Environment and Mineral Resources minister Chirau Mwakwere. He has rejected calls to postpone new shareholding rules for foreign mining firms. Photo/ FILE
What you need to know:
Mining industry stakeholders are now gearing to petition Mr Mwakwere to give players more time to comply following a closed-door conference organised by Kenya Chamber of Mines (KCM) last week.
Mr Odinga who is vying for the presidency on a Cord coalition ticket had said during the launch of the alliance’s manifesto he would reverse the measure if he ascends to power.
Mr Mwakwere, who is currently at his Coastal rural constituency, said he would only return to Nairobi to gazette another equally controversial part of the Bill requiring companies to value add at least by 30 per cent.
Mining industry players are preparing to petition the State over an order requiring foreign firms to cede at least a 35 per cent stake to locals.
Environment minister Ali Mwakwere last week said he would not reverse the order, brushing off Prime Minister Raila Odinga’s promise to scrap the rule.
In a telephone interview with the Business Daily, he said the Cabinet including the PM had passed the draft Mining Bill.
“Although the Bill is not yet law I don’t have to wait for it to be signed. I extracted the rule because anything approved by the Cabinet is official,” he said adding that powers to do so are vested under the Mining Act of 1940.
Mining industry stakeholders are now gearing to petition Mr Mwakwere to give players more time to comply following a closed-door conference organised by Kenya Chamber of Mines (KCM) last week.
“We will seek further indulgence on the 35 per cent rule,” KCM chief executive officer Monica Gichuhi said last week on Thursday.
Base Resources said last month that the Attorney-General Githu Muigai had written an opinion assuring the Australian Miner that firms that were in operation before the gazette notice would not be affected. Mr Mwakwere, however, expects all firms to comply.
“That was just an opinion. The regulation stands and must be implemented to the letter; opinion or no opinion,” he said.
Mr Odinga who is vying for the presidency on a Cord coalition ticket had said during the launch of the alliance’s manifesto he would reverse the measure if he ascends to power.
But in what may escalate the dispute, Mr Mwakwere, who is currently at his Coastal rural constituency, said he would only return to Nairobi to gazette another equally controversial part of the Bill requiring companies to value add at least by 30 per cent.
The minister wants a short compliance period even as the industry seeks up to three years to comply.
Commissioner of Mines Moses Masibo told the industry players that the rule would apply throughout the lifetime of mining concessions, meaning dilution of local stakes as firms raised more capital would not be allowed.
“The spirit of this regulation is to maintain the 35 per cent but the minister has the power to determine what form local equity would take,” he said, adding that while the rule would apply from prospecting to actual mining, the government was considering participating in the former.
Although the rule has caused a lot of markets jitters, Nairobi Securities Exchange (NSE) players are seeing a major opportunity.
Edward Burbidge, CEO Burbidge Capital, an advisory firm, says listing of the 35 per cent makes a “lot of sense” despite the controversy.
The Growth Enterprise Market Segment (Gems) unveiled a week ago is seen as the right forum for mining firms with no profit track-record to raise capital besides ceding the 35 per cent to the locals.
However, the rules on local ownership represent a challenge not least for lack of clarity.
Andre DeSimone, CEO Kestrel Capital, a stockbrokerage, noted mining firms at times need to raise quick funds, which the Capital Markets Authority stringent rules may constrain even in the less regulated small-cap Gems.
But NSE head of marketing Donald Ouma says the Gems rules are flexible enough as the regulator did not need to approve a private placement involving less than 50 investors.
More confusion is expected over the implementation of the rule as the gazette notice talks of Kenyan investors as defined under the Immigration Act.
Mr Ouma though told the industry players NSE would treat East African Community investors as locals going by an earlier Treasury order while domestic investors would be those domiciled in Kenya.
