Probe team reveals mining licences were awarded illegally

Mining Cabinet secretary Najib Balala revoked all licences that were awarded between January and May. FILE  NATION MEDIA GROUP

By John Gachiri

In Summary

• The taskforce found that 15 firms had been issued licences while 28 others were in various stages of being awarded licences.

Most of the mining licences that were issued between January and May this year were awarded illegally, a taskforce has revealed.

The taskforce, which was set up by Mining Cabinet secretary Najib Balala to verify the licences issued in the first five months of the year, has released an interim report that shows “glaring” irregularities.

“Some licences were issued without proof of the company’s ability to put them to use, while others did not demonstrate adequate financial capacity,” said a statement from the Mining ministry.

Other firms were issued licences despite lacking registration records, bank statements, not having paid statutory fees to the ministry and in some cases licences were issued without consent from local authorities.

The taskforce, chaired by Mohammed Nyaoga, found that 15 firms had been issued licences while 28 others were in various stages of being awarded licences.

Mr Balala revoked all licences that were awarded between January and May, saying that the rush just before the March 4 General Election was suspect.

He also suspended Moses Masibo, the commissioner of mines. The licences were to be reviewed and the affected firms were to make submissions to the taskforce, but only slightly more than half complied with the directive.

“The report reveals that only 22 companies of the 43 whose licences were suspended made their submissions to the task force,” said the statement.

Cortec Kenya, which has mining rights on the Mrima Hills Project located in Kwale County and are estimated to hold as much as $100 billion worth of rare earth minerals and is one of the firms that is affected, said that it did not make submissions to the taskforce.

Cortec managing director Jacob Juma said on Sunday that the firm only informed the taskforce that it had sought remedy from the courts. “We only wrote to them a letter stating that we are in court,” Mr Juma told the Business Daily.

Cortec Kenya has sued Mr Balala for cancellation of its licence. The case is to be decided by a panel of between three to five judges, but in the meantime the courts have ordered that no other firm be awarded any licence for the Mrima Hills Project.

(READ: Cortec now blames China over revoking of mining licence)

“The court has granted an injunction restraining the ministry from issuing any licence for the area affected by Cortec Mining Kenya’s existing licence at Mrima Hill to any other party whilst the matter is before the Court,” says a statement by Pacific Wildcat Resource, which has a 70 per cent stake in Cortec.

Pacific Wildcat Resources, which is listed on Canada’s TSX Venture Exchange, has felt the effects of the cancellation as seen by its share price which dropped by 50 per cent after the minister revoked the licence in August.

The report said that the ministry has to find policies that protect Kenya’s economic interest and encourage investors to the capital intensive sector.