Kenya to form a mining corporation, says Balala – by Mwaniki Wahome ([Kenya]Daily Nation – May 26, 2013)

A national mining corporation will be formed to act as the investment arm of the government where joint venture with the private investors is involved. This is one of the recommendations in the envisaged mining Bill that is meant to spur growth in the industry.

This was disclosed as stakeholders got closer to striking a deal on contentious issues related to sharing the income realised from mining activities in the country.

Mining Cabinet Secretary, Mr Najib Balala, said after getting Cabinet approval, the public and other stakeholders’ views will be included before the proposed law is taken to Parliament for debate and adoption.

“The national mining corporation is a strategic vehicle through which the government will invest in the mining industry with the private sector,” said Mr Balala. An earlier recommendation was to form a mining authority, but the idea was shelved after it was found that it would not facilitate the commercial interests of the country in the mining industry.

Experts have faulted the current Mining Act, that was put in place by the British colonial regime for being rigid, hence stifling mineral exploration and, at the same time, failing to spell out how benefits of such wealth are to be shared especially with the communities where the resources are found.

Broadly, stakeholders who met last week agreed that the central government should take up 70 per cent of the mining activity proceeds, county government 25 per cent and local communities 5 per cent.

Benefit many Kenyans

“There has been a heated debate on the sharing of the mining resources and our proposal is to review the angle (taken by stakeholders) to allow a free carry of 10 per cent for the (central) government,” said Mr Balala.

He said the new law has a provision for the government to take up 35 per cent of shares in mining companies, a provision that would benefit many Kenyans.

This is the first time the law is attempting to state clearly the stake locals can lay claim on the mineral resources that are to be found in their backyard.

Experts have, however, said the sharing formula is bound to change as it does not factor in the share of private investors, who have their own profit margins.

Nevertheless, there is demand to have a mandatory 30 per cent local ownership in all the mineral exploration ventures in the country.

The new law is intended to ease the process of licensing private investors, carrying out of relevant studies and fostering participation of the communities where the mineral resources are found.
Deal with emerging concerns

Mr Balala described the current Mining Act that was established in 1940 as archaic adding that it does not deal with emerging concerns in the industry. He said the focus of the new law will be to ensure that all mineral investments in the country are for the interest of the public.

“How do we do the licensing and who gets the licensing. Those are the regulations that when the Bill is seeking to address. Through the Act, the Cabinet Secretary will have the powers to regulate the sector in a transparent manner. The fundamental issue is that Kenya must benefit in any deal of exploration and particularly the exploitation of the resources,” Mr Balala explained when he took office three weeks ago.

According to existing map on mineral resources, Kenya has potential for oil, gas, iron and steel, coal, gold, silver, zinc, copper, titanium and zirconium, niobium and rare earth metals among many others.

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