Miners in Kenya have put the government on the spot for withdrawing $28.5 million in public funding for a survey to map the country’s mineral resources in favour of financing from China.
The Kenya Chamber of Mines fears dusting off a controversial pact signed in 2013, which gives China’s Geological Exploration Technology Institute (GETI) exclusive rights to do the geophysical survey with funding from Beijing, amounted to ceding control of the country’s resources.
“China will end up controlling the mining sector if they fund and carry out the survey because they will have raw data on the country’s mineral wealth,” Kenya Chambers of Mines chief executive officer Moses Njeru told The EastAfrican.
However, GETI did not carry out the mapping in 2013 after China said it would only finance the survey on condition that Kenya grant its firms priority in mineral exploration.
The airborne survey is critical because it will provide detailed geological mapping and mineral resource assessments needed to drive the growth of the nascent sector.
The survey is estimated to cost $70 million and will be carried out over 30 months.
“Kenya is a greenfield of minerals but for investors to come into the country, they need credible data that can inform investment decisions,” said Mr Njeru.
However, Principal Secretary in the Ministry of Mining Ibrahim Mohamed said the government had not made a final decision on the funding of the survey and Treasury was reaching out to other financiers.
“Discussions are still ongoing with Treasury for funds from other sources like the World Bank,” he told The EastAfrican.
He added that to guarantee the credibility of the survey, the Ministry had set stringent standards that the company that wins the contract must adhere to.
Treasury recalled funds
In October last year, British and Canadian consultancy firms International GeoScience Services and Paterson, Grant and Watson won a consultancy contract to oversee the survey.
The firms were to provide consultancy services for development of specifications, terms of reference and supervision of the survey.
Last year, the National Treasury recalled funds that had been allocated for the survey in the supplementary budget as part of plans to scale down expenditure by $1.7 billion.
Mining stakeholders say Kenya should emulate its neighbours Tanzania, Uganda and Rwanda, whose governments fully funded the geophysical surveys to guarantee sovereignty of the data.
In Tanzania, the government contracted BGS International to support an airborne survey under the $55 million Sustainable Management of Mineral Resources Project, which was funded by a loan from the World Bank.
In Uganda, the government set aside $44.7 million for the survey, geological mapping and resource assessment while in Rwanda the government contracted Paterson, Grant & Watson Ltd to undertake the process.
“For Kenya to fully exploit and benefit from its mineral wealth, the sovereignty of data is paramount because it is a guide for investments,” said Mr Njeru.
Kenya is believed to have numerous deposits of minerals but the lack of a geological database has impended exploitation.
According to the Ministry of Mining, the mining sector has the potential to contribute about 10 per cent annually to gross domestic product. It currently only contributes one per cent.
It is estimated that Kenya could earn $140.6 billion cumulatively from the sector based on proven and estimated oil and mineral resources.
Currently, the known minerals in the country are gold, zinc, copper, coal, dimension stone, gemstones, soda ash, fluorspar, diatomite, ruby, carbon dioxide, oil, titanium, mercury and gypsum.
In June last year, the country enacted a new mining law in an effort to improve the country’s regulatory environment and make it more attractive to investors.
The new law enables Kenya to strike a balance between investor interest, public interest and financial obligations to the mineral rights holders.
In 2015, a report by Fraser Institute of Canada ranked Kenya’s mining sector among the bottom 10 in the world in terms of attractiveness for investors due to concerns on issues like the regulatory environment, security, political stability and trade barriers.