Kenya has launched an audit of the licences of mining companies to establish how they were issued.
The Ministry of Mining says the licensing regime will be streamlined to ensure the government gets value from its mineral resources.
Already, the government is battling lawsuits at the International Centre for Settlement of Investment Disputes filed by mining companies seeking compensation for revocation of licences.
The government cancelled the licences of 43 companies, warning that those that obtained licences illegally stood revoked.
While stakeholders in the mining sector were upbeat that the inauguration of the Mineral Rights Board in July 2017 would end the problems of licensing that have characterised the mining sector, the board is hampered by lack of funds.
According to Section 31 of the Mining Act, the board — comprising nine members, including the Treasury Principal Secretary — has as its core mandate to advise and recommend to the Cabinet Secretary on issues relating to granting, rejection, retention, renewal, suspension and revocation of licences.
“The board is operational though it is facing financial constraints and cannot discharge its functions effectively,” said Mining Principal Secretary John Omenge.
He added that Kenya has resolved not to renew or issue new mining licences and permits until it resolves all pending issues and puts in place a smooth licensing regime.
Among the issues include the auditing of all licences issued in the past on the basis that majority were issued irregularly.
Mining companies operating in Kenya have not had their licences renewed since 2015 and are operating under a gazette notice. This has made it impossible for them to source for exploration funding or enter into long-term commitments.
By end of last year, a total of 129 companies had presented applications for exploration licence/permit to the Department of Mines while another 77 had applied for a dealers’ licence/permit.
According to the Mining Act, investors in the sector can be granted licences and permits for large scale operations, which include reconnaissance, prospecting, retention or mining licence or small scale operations that include prospecting or mining permit.
The Act ultimately locks out speculators by imposing tough conditions for investors eyeing opportunities in the sector. Streamlining the licensing regime is part of the reforms the government is undertaking in the nascent mining sector.
Other reforms include formalising artisanal and small scale mining activities to save miners from exploitation by middlemen and ensure they are able to access support services like market linkages, technology and training on environmental and safety measures.