Ilya Gridneff Nairobi
KENYA expected to enact a mining law later this year to provide policy stability in a country ranked by an industry institute as one of the world’s least attractive places to invest, Mining Secretary Najib Balala said.
The Mining Bill, currently before the East African nation’s senate, was expected to be passed before the fiscal year ends on June 30 and begin a “new era” for mining in Kenya, Balala said last week in the capital, Nairobi.
“There have been bad practices before, so we want to change that,” Balala said.
“This bill is good not only for the government, but also for the industry as it guarantees them stability, it guarantees them their rights. It also brings transparency to the process,” he said.
Kenya is overhauling its mining code to increase the share of revenue from an industry that represents only about 1 percent of gross domestic product, partly because poor regulation has deterred investment. Under the new law, the government will impose royalty rates ranging from 1 percent of the gross sales value of industrial minerals such as gypsum and limestone, to 10 percent for coal, titanium ores, niobium and rare-earth elements, and 12 percent for diamonds.
Kenya was the world’s third-biggest producer of soda ash, used to make glass, and ranked seventh in output of fluorspar, used in steel, according to the US Geological Survey. It also has deposits of coal, gold, rubies and sapphires. Randgold Resources, a producer of the metal in Africa, said last year it planned a study of Kenya’s gold-mining potential. It does not produce any diamonds.
Investor attitudes
The country ranked third from bottom on the Investment Attractiveness index published in the Vancouver, Canada-based Fraser Institute’s annual survey of mining companies last month.
The report assesses what impact mineral endowments and policies such as taxation and regulatory uncertainty have on exploration investment. It cited a lack of transparency in Kenya’s mineral-title process and “terror threats” as factors behind the ranking, which only beat Malaysia and Hungary. Balala said he was “surprised” by the results of the survey.
“Maybe it is a lesson for us to improve,” Balala said. The government had taken steps to improve security, he said, after “terrorist attacks” in Kenya killed at least 361 people since September 2013, according to Bath, UK-based risk consultancy Verisk Maplecroft.
Shortly after his appointment in 2013, Balala cancelled 43 prospecting and mining licences after saying the government discovered irregularities in the way they were granted.
Royalties dispute
Cortec Kenya Mining, a subsidiary of Kelowna, Canada- based Pacific Wildcat Resources, lost its case in the Kenyan High Court in which it accused Balala of illegally revoking its permit.
Cortec is appealing the ruling.
Kenya improved the transparency of its licensing system in February with the introduction of an online register to obtain and process permits, Balala said.
“The online system is a major relief on a personal basis,” he said.
“I don’t have to be disturbed if someone wants a licence.” –
Bloomberg