Why didn’t the axis power conquer Malta, considering the island was basically in Italy’s territory and that it would cause a huge blow to the British?
They lacked the amphibious landing capacity (like landing craft) , did not do much beyond theoritical map planning about capturing Malta , Italian Navy made no large scale operations and as war extended due to lack of fuel they were immobilised
Well, they landed many troops in North Africa. So they might were able to land forces in Malta too. What happened to all those landing crafts, originally planed for Britain?
They had some for Operation Sealion which have not used. They could use those.
Not securing Malta, was a big mistake, among others, during WW2 for Axis powers.
They landed reinforcement to their harbours (Tripoli and Benghasi) they held before the war with cargo ships to docks at their hands , not with landing craft (which they did not have throughout entire war except a few Siebel ferries which were insufficient numbers and used to ferry supplies from Italy to Africa) not an enemy held and defended shore like Malta and there was not any rehersal excersize for amphibious operations in Axis side either. Italian Navy lacked fuel , were prevented a large scale sortie. “All those landing craft” you mentioned did not exist except drawing board , they had river barges unsuitable for sea not shallow draught landing craft like Higgins Boats nor LSTs or LCLs (Landing Craft Light) designed to carry vehicles , equipment and large number of troops. Combined with lack of fuel for Italian Navy , their reluctance to engage Royal Navy Mediterranean Fleet directly and Germans distrust of Italian Naval prospects , all played a role in decision not to launch a seaborne invasion
Only viable option foer an Axis invasion would be an airborne attack on Malta (Italian had two crack airborne divisions and Germans also reserved one extra parachute brigade) but after heavy losses German paratroops suffered during invasion of Crete (which lacked proper anti airborne and air defence structure and a wide target unlike Malta which was smaller , had a preprepared defensive structure and a concentrated garrison with RAF air defences) caused Hitler and Axis commanders to shelve whole thing