Markets & Finance
Cortec now blames China over revoking of mining licenceWednesday August 07 2013
Cortec Mining Kenya, the Canadian Pacific Wildcat local subsidiary, Wednesday claimed China was behind the Mining secretary’s decision to revoke its licence this week and promised to take the battle to court.
Cortec is one of 42 companies set to be affected by an order by Najib Balala suspending exploring and mining licences issued between January and May this year having received its licence on March 7.
READ: Kenya revokes new mining licences
The company, however, believes it is the main target of the directive as it is the only operational firm on the list.
Pointedly, the move came as the Cabinet was set to discuss the Mining Bill 2013 Thursday and may signal Jubilee’s determination to overhaul the industry.
“The company has not received any formal notice of the cancellation of its mining licence and will strongly oppose the revocation of its legally acquired rights to mine… it is the company’s intention to vigorously challenge any abuse of our licence or the company in the courts,” said the company’s managing director David Anderson.
Cortec contends that since 2008 it has drilled 7,897 metres on Mrima Hill at a cost of over Sh200 million with analysis of the drilling leading to the identification of niobium and rare earth.
Rare earth deposits consist of Critical Rare Earth Oxides (CREO) including Neodymium, Dysprosium, Europium, Terbium, and Yttrium.
Niobium is used to produce high strength low alloy (HSLA), an additive to ordinary steel which increases its strength while reducing its weight.
Rare earths are crucial in making high-tech electronics products such as super conductors and miniature magnets whose demand has exploded. The management said this showed its commitment and technical ability to mine the resource.
It accused the Chinese of wanting to control the niobium market by controlling its supply in the market. Interestingly, the company made the comments as the Cabinet Secretary met a mining delegation from China under the umbrella of Blue Ocean Investment Fund.
“He is targeting Cortec. He is trying to exert pressure because there are many interested parties in our resource. The Chinese are interested. They want to control the niobium market,” said Jacob Juma, a director of Cortec Mining Limited and a 30 per cent owner.
China supplies an estimated 97 per cent of global rare earth. Japan is the main consumer and has been hurting from a shortage which has pushed up prices forcing it to look for other supply sources.
Mr Balala suspended the Commissioner of Mines, Mr Moses Masibo, on Monday accusing him of presiding over the irregular award of licences.
He set up a committee to review issued licences and advise on the way forward. The affected licences were issued during the transition period from the Kibaki to Uhuru Kenyatta government.
Cortec said it was not issued with a new licence in March but the commissioner of mines allowed conversion of its exploratory licence issued in 2007, renewed in 2011, to a mining one following confirmation of rare earth deposits.
READ: Canadian miner finds larger niobium, rare earth reserves in Kenya
The firm said the current Mining Act gives the commissioner such powers.
Shares of Pacific Wildcat Resource, which owns 70 per cent of Cortec Kenya, were on Tuesday suspended from trading at the Toronto Stock exchange a day after the suspension notice.
“It was suspended till we finish with these issues as all these operating documents are lodged with the stock market,” said Mr Juma.
Sterling Limited, registered in the United Kingdom, holds the remaining 30 per cent with Mr Juma claiming to hold ownership in the two companies which gives him a significant stake in Cortec.
Mr Juma has been in the public limelight in recent weeks owing to his directorship at Erad Suppliers, a firm laying claim to National Cereals Board Produce’s assets following a contested Sh700 million award.
The ore find has been valued at a mind boggling $100 billion (Sh8.5 trillion), a figure that has been dismissed by the mining ministry stating that some companies inflate the amount so as to ease capital raising activities and improve share performance.
Two weeks ago the minister also cancelled further issuance of mining licences. Kenya has found itself in a discovery stage with announcements of mineral and oil finds pushing it to review its legal structures which had lagged behind as emphasis was placed on agriculture and service industries.
The mining bill will be reviewed by the Cabinet today before it is introduced in parliament for debate after the recess.