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Kenya in another attempt to carry out mineral survey

Saturday January 02 2016
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Artisan miners in Kakamega County in Kenya dig for gold. Kenya has revived plans to conduct an aerial geophysical survey to identify mineral deposits in order to attract investors. PHOTO | FILE

Kenya has revived plans to conduct an aerial geophysical survey to identify mineral deposits in order to attract investors.

The Ministry of Mining says the survey, which is expected cost Ksh6.5 billion ($65 million), is intended to provide detailed geological mapping and mineral resource assessments to drive the growth of the extractives industry.

Kenya’s fresh plans come after three years of unfruitful discussions with China’s Geological Exploration Technology Institute (GETI) to undertake the exercise with a grant from Chinese Government.

Kenya and GETI signed a memorandum of understanding three years ago but the project never took off because of lack of funds.

GETI of Jiansu Province was to undertake an aerial survey for 24 to 36 months at a cost of $67 million to $70 million, partly funded by the Export-Import Bank of China. The bank has not given a funding commitment, prompting the Kenyan government to start the project afresh.

Mining Cabinet Secretary Dan Kazungu said reviving the aerial survey project, which covers the entire country, is essential for the government to have a detailed database of potential minerals to be marketed to local and foreign investors.

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“We will ask Treasury to provide either full funding or money in tranches for an airborne geophysical survey as a Kenyan-driven process because the information cannot be left in the hands of foreigners,” he said.

Ground geological mapping and geochemical surveys will follow the aerial survey to verify the availability of the resources. Data designed to enhance accuracy of companies exploring the minerals will be made available to investors at a fee.

Kenya has discovered oil, gold and rare earth minerals among other resources but the extractives sector contributes less than one per cent of exports. Tanzania’s mining sector contributes 4 per cent to the gross domestic product.

BGS International was contracted in 2014 to support an airborne survey of 612,000 kilometres in northern Tanzania under the $55 million Sustainable Management of Mineral Resources Project funded by a loan from the World Bank.

Aerial survey

Uganda’s aerial survey started with data acquisition by Fugro Airborne in December 2006 for about 18 months. The government in 2004 set aside $44.70 million for the survey, geological mapping and resource assessment.

Uganda’s President Yoweri Museveni said during the Mineral Wealth Conference held on October 1, 2014 in Kampala that the aerial survey covering 80 per cent of Uganda and led to the discovery of over 200 million tonnes of iron ore reserves.

READ: Study shows Uganda’s vast mineral riches

He said investors involved in gold prospecting using new airborne data identified new targets in the eastern part of Kisita mining camp and new targets at Kamalenge-Kyasampawo confirmed to bear about five million ounces.

Gulf Resources Ltd used newly generated airborne geophysical data to carry out additional exploration work and established reserves rose from the previous five million tonnes to the current 54.9 million tons of vermiculite.

“With the increased reserves established, the deposit is considered to be world class and operators of the mine have recently installed a new plant with production capacity of 80 tonnes per day,” said President Museveni.

Mineral occurrence

Rwanda in April 2009 contracted Paterson, Grant & Watson Ltd of Canada to interpret newly acquired airborne survey and integrate it to existing mineral occurrence data. The final report was presented in January 2010.

Mr Kazungu said about 4 per cent of Kenya has mineral occurrence due to the activities of private firms and added that exploration is being hampered by lack of modern data on resource mapping, making the airborne survey vital.

“The aim of an airborne survey with satellite imagery studies is determine the mineral potential. Mining has been adopted as an anchor of the Vision 2030 economic blueprint to propel Kenya to middle income status,” he said.

In August 2015, Kenya hired global management consulting firm, McKinsey & Company to design a 20-year strategy for mining sector soon to be presented to the government as part of the development of the industry.

“This national strategy will position Kenya properly. We want to have Kenya as a regional hub,” said Mr Kazungu.

Mining Bill

Investors are waiting for the Mining Bill of 2015 currently with the arbitration committee of the Senate and National Assembly to be enacted to create a new regulatory framework for Kenya’s extractives industry.

Mr Kazungu said the Ministry of Mining had initiated discussions with National Assembly Speaker Justin Muturi to intervene and fast-track the process of the Mining Bill getting presidential assent early this year.

“Kenya is using the Mining Act Cap 306 of 1940 to regulate minerals exploration but the Mining Bill, once enacted, is expected to make the country an attractive investment destination,” he said.

The Bill provides for local communities residing in areas where minerals are extracted to get 10 per cent of the resource, and county governments 20 per cent with national government retaining 70 per cent.

Royalty rates set to be embedded in the Mining Bill are expected to increase government’s earnings from the minerals sector to at least $15 million in 2016 going forward from $210,000 in 2012.

The new code will set royalty rates in terms of gross sales value at 1 per cent for industrial minerals like gypsum and limestone, diamonds 12 per cent, gold 5 per cent and coal, titanium ores, niobium and rare-earth minerals 10 per cent.

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