Move to ease mining laws sparks fresh controversyMove to ease mining laws sparks fresh controversy

A titanium mining site at Maumba in Kwale County. The government’s decision to revise the controversial rule requiring foreign mining firms to cede 35 per cent ownership to local share-holding has drawn mixed reaction. Photo/File 

By EDWIN MUTAI

The government’s decision to revise the controversial rule requiring foreign mining firms to cede 35 per cent ownership to local share-holding has drawn mixed reaction amid calls for bigger benefits for communities living around project sites.

(Read: Foreign investors win battle for full control of mining operations)

Mining Secretary Najib Balala said last week the law introduced last October is among the key changes proposed to the Mining Bill being refined at the Attorney-General’s office. “I am keen to confirm that the Government of Kenya is repealing the 35 per cent local ownership rule after the completion of the mining Bill,” Mr Balala told a conference in London.

The rule introduced to help maximise the benefits from the fledgling sector triggered anxiety among
foreign-owned mining firms. Their main concern was the fate of investments that they had already made and how these would be shared with yet-to-be identified local partners. Kenya Investment Authority (KIA) managing director Moses Ikiara said the controversial local-ownership law risked deflecting investment from the country if not reviewed.

“How do you ask investors to come in yet you are imposing a 35 per cent local ownership requirement? Although there is a strong constituency who feel there should be local protection or ownership, we need to consult and look at best practices elsewhere and come up with an agreed position with regards to mining,” he told the Business Daily.

(Read: Clarify mining policy)

Mr Balala said the government would repeal the law to restore investor confidence in the competitive sector.

“A vibrant mining sector will create jobs and generate significant revenues for the government. We are here to crowd investors in and not out,” he said.

Nominated senator Agnes Zani however urged the government to ensure communities living around project sites benefited from the proceeds of the business. “The Mines and Minerals Bill is suggesting an 80 per cent allocation of proceeds to the national government and 20 per cent to the community while the 2012 Bill suggests 75 per cent to the national government and 25 per cent to the community. We need a harmonised structure so that communities don’t lose out,” she said.

Dr Zani urged the government to also review the royalty charges on key minerals to ensure the country benefited from its resources.


A draft of the Bill also proposed to increase royalties on minerals such as gold threefold. It also offered to have mineral-specific structure for royalty payments and charges, deviating from the current law where royalties are pegged at three per cent for all categories of gems. Kenya has more than 300 local and foreign firms prospecting for minerals or producing on a small scale, up from less than 30 two years ago, Kenya’s Chamber of Mines says.

The country has proven deposits of titanium, gold and coal and is also estimated to hold deposits of copper, niobium, manganese and rare earth minerals. Africa-focused gold producer Goldplat early this month said it had suspended its Kenyan operations to focus on cash-generating activities in South Africa and Ghana, due to low gold prices and uncertainty over the controversial law.