Politics and policy

Kenya targets more royalties from mining firms

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By Neville Otuki

Posted  Monday, August 5  2013 at  18:54

The government has raised royalties on minerals extracted in Kenya as it moves to safeguard the country's interest in the lucrative mining sector.

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The royalty rates on the valuable rare earth, niobium and titanium ores will rise to 10 per cent of gross sales for each of the three up from the three per cent previously charged.

The levy for gold has will now be five per cent from an average of three per cent while coal has grown to eight per cent.

“The ministry has reviewed all royalty; licensing and drilling charges that were previously charged,” said Najib Balala, the secretary for the Ministry of Mining on Monday.

“All the above changes are aimed at ensuring that the ministry creates a level playing field in the mining industry in the country,” said he during a press briefing in Nairobi on the Mining Bill that is now ready to be tabled before the Cabinet for scrutiny.

Other minerals that have had their royalties reviewed include gemstones, fluorspar, diatomite and carbon dioxide (all five per cent), metallic ores such as iron, manganese, chromium and bauxite all at eight per cent.

At the bottom are industrial minerals namely gypsum, limestone and silica sand which attract a one per cent royalty charges of gross sales value.

Industrial minerals will, however, fetch a royalty of five per cent for exports.

The review of levies has been rife in recent days with mining sector officials speculating possible rates of between three and 10 per cent.

“The royalties are going to be as high as between three per cent and 10 per cent,” said Richard Ekai Titus, the Principal Secretary for mining said.

The development comes at a time when explorations in various parts of the country have revealed massive mineral wealth including rare earth deposits in Kwale County estimated to be worth Sh5.4 trillion and coal in Mui Basin valued at Sh3.4 trillion.

The drilling charges for minerals have also been adjusted away from the standard Sh800 per metre with a new pay scheme based on every 50-metre depth into the ground.

According to the Kenya Chamber of Mines (KCM), an industry lobby, there are about 300 local and foreign firms that have operations in the country including Cortec Mining Kenya, a subsidiary of Canada-based minerals and Pacific Wildcat Resources, which is associated with exploration of Niobium reserves at the Coast.

The Mining Bill 2013 introduces new institutions in the sector such as the National Mining Corporation (NMC) – the investment arm of the government in the mining sector.

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