Kenya to award first gold mining licence next week

A goldsmith displays gold bars at his shop in Riyadh October 12, 2009. Kenya will issue its first ever gold mining lease on Tuesday, opening the way for commercial exploitation of the precious metal whose price has peaked in recent weeks after turbulence rocked global financial markets. File

Kenya will issue its first ever gold mining lease on Tuesday, opening the way for commercial exploitation of the precious metal whose price has peaked in recent weeks after turbulence rocked global financial markets.

Goldplat — gold dealer listed at the London Stock Exchange — will be awarded the lease to exploit the large gold deposits in the Lolgorien area of Narok County, according to sources at the Mines and Geology Department. (READ: Kenya eyes billions in gold revenue from Narok mines)

“All objections that had been raised have been resolved and we expect that a commercial mining lease will be awarded to Goldplat in the next week, probably on Tuesday,” said the senior official at the department who sought anonymity on the strength that the announcement will be done by the Permanent Secretary.

Legally, it is the department that is mandated to issue the mining lease but government protocol has it that only the Ministry of Natural Resources PS would formally notify the public.

Mr Moses Masibo, the acting Commissioner of Mines, declined to comment on the licensing process but said the Permanent Secretary will make a “big announcement next week”.

The award of the licence will give Kenya a larger foothold of the international gold market that it has in the past decades fed through small-scale mining. The value of gold from the Kilimapesa mines could top Sh60 billion a year in foreign currency at the prevailing prices or more if the surge in gold prices continues, placing the metal among the top revenue earners.

The government would earn four per cent of the value of each export consignment in the form of royalties, in addition to corporate tax that is tied to the profit that Goldplat would make.

Environment and Natural Resources PS Ali Mohammed, told the Business Daily last month that the cabinet had approved a benefit sharing arrangement that would influence how minerals will be shared. The deal could come in handy for the local currency, which lost more 20 per cent to the dollar since January to trade at Sh97.
Last year, Kenya earned Sh6.2 billion from the sale of two tonnes of gold, three times higher than the year before, an indication of the how fast the commodity is gaining prominence as an export commodity.
Sharp increases in the price of gold since last year have heightened exploration activities in areas such Turkana, Samburu and Kitui.
Goldplat chief executive, Demetri Manolis, told investors in July that the firm, which has been prospecting in Kenya for more than a decade, was headed for its first sale of the precious commodity.

Gold traded in the global market at a record Sh6 million a kilogramme ($1800 an ounce), more than 60 per cent and about 30 per cent higher than January 2010 and January 2011 respectively. It remains to be seen if Kenya would escape the resource curse that has seen a number of African countries including Zambia, Tanzania and the Democratic Republic of Congo miss out on the record mineral prices.

This has been due to the firms enjoying high tax subsidies and the avoidance of paying taxes and royalties through under declaration of minerals.

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