of electricity by 2032, adding further strain to a national grid already weakened by chronic shortages and vulnerable to climate-related disruptions.

The World Bank puts the sector's medium-term power needs at 60 to 100 megawatts, rising to as much as 160 megawatts in the longer term.

Malawi, one of the world's poorest countries, has pinned hopes on mining to diversify an economy long dominated by agriculture.

The southern African nation has identified uranium, graphite, rutile, rare earths, niobium and tantalum among its priority minerals, with projects including Kayelekera, Kasiya, Kangankunde, Songwe Hill and Kanyika at various stages of development.

The World Bank estimates the sector could generate around $30 billion in exports between 2026 and 2040, but cautions that the projection hinges on infrastructure and institutional reforms that have yet to materialise.

Electricity costs typically account for about 30 percent of mining operating expenses, the report said, meaning unreliable grid supply often forces companies to rely on costly self-generation, undermining the commercial viability of projects.

At Lindian Resources' Kangankunde rare earths project in the southern district of Balaka, executive director Zekai Komur said access to grid power was now "a major consideration" for the company's expansion plans.

The project's first phase requires around three megawatts to lift output from a planned 500,000 tonnes a year towards four million tonnes, he said, while a potential second phase - combining a solar farm with 20 megawatts from state utility Escom - could deliver a five-fold increase in production to around 100,000 tonnes of rare earth concentrate annually by 2028 or 2029.

"We are looking at a major solar farm and 20 megawatts of Escom power," Komur said, adding the company had applied to upgrade its mining licence from medium- to large-scale.

Kayelekera, a uranium project in the northern district of Karonga owned by Australia's Lotus Resources, currently operates entirely off-grid.

The World Bank identified the 358-megawatt Mpatamanga Hydropower Storage Project, expected to become Malawi's largest power plant, as a key priority.

But it said additional generation alone would not resolve the shortfall, calling also for regional power interconnections with Mozambique and Zambia, cost-reflective tariffs and a foreign exchange stabilisation mechanism to attract investment.

The bank estimates Malawi's energy sector requires billions of dollars in investment, of which only $530 million has so far been secured.

Mining Minister Thoko Tembo, speaking at the launch of the roadmap, said the document should be understood within the government's "Malawi 2063" long-term development strategy, and outlined priorities including improved licensing systems, stronger environmental governance and ensuring mining benefits local communities.

An editorial in local daily newspaper The Nation was more critical, warning that without decisive government action, "the country's mining ambitions will remain trapped in policy documents while transformative investments are delayed by avoidable infrastructure bottleness."