Kenya has raised the application fees for large-scale miners and prospectors ninefold and recruited more inspectors in a bid to keep away speculators and free up space for big-ticket investors.
Large-scale investors are required to part with non-refundable fees of Sh500,000 when bidding for licences and permits to explore and extract minerals, following a change in regulations, compared with Sh50,000 previously.
Mining Principal Secretary (PS) Elijah Mwangi says the 900 percent surge in fees under Mining (Licence & Permit) (Amendment) Regulations will free up space for big-ticket investors who are struggling to get rights to explore and extract Kenya’s minerals because of firms holding onto licences for speculation.
“Going forward, somebody will take time because you don’t want to lose money before making the applications. That will lessen our workload of having 100 applications whereas 90 percent are incomplete,” Mr Mwangi said.
“Those speculators deny the government some serious investors because if you access our [mining] cadastre, you’ll find everywhere has been taken.”
He added: “If you are an investor, you may come and ask that you want to invest $100 million in manganese extraction, for example. But we don’t have space because everywhere and anywhere has been taken. So they [speculators] are denying us serious investors because they are holding somewhere doing nothing.”
Kenya Chamber of Mines (KCM), an industry lobby, has, however, protested the enforcement of the regulations, saying that views from stakeholders during the public participation process were not considered.
Patrick Kanyoro, the KCM chairman, says the jump in application fees gazetted last June but enforced “about two to three weeks ago” is “unrealistic and impractical”.
“The government doesn’t do business and if we make it impossible for some people to do business, what will happen is that you’ll have raised the fees and nobody will be paying it. This is just an application fee... it is extremely expensive,” Dr Kanyoro said.
“The argument they [Mining ministry] advanced is that they don’t want jokers and speculators in the industry. Almost all businesspeople are speculators and there’s nothing wrong in speculating in business. So it is not negative to speculate.”
The enhanced fees, the State Department for Mining maintains, seek to lock out bids from speculators who have explored the “lower fees” in the past by applying multiple times even after their bids are thrown out in the hope of being awarded mineral rights permits to sell to the highest bidder in turn.
This came on the back of ministry data showing that more than 90 percent of 1,161 applications for mineral rights processed since Kenya re-opened the licensing process last October, did not meet the threshold in the documentation required.
The ministry says it has revoked nearly 2,000 applications lodged in the online portal for lacking some or most of the supportive documents such as company registration, ownership, proof of funding, as well as tax and environmental compliance certificates since late last year.
Technical teams, PS Mwangi adds, are under firm instruction to have a “sit-down” with successful bidders to ensure they “justify technical and financial capability to do mining or prospecting” before being awarded licences.
The Mining Act 2016 requires that successful bidders for mining rights start work within six months after the award, failure to which they are required to forfeit the funds they had indicated in their proposals.
“There’s no time for you to get a licence and start walking around looking for someone to buy into your licence,” Mr Mwangi said.
“Our compliance and inspectorate team will be very much alive because we have facilitated them. We have procured 18 vehicles for inspectors of mines to move around to ensure that anybody with a mining licence is working according to the conditions of the licence. We have also hired 76 more inspectors of mines.”
Kenya deployed a special police unit to battle widespread illegal exploration and exploitation of minerals after it restarted processing permits and licences in October 2023 following a nearly four-year moratorium from December 2019.
The Mining Police Unit swung into action under the command of the Inspectorate of Mines to enhance compliance with regulations in the underperforming sector.
Illegal exploration, exploitation, and dealing in minerals is penalised through a fine of up to Sh10 million or a jail term of two years or both under the Mining Act 2016.
Smuggling of minerals is, on the other hand, classified as an economic crime which attracts a fine of up to Sh1 million or 10 years in prison upon conviction.
Though mining activity has been present in the country for over 50 years, productivity has remained low, with a scale of operations limited to soda ash, mineral sands, and from 2013 Titanium ores in Kwale.
The country is also believed to hold significant deposits of copper, coltan, niobium, manganese, and rare earth minerals which largely remain under-exploited, dwarfing the mining sector’s contribution to the national economic output.
“We have cases where we have issued licences, but essentially nothing is happening on the ground,”Mr Mwangi said. “For us to grow as a country, we need investment in explorations. We need people who will come and bring money so they can do explorations.”
The Ruto administration opened the door for investors to resume prospecting on all construction and industrial minerals such as limestone, gypsum, and diatomite.
Prospecting and exploration of strategic minerals such as uranium and cobalt are, however, being approved on a case-by-case basis guided by Mining (Strategic Minerals) Regulations, 2017.
