Inside Muthama’s court battle for gemstone export

Johnstone Muthama (centre) at a past press briefing. PHOTO | DENNIS ONSONGO 

By GALGALLO FAYO

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Summary

• Johnson Muthama says in court papers that he is incurring losses worth millions of shillings after the Mining secretary withheld the export licence for his firm, Rockland Kenya Limited.
• The then Mining secretary Dan Kazungu paralysed Rockland Kenya operations when he published a list of companies licensed to deal in the mining and exportation of minerals, excluding Mr Muthama’s company.
• Mr Muthama claims that all three firms are new entrants into the mining business and casts doubt on their capability.

Details of former Machakos senator Johnson Muthama’s fight for his lucrative mining business have emerged from the courts, offering a glimpse into what has been a hidden but vicious war with sector regulators.

Mr Muthama says in court papers that he is incurring losses worth millions of shillings after the Mining secretary withheld the export licence for his firm, Rockland Kenya Limited.

The then Mining secretary Dan Kazungu paralysed Rockland Kenya operations when he published a list of companies licensed to deal in the mining and exportation of minerals, excluding Mr Muthama’s company.

Mr Kazungu in September 2017 wrote a memo to the Mining principal secretary and the director of mines indicating that only three companies were licensed to deal in gold and carry out ‘mineral dealings other than gold’.

Mr Muthama wrote a protest letter to Mr Kazungu, citing the predicament facing his firm after the September directive but got no substantive response forcing him to move to court.

“We fail to understand how the said companies, which are not known and or never made an impact in the mineral sector in Kenya, managed to get a head start over companies that have been in Kenya’s mineral sector for a period in excess of 10 years,” Mr Muthama said in a letter addressed to Mr Kazungu.

Mr Kazungu’s September 7, 2017 memo set new conditions that mining companies were required to comply with, and identified Aurical Kenya Limited, Modogashe Agencies Limited and Match Electricals Limited as the duly licensed firms in the business.

Mr Muthama claims that all three firms are new entrants into the mining business and casts doubt on their capability.

He says Rockland had been kept waiting for three years for renewal of its export permit on grounds that the ministry was awaiting the rollout of the new Mining Act before issuing fresh licences.

It was therefore surprising to find new entrants had been given priority over established firms without making clear the criteria used to issue the licences, he adds.

“Your notice sounds like we were going back to the situation where exclusive licence was given in the 1990s to Goldenberg International. This is a situation that scares everybody,” he told Mr Kazungu.

READ: Muthama’s mining firm denied licence

The politician also accuses the Mining ministry of bungling the process of lobbying for the hosting of International Colored Gemstone Association (ICA) 2019 conference, which was to take place in Africa for the first time.

Organisers of the event, which brings together over 2000 global mineral dealers, instead settled for Thailand. Mr Muthama says withdrawal of his company’s licence has cost it about Sh40 million in the period between October and January 2018.  

Justice George Odunga on February 16 suspended the directive by the minister, pending the hearing and determination of Mr Muthama’s suit.

The businessman says his firm was given a special mining lease in 1991 and the same was extended in 1996, and again renewed in 2012 to 2033.

Rockland says it has complied with all requirements and paid taxes and other fees to the government based on the exported minerals.

The firm further says that it has invested heavily in work permits for qualified personnel to help run the business, a move it claims is occasioning it heavy losses.

Rockland Kenya Limited was registered on August 14, 1991 and granted Special Mining Lease No 19 of 1991 a day later.

Mr Muthama acquired the company from American geologist John Saul, and acquired a licence to mine and export ruby (a precious gemstone) in Taita.