Investors worry over fate of cancelled mining licences

Confusion has hit the mining sector as investors are yet to get a word from the government on the fate of their licences, which were revoked last year.

The industry lobby group, the Kenya Chamber of Mines, says Mining Cabinet secretary Najib Balala is yet to constitute a committee to implement the recommendations of the report by a task force he formed to scrutinise the 43 affected licences.

The task force, which was led by lawyer Mohammed Nyaoga, submitted its report to the Mining Cabinet secretary last January.

The investigating team concluded that none of the affected firms had followed the law in acquiring their permits.

“There is a lot of uncertainty among investors about what happened to their licences. We have talked with the ministry and even met the Cabinet secretary in April, but we have not been able to get any concrete decision regarding the revoked licences,” said Monica Gichui, the chief executive officer of the Kenya Chamber of Mines.

In a last week’s report focusing on the recent developments in the local mining sector, American law firm King & Spalding was quoted as warning that with last year’s cancellation of prospecting and mining licences, the government risked paying billions in compensation to mining companies due to its disregard of bilateral agreements on investment.

It is understood that the Kenya Chamber of Mines and individual miners have written to the mining ministry demanding to know the status of the investment in the revoked licences, but this information is yet to be made available.

“We wrote to the Cabinet secretary asking the way forward regarding the licences. We want a concerted effort so that people are not victimised. However, we have not had any success in this,” said Ms Gichui.

Task force recommendation
Speaking in an interview with the Smart Company, Mr Balala admitted that he had received the report from the task force, but did not say what action the ministry planned to take.

He said the ministry had stopped the process of issuing new licences pending enactment of the draft mining law that is currently before Parliament and which seeks to remove the mandate to award licences from the Commissioner of Mines to a mineral licensing board.

The Ministry of Mining has also introduced an online system through which application and processing of prospecting and mining licences will be done to stem loss of revenue to the government.

“The Nyaoga team confirmed that all the affected companies did not follow the law and that the prospecting licensing committee approved the licences illegally. That is why we have abandoned the process of processing licences,” said Mr Balala.

Among the companies whose licences were revoked is Cortec Mining Kenya, which was licensed to mine niobium and rare earth metals in Kwale estimated to be worth billions of shillings.

Base Titanium, currently exporting minerals from Kwale, and Dangote Mining that is associated with Nigerian billionaire Aliko Dangote, were also affected.

Balala locked horns with industry players, even ending up in a legal battle with Cortec, after the licences were cancelled.

Series of demands

Last year, the Kenya Chamber of Mines accused the Mining Cabinet secretary of “going against the spirit of collaboration between the industry and the government.”

This led to a series of demands from the mining industry lobby group, including demand for representation in entities created to evaluate investors in the sector.

Last year, the value of mineral output declined by 28.6 per cent from Sh27.6 billion in 2012 to Sh19.7 billion, according to data from the Kenya National Bureau of Statistics.