Minerals survey deal gives Chinese firms upper hand

A Chinese firm has won a deal to map out areas in Kenya that have signs of mineral deposits in a government-to-government pact that gives the Asian giant an upper hand in future bidding for exploration and mining contracts.

The deal is, however, tied to a condition that China finances the survey, which is expected to cost between Sh5 billion and Sh6 billion.

The issue is expected to come up for discussion between President Uhuru Kenyatta and his Chinese counterpart when he travels to the country over the weekend.

Mining secretary, Najib Balala on Wednesday signed a memorandum of understanding with Chinese government agency, Geological Exploration Technology Institute of Jiangsu, which will be expected to undertake the survey.

“This MOU shall come into force at the date of its signature and will remain valid until the loan or grant agreement are signed and will automatically become null and void if the loan or grant is not signed,” reads part of the memorandum.

The mapping, to be conducted throughout the country is expected to take between two and three years using “aeromagnetic” and “radiometric” methods. The methods allow geologists to see up to 500 metres underground.

Mr Balala, however, sought to allay fears that the information gathered will give undue advantage to Chinese companies bidding for exploration and mining contracts.

“Whether the money is loaned to us or given as a grant the output is the property of Kenya and there will be no dissemination without consent of the government. We have independence of information and we will allocate it as per the law,” he said.

A loan will have to be approved by the National Treasury so as to ensure that the country’s external debt burden is not unbearable having already received two loans exceeding Sh60 billion last year to close budget gaps and finance the elections.

The country is also expected to float an international bond of Sh85 billion before end of the year.

The survey will help the country to identify its mineral wealth, which has been a big source of speculation, and strategise on how to tap it.

In the recent past, there has been confirmation that Kenya is endowed with niobium, rare earths, titanium and coal. There has been speculation that the country could also have significant deposits of gold and diamond.

Mr Balala, in seeking to allay claims of favouritism of the Chinese, said the mapping had already been initiated by the previous government, with some of the ministry officials visiting the institution last year.

The institution will also be charged with training of local experts and will work with a team forwarded by the ministry.

Mineral exploration has been shrouded in controversy and opaqueness with intense effort being put in the sector in the last four months following its elevation from a government department to a full ministry.

A recent report by the International Monetary Fund accused government officials of failing to disclose the details of deals signed with oil and mining companies, even though the Constitution provided for transparency and access to public information.

The niobium and rare earth deposits at Mrima hills in Kwale County have been estimated to be the sixth largest in the world and have been valued at $100 billion by the prospectors Cortec Mining Limited.

Cortec’s mining licence was revoked two weeks ago in what was termed as a “cleaning up” exercise by the ministry.

Forty two licences, issued between January and May this year were revoked. Those issued between 2003 and 2012 will be evaluated to ensure that they are not being held by speculators.

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