Kenya to engage mining firms on local stake rule


Najib Balala, Cabinet Secretary in charge of Mining. Photo/Billy Mutai

Kenya will hold discussions with mining firms to reach a common position over a law requiring the companies to set aside 35 per cent of shares for local shareholders, its new mining secretary said on Friday.

Enacted late last year, the law angered foreign investors, who warned it had the potential to kill the east African nation's nascent mining industry.

Kenya has more than 300 local and foreign firms prospecting for minerals or producing on a small scale, up from less than 30 two years ago, the national chamber of mines says.

"It has not been received well by the investors. We are open to discussion but the law is already in place," Najib Balala, the cabinet secretary for mining, told Reuters when he met with the local chamber of mines.

"We are not going to be a government or ministry whose role is just to regulate 'my way or the highway'. It will be a ministry of listening and consultation."

The consultations will be aimed at ensuring that the government, investors and local communities benefit fairly from the mineral resources.

(Read: Foreign mining firms to cede 35pc share to Kenyans)

President Uhuru Kenyatta created a new mining ministry to give the sector the required focus in order to build it up and diversify an economy, based mainly on services and farming.

Kenya has proven deposits of titanium, gold and coal and is is also estimated to hold deposits of rare earth minerals, copper, niobium and manganese, he said.

The titanium mine, operated by Australia's Base Resources, in the coastal county of Kwale will be the country's biggest mine when it starts production before the end of this year. Balala said his priority was to push through a new law for mining to replace an ineffective one that has been around for decades.

"The old framework was established in 1940 so it's very old. It's not a facilitative process. It is rather a regulatory process. I believe in facilitation so that is a priority," he said.

Among other changes, the law will stipulate clear time lines for licensing, a hitherto opaque process that was open-ended, leading to delays as officials took time to process applications.

Under the new law, an application has to be forwarded to the licensing authority within 45 days of submission and a decision on whether to grant a licence must be made within 14 days thereafter.

Enactment of the law will allow the government to carry out a detailed aerial survey to map the country's mineral resources, which will cost $50-$60 million, Balala said.

He said if the study does not show the country is endowed with significant mineral deposits, the government would focus on building a gemstones cutting and polishing centre and a gold refinery to turn it into a minerals hub.

It would also expend energy "To make Kenya into a trading centre so the region can bring their minerals into Kenya and be traded through the minerals and metals exchange," he said.

Regional gold producing powerhouses include Tanzania and Sudan.