Licensing stand-off hits mining growth in Kenya

Thursday June 29 2017

Mining Cabinet Secretary Dan Kazungu. Kenya

Mining Cabinet Secretary Dan Kazungu. Kenya estimates that the mining sector has potential to contribute about 10 per cent to national revenues annually but currently only contributes a paltry one per cent. PHOTO FILE | NATION 

By NJIRAINI MUCHIRA
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A new controversy over licensing has hit Kenya’s mining sector, threatening efforts to transform the industry into a major economic contributor.

Mining Cabinet Secretary Dan Kazungu is yet to inaugurate the board mandated to offer advice regarding issuance of licences and permits.

President Uhuru Kenyatta had appointed Abel Chumba chairman of the Mineral Rights Board, but failure by the CS to inaugurate the board has left the renewal and issuance of new licences in limbo.

Mining companies operating in Kenya have not had their licences renewed since 2015 and are operating under a gazette notice, making it hard for them to source funding for exploration or even make long-term commitments.

Failure by the CS to inaugurate the board is attributed to internal wrangling at the ministry and opposition to Mr Chumba’s appointment. Until his elevation, Mr Chumba was a senior inspector of mines in the ministry.

Lost opportunity
So far, 129 companies have applied for exploration licences/permits to the Department of Mines while another 77 have applied for a dealers’ licence/permit.

But the Department cannot process or issue any licences because the Mining Act, 2016, confers most of those the powers on the Cabinet Secretary, based on the board’s written advice.

On this, Mr Kazungu could not be reached, while Principal Secretary Dr Ibrahim Mohamed said only the CS declined to comment on the issue.

The board, which comprises nine members including the Treasury PS, has the responsibility to bring sanity in the issuance of licenses to facilitate development of the industry.

According to Section 31 of the Mining Act, the board’s core mandate is to advise the Cabinet Secretary on issues relating to granting, rejection, retention, renewal, suspension and revocation of licences.

“The Cabinet Secretary, on the recommendation of the Mineral Rights Board, may grant, deny or revoke a mineral right,” says the Act, which came into law last year in May.

Under the Act, investors in the mining sector can be granted licences and permits for large scale operations including reconnaissance, prospecting, retention or mining licences or small-scale operations that include prospecting or grant of a mining permit.

The Act stops the trend of licensing speculators and imposes tough conditions for any investor eyeing opportunities in the sector.

According to Kenya Chamber of Mines chief executive officer Moses Njeru, it is ironic that Kenya has a licensing stand-off even as government tries to grow the sector.

“Failure to issue investors with licences is making Kenya lose many opportunities. This is why this sector is not growing,” he told The EastAfrican.

He added that with the mining sector in Tanzania in upheaval following a ban on exports of unprocessed minerals, Kenya is losing an opportunity to place hers on a growth trajectory.

In March, Tanzania banned raw mineral exports to enforce value addition in accordance to the Mineral Policy of 2009 and Mining Act of 2010. The ban has resulted in massive losses, a freeze in jobs by mining companies and a fall in new investments.

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