The Ministry of Mining has lowered royalty charges for gold miners in the hope of attracting greater investment in the nascent industry.
Newly published regulations by the Ministry show that miners will now pay a three percent royalty on the gross value of extracted gold, down from five percent previously.
Kenya has proven deposits of titanium, gold and coal. But the country's mining sector is a relatively small contributor to national output, although revenues are expected to grow as new mines and investors come on stream.
Gold mining over the years has been largely artisanal and small-scale in a largely informal process, although several medium-sized companies have entered the industry.
Kenya's earnings from gold mining fell to Sh3.17 billion in 2023 from Sh3.38 billion the previous year, according to the Economic Survey 2024.
The data shows that 410 kilogrammes of gold were realised last year, down from 563.6 kilogrammes in 2022.
Section 183 of the Mining Act, 2016 provides that every holder of a mineral right shall pay royalties to the state in respect of the various classes of minerals obtained under the mineral right.
Revenues from mineral royalties are then shared among the national government, beneficiary counties and communities.
Official data shows that at least Sh7.5 billion has been collected from mineral royalties as of June 2022. This means that the National Treasury is holding Sh1.5 billion for the counties and Sh750.39 million for the communities where the minerals were exploited. The balance of Sh5.25 billion (70 per cent) is the national government's share.
The National Treasury has earmarked a Sh1.05 billion payout in mineral royalties to 23 counties in the 2024/25 financial year, as part of a revenue sharing arrangement between the national government, beneficiary devolved units, and communities.
The National Treasury did not name the counties that will benefit from the Sh1.05 billion royalty, although records show that some of the mineral counties in Kenya include Makueni, Taita Taveta, Kwale, Homa Bay, West Pokot, Kericho, Kakamega, Elgeyo-Marakwet and Kericho.
The share of mineral royalties will form part of the total Sh54.7 billion additional allocations (conditional and unconditional) to counties for this financial year.
“Out of this, Sh19.06 billion will be financed from the national government’s share of revenue, and Sh35.66 billion from proceeds of loans and grants from development partners,” the Treasury said in its Budget Policy Statement 2024.
Although mining has been active in the country for more than 50 years, productivity has remained low, with large-scale operations limited to soda ash, mineral sands and, from 2013, titanium ore in Kwale.
The country is also believed to have significant deposits of copper, niobium, manganese and rare earth minerals, which remain largely under-exploited, dwarfing the mining sector's contribution to the national economy.
Kenya is also grappling with illegal exploration and extraction of minerals, which is punishable by a fine of up to Sh10 million or two years imprisonment, or both, under the Mining Act, 2016.
Smuggling of minerals, on the other hand, is classified as an economic crime and carries a fine of up to Sh1 million or 10 years imprisonment.
