The law, which was enacted last year but became effective May 9 through a backdated gazette notice, transfers ownership of all movable and immovable property previously held by a mining company to the government.
Under the regulations, companies are required to maintain an accurate register of their movable and immovable assets and submit the same to the government every year.
Kenya’s mining sector weakened last year as earnings fell to Sh23.3 billion from Sh23.8 billion the previous year.
A decline that has been attributed to poor performance in the fluorspar sub-sector following the closure of an Eldoret-based factory.
Titanium, however, cemented its position as Kenya’s top mineral earner with Sh13.3 billion, up from Sh12.9 billion in 2015.
A mining company has strongly opposed a new law that requires firms to surrender their assets to the Kenyan government upon the expiry of their operating licences.
The law, which was enacted last year but became effective May 9 through a backdated gazette notice, transfers ownership of all movable and immovable property previously held by a mining company — including roads, power installations, schools, and machinery — to the government.
It means all licensees, including foreigners, are likely to leave their mining sites empty-handed upon the termination of their licences.
One of the mining firms yesterday described the provisions of the Mining (Use of Assets) Regulations as illegal as they infringe on their rights to decide what to do with their property.
“In particular, the intention of the Act and regulations to vest immovable and movable assets without consideration of full and fair compensation as required under Article 40 of the Constitution means this part of the regulations could be interpreted as the nationalisation of assets,” said Simon Wall, the external affairs manager at the Kwale-based Base Titanium.
Under the regulations, companies are required to maintain an accurate register of their movable and immovable assets and submit the same to the government every year.
Information in the register must include descriptions, cost, year of purchase, and net book value of the assets.
Upon the termination or surrender of operating licences, the Ministry of Mining is required to issue a “written notice that the holder has ceased to be the owner of the property” and go ahead to share the goods among relevant government agencies.
The regulations demand that all immovable property such as schools built and operated by a mining company be handed over to the Ministry of Education while roads will go to the Ministry of Transport.
The centre-piece of the regulations is that all immovable property will be appropriated by the national government while movable assets whose costs have been recovered through tax deductions will be vested on county governments.
The counties will also have first rights to buy all other movable property.
Mining firms may, however, seek permission to remove movable property from a mining site if such equipment is to be used in another mining operation in the country.
In cases where immovable property does not sit on public land, the State will strike a deal to either acquire or lease the land from the owner.
The new regulations also require companies to maintain a list of any hazardous materials and excavations that remain on the mining site upon expiry of the licence. Mr Wall contends that miners should be given the right to determine what happens to their property and that any takeover of the same must be based on the market value of the assets.
Machinery at Base Titanium’s site at Nguluku Maumba in Kwale. FILE PHOTO | NMG
Mining companies operating in under-developed areas usually spend billions of shillings building infrastructure and supporting local communities.
Base Titanium, for instance, says it has invested Sh3 billion in legacy infrastructure around the Kwale mines, including a power sub-station that is now managed by Kenya Power.
Tata Chemicals’ mining activities in Kajiado county have spurned the growth of a town around Lake Magadi that is fully supported by the mining firm.
The new regulations represent fresh efforts by the government to increase oversight in the mining sector.
In addition, Kenyan authorities have published regulations requiring mining companies to prioritise local companies in their sourcing of goods and services.
The regulations, for instance, require the mining firms to buy insurance locally or ask for special permission to buy from international markets besides working with local engineering, accounting and law firms.
Kenya’s mining sector weakened last year as earnings fell to Sh23.3 billion from Sh23.8 billion the previous year — a decline that has been attributed to poor performance in the fluorspar sub-sector following the closure of an Eldoret-based factory. Earnings from gold and soda ash also dipped. Titanium, however, cemented its position as Kenya’s top mineral earner with Sh13.3 billion, up from Sh12.9 billion in 2015.
