Balala set to lose power on mining licences, fees

Politics and policy

Mining secretary Najib Balala. PHOTO | FILE 

By EDWIN MUTAI, emutai@ke.nationmedia.com

In Summary

• Mining secretary Najib Balala will also lose power to set royalties in a county with proven deposits of titanium, gold and coal.
• Last year, Mr Balala revoked 31 licences to various companies on grounds that they were issued under unclear circumstances.
• 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.

Mining secretary Najib Balala will lose power to issue and arbitrarily cancel mining licences if the National Assembly approves changes to the Mining Bill 2014.

Committee on Environment and Natural Resources chairperson Amina Abdalla has proposed the creation of a mineral rights board.

The minister will also lose power to set royalties in a county with proven deposits of titanium, gold and coal.

The nine-member board will advise and give recommendations in writing to the minister on granting, rejection, retention, renewal, suspension, revocation, variation, assignment, trading, tendering or transfer of mineral rights agreements.

The board will comprise a chair, appointed by the president, three principal secretaries, the chairman of the National Land Commission and directors of mines and geological surveys.

Two mining experts, appointed by the Cabinet secretary, will also sit on the board to give the private sector a say in the administration of licences.

The Mining Bill 2014 will be scrutinised by the committee of the whole House on Tuesday before presentation to President Uhuru Kenyatta.

“The functions of the Mineral Rights Board shall be to advise and give recommendations, in writing, to the Cabinet secretary on cessation, suspension, or curtailment of production in respect of mining licences, fees, charges and royalties payable for mineral rights and any matters which under this Act are required to be referred to the Mineral Rights Board,” the amendment moved by Ms Abdalla reads in part.

The board will make recommendations to the minister on areas suitable for small -scale artisanal mining, areas which mining operations may be excluded or restricted and the declaration of certain minerals as strategic.

The mining sector is a relatively small contributor to national output although its revenues are expected to grow as new mines come on board. Kenya has titanium, oil, gold and coal deposits as well as significant reserves of copper, niobium, manganese and rare earth.

Last year, Kenya earned Sh19.6 billion from mining, down from Sh27.5 billion in 2012, hurt by lower gold prices that cut earnings from the precious metal 45 per cent to Sh7.4 billion.

Last year, Mr Balala revoked 31 licences to various companies on grounds that they were issued under unclear circumstances.

READ: Balala now cracks the whip on mining companies

He also raised royalties. Royalties on gold increased to five per cent of gross sales value from 2.5 to three per cent. Royalties for rare earth, niobium and titanium ores were increased to 10 per cent of gross sales value from three percent previously.

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 said. Among companies prospecting in Kenya is Cortec Mining Kenya and Base Resources