Laws delay Kenya’s large-scale mining

Kenya’s ambition to grow national wealth from minerals faces uncertainty as the government delays new mining laws that could set the stage for large-scale production even as global prices rally.

Mines and Geology Department said slow legislative process has dimmed the prospects for the implementation of legal reforms that seek to encourage large scale mining in the country

“The new laws are still at the Attorney General’s chambers and there is nothing we can do or plan based on them until they are cleared for use,” the deputy commissioner, Mr S M Kimomo, told Business Daily.

Global price rallies for precious metals have stirred fresh interest in the country’s mining industry.

From a modest $834 per ounce by close of 2008, gold prices have risen sharply to averages of $1,168 per ounce.

Last year, the government revised the Mining Act, changing it into Mining and Minerals Act in a bid to attract foreign firms and make the sector more profitable to the artisanal workers who have dominated it over the last 50 years.

Under the new laws, the prospecting licences will initially be valid for four years with the option of renewing for up to three more years.

The laws also allow investors to transfer their exploration licences to third parties.

In March, Mines and Geology Commissioner Benard Rop said more large scale miners had started showing renewed interest in the sector in anticipation of the implementation of the new laws.

The firms, including the London Stock Exchange listed Goldplat, and Toraonto, listed as Kansai Mining Corporation were among the latest miners to apply for licences to operate in the country.

Two weeks ago, Goldplat announced that Kenya Government had approved documentation required for a mining lease to roll out operations at the Kilimapesa Hill.

“The only outstanding requirement is the formality of the issuance of a mining right number from the director of survey ... the Kenyan Government is very positive about the granting of the mining lease to Kilimapesa Gold and views this as the start of a new era for the gold mining industry in Kenya,” Golplat CEO Demetri Manolis said in a statement.

Non-metallic minerals

The contribution of mining to GDP dropped from 0.7 per cent in 2008 to 0.5 per cent last year.

Kenya’s mining industry is dominated by production of non-metallic minerals such as soda ash, fluorspar, and gold, which is undertaken by many firms.

Official data indicate earnings from gold rose almost four times to Sh2.3 billion in 2009 from Sh593 million a year earlier.

The country earned Sh123 million and Sh6 billion respectively from fluorspar and soda ash last year.

If implemented, the new laws are expected to improve the hunt for precious metals, changing the tide against non metallic minerals.