Taxpayers to foot Sh205m bill in mining licence suit

Taxpayers will foot a Sh205 million bill in legal fees to lawyers who represented the Ministry of Mining in a case filed by a Canadian firm, Cortec, following the cancellation of its mining licence in 2016.

Parliament has however failed to allocate the money in the budget policy statement (BPS) despite the Environment and Natural Resources committee recommending an additional Sh205 million to foot the pending bill.

“The committee on Environment and Natural Resources further recommends the allocation of Sh205 million to the Ministry of Mining for the pending bills accrued by the government through payment of legal fees for the Cortec case,” Kareke Mbiuki who chairs the committee said in a brief attached to the report of the Budget and Appropriations Committee (BAC) that MPs approved last week.

Cortec’s prospecting licence for Niobium and rare earths at Mrima Hills in Kwale was revoked by the then Mining minister Najib Balala months after it obtained a National Environmental Management Authority (Nema) permit and announced a Sh44 billion investment in the venture.

Cortec is among several other global mining firms that are demanding a total of Sh334 billion from the government as compensation for cancelling their licences.

About 10 different cases have been filed or are ongoing at the International Centre for Settlement of Investments Disputes (ICSID) based in Dubai regarding the revocation of their exploration permits. One of the disputes involves a Sh200 billion claim by Cortec Kenya and a Sh61.8 billion claim by WalAm Energy Inc.

READ: Global mining firms sue Kenya for Sh334bn compensation

Other firms that lost their licences include Sirmonet Mineral Kenya, Yongtai Mining Company, Balham Trading Company, Ololunga Mining and Industrials as well as AQ Kenya Gold Ltd.

While revoking the mining licences, the government said Cortec’s 21-year licence was unprocedurally issued and was against regulations banning the exploration of minerals in a gazetted forest.

The government has maintained that the licence awarded to the Canadian firm was revoked because it was invalid in law.

The ministry said Cortec had not obtained approval from the Nema and the Kenya Forest Service before applying for the mining license.

Cortec moved to court to challenged Mr Balala’s decision to revoke its licence to mine Niobium, which was expected to start exporting in 2016.

The firm claimed it had received a letter from Nema and KFS to the effect that it had approved the proposed mining project, but that it would be valid for 24 months from the date it was to commence mining.