Economy

Balala sets out priorities for mining sector

balala

Newly appointed Cabinet Secretary in charge of Mining. Photo/Billy Mutai

Setting up a metal exchange, identifying the minerals in the country and making laws to guide the sector will be the priorities of the new Mining ministry.

Cabinet Secretary Najib Balala said the ministry will first ensure a legal framework was in place as well as carry out a comprehensive geo-mapping of the country.

“We want it (mining) to be done properly and in a professional way, not to exploit the country and local communities,” Mr Balala said on Friday during a press conference in his new office at the former Ministry of Works building.

A surge in global commodity prices and investor appetite for new frontier markets have revived interest in Kenya’s mining potential. The budding industry is seen as a potential major income earner for the government.

Mr Balala and his team are faced with the challenge of ensuring maximum gain from the under-exploited industry while avoiding flight of investors through punitive policy measures.

Funding will also be a big challenge. In the 2013/2014 fiscal year, the ministry was allocated Sh575 million, according to budget estimates. This is expected to increase by 10 per cent, to Sh634 million, in the 2014/2015. To carry out the geo-mapping the ministry will require about Sh5 billion, said Mr Balala.

New laws gazetted last year require that foreign mining companies cede 35 per cent of their shares to locals. Firms will be given between three and five years to do that.

Mr Balala said he would look at this law and discuss it with players in the industry to ensure it is viable for local investors.

Recently the tax regime in the industry was tightened to help collect more revenues from players in the mining sector. According to an estimate by the Industrialisation ministry, the government has lost Sh300 billion from the frequent property transfers in the mining sector.