Tycoon Munga, China firm row over Sh4trn coal mines

Mr Munga and Dr Kariithi are co-owners of Great Lakes Corporation, which is claiming a 30 percent stake in blocks C and D of the Mui coal basin in Kitui County.

Fenxi Mining Industry Co. Ltd insists it dumped Great Lakes Corporation in 2018 for failure to contribute an agreed $3.875 million (Sh500.9 million) towards the concession fee for the mining blocks.

On August 26, 2025, the Chinese investors served the Energy and Mining ministries with a notice of default, demanding consents required to initiate coal extraction within 60 days or face arbitration proceedings in Mauritius.

Fenxi Mining Industry Co. Ltd claims that the government has ignored an Attorney-General advisory opinion, which stated that the concession rights lay in the Chinese firm’s hands as the signatory to the agreement, and that it was free to work with, or replace Great Lakes Corporation, as a local partner.

The agreements signed by Kenya and Fenxi Mining Industry Co. Ltd indicated that disputes are to be resolved through arbitration in Mauritius.

Fenxi Mining Industry Co. Ltd claims that Mr Munga and Dr Kariithi have, for over a decade, frustrated its efforts to either start coal mining or sell the extraction rights to other interested investors and now want to sue the government.

Fondly known as the founder of Equity Bank, Mr Munga has, over the years, become a serial entrepreneur with a foothold in different sectors from agro and insurance to education and industrials.

He has recently harvested hundreds of millions of shillings from the sale of Britam and Equity Bank shares.

Mr Munga and Dr Kariithi in 2014 wrote to the Ministry of Energy as board chairman and managing director of Great Lakes Corporation, asking the State institutions to ignore complaints by their estranged Chinese partners.

In the letter, the duo said they were writing on behalf of the Fenxi Mining Industry Co. Ltd and Great Lakes Corporation consortium and that plans to settle the Sh500 million concession fee were at an advanced stage.

“The undersigned (Mr Munga and Dr Kariithi) referred you to a letter dated 19th February 2014 from the ministry and signed by the chief geologist, which the undersigned stumbled upon by accident while attending the investors meeting in China. This letter was largely a complaint against Great Lakes Corporation,” said Mr Munga and Dr Kariithi in the letter.

Mr Munga and Dr Kariithi, in the letter, said the consortium’s planned partnerships with third parties to be involved in the coal mining venture were at an advanced stage.

The two cited a meeting with then Energy PS Joseph Njoroge in which it was agreed that any further communication from the ministry would be copied to Great Lakes Corporation. Previously, the ministry had been communicating only with Fenxi Mining Industry Co., Ltd in relation to the mines.

On Friday, Mr Munga said he is not well-versed with the day-to-day operations of Great Lakes Corporation, and advised that we contact Dr Kariithi instead.

Dr Kariithi had not responded to our queries to his known mobile phone number by the time of going to press.

“In accordance with its rights under the BSA (benefit sharing agreement), on November 10, 2022, the concessionaire appointed Dorse Gems International Ltd as its designated local partner pursuant to Article 2.1.1 of the BSA… However, the government has failed and/or refused to grant the necessary consent for this appointment, thereby breaching its obligations under the agreement,” said Yang Wusheng, Fenxi Mining Industry Co. Ltd chairman, in the default notice.

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“Instead, the government has continued to entertain a third party, whose engagement was expressly terminated by the concessionaire, and has used this as a basis for preventing the commencement of the project. The government’s representatives have shown a seemingly biased preference for this third party, Great Lakes Corporation Ltd, despite having been formally notified of the termination of its engagement,” Mr Wusheng added in the default notice.

Coal-rich Mui Basin covers around 500 square km.

Fenxi Mining Industry Co. Ltd was awarded a 21-year concession to extract coal from blocks C and D of the Mui Basin on September 12, 2011, covering half the area with an estimated 400 million tonnes of coal now worth Sh3.9 trillion. The firm brought Great Lakes Corporation Ltd on board as a local partner, with the duo becoming a consortium, Fenxi Mui Corporation Ltd, which was incorporated on February 19, 2013.

The consortium signed a benefit-sharing agreement with the government on December 23, 2013.

To seal the deal, the consortium was required to pay $5 million (Sh646 million) to the government. Fenxi Mining Industry Co. Ltd was to contribute $1.125 million (Sh145.4 million), with Great Lakes Corporation paying $3.875 million (Sh500.9 million).

In past correspondence with the Energy ministry, Fenxi Mining Industry Co. Ltd claimed that Great Lakes Corporation failed to remit its share of the requisite fees.

On February 1, 2018, Fenxi Mining Industry Co. Ltd director Yang Wusheng wrote to the Energy ministry seeking to implement the project to the exclusion of Great Lakes Corporation.

The following month, Mr Munga and Dr Kariithi wrote to the Energy ministry, maintaining that the concession belongs to the consortium, and not Fenxi Mining Industry Co. Ltd.

The tycoons argued that once the benefit-sharing agreement was signed, the concession became the property of the consortium, and not only Fenxi Mining Industry Co. Ltd.

In that correspondence, which bore the letterhead of Fenxi Mui Mining Corporation Ltd, Mr Munga and Dr Kariithi pledged to complete payment of concession fees and other related costs by May 2, 2014.

The two added that the consortium was working with Deloitte Beijing, HSBC’s Nairobi and Hong Kong offices, while engaging financiers such as the US Power Africa Fund to arrange funding for the extraction project.

Fenxi Mining Industry Co. Ltd maintains that Great Lakes Corporation has never paid its share of the concession fees.

On May 7, 2018, Fenxi Mining Industry Co. Ltd terminated its partnership with Great Lakes Corporation on account of the non-payment, triggering a dispute over the latter’s interests in the mining venture.

Then Energy Cabinet Secretary Charles Keter sought to end the dispute by seeking the Attorney-General’s opinion to take a government stand.

Then Attorney-General Paul Kihara Kariuki wrote to Mr Keter on November 19, 2020, stating that the concession is legally owned by Fenxi Mining Industry Co. Ltd, which had the right to choose whether to go solo or include a local partner in the coal extraction project.

“Fenxi-Mui Mining Corporation Limited (the consortium) was incorporated in February 2013, by the concessionaire (Fenxi Mining Industry Co. Ltd) and its local partner (Great Lakes Corporation) as a special purpose vehicle for the project and could only assume the roles of a concessionaire through an assignment of those rights and obligations by the concessionaire. There is no evidence that this ever happened,” Mr Kariuki said.

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“Therefore, Fenxi Mining Industry Co. Ltd is the rightful party to implement the concession and has the exclusive right to carry out the works under the concession unless it elects to assign the rights to the Kenyan subsidiary, which assignment should be approved by the Cabinet Secretary as provided under section 51 of the Mining Act, 2016.”
Under the benefit-sharing agreement, the concessionaire was to invest a minimum of $2.622 million (Sh399 million) in implementing the first phase of works.
In the second phase, which involves extraction, the concessionaire was to invest a minimum of $189 million (Sh24.4 billion).
In the event that the concessionaire would extract more coal than required in an agreed period of time, then it was free to seek the government’s consent to export the excess fuel.