7 November 2012

Kenya: Why Proposed Mining Law Is Top Priority


The country's mining profile has improved significantly in the past few years and there is a strong justification for Parliament to fast-track the passage of the Geology, Minerals and Mining Bill and Policy 2012, to ensure the country and county governments maximize their benefits from the sector.

One of the key innovations in the new bill is the need to enhance benefits to the local communities in which minerals will be extracted. The new policy proposes a royalty sharing formula of 75 percent for the central government, 20 percent for the counties and five percent for local communities. The existing laws have been slanted in favour of investors leaving the government with a paltry five per cent of the proceeds

Incidentally, the counties in which large mineral deposits have been discovered in the recent years are ranked poorly in terms of economic development and mining may turn around their economic fortunes. In Kwale, where literacy and poverty levels are discouraging, the multi-billion titanium mining is expected to commence next year.

The actual mining of the niobium and rare earths in Kwale, where viable quantities have been established, will boost the revenue of the county if a new regulatory regime is in place.

Similar benefits are expected in Turkana and Taita, with similar glaring poverty levels as Kwale, where large scale oil and iron ores have been discovered respectively.

The country has relied on a law that was enacted four decades ago, which is not commensurate with the new developments in the sector.

The mining policy proposes establishment of a Mining Corporation that will coordinate investment in the mining industry. Also, it proposes that a mining authority be established to streamline management and regulation in the sector.

If the process to extract envisaged minerals in the coming years starts on a wrong footing especially on the need to help the local communities and county governments, it will disorient the venture and escalate tensions in an already volatile area.

Going by the number of mining projects that have been undertaken in this country in the past, an absence of a mining policy and a modern law will undermine the country's effort to take advantage of the mineral discoveries.

Take for instance titanium mining project in Kwale, South Coast. Seventeen years were lost largely due to hostility from the local communities, who felt that the project did not have any bearing on their livelihoods apart from forcefully displacing them. The government licensing regime in the sector has also not been conducive to the investors.

Another good example is the prospecting of rare earths and Niobium going on at Mrima Hills. Apart from a hostile community that is skeptical of the benefits this mining is all about, a regime that has not been streamlined is derailing the project.

Currently, negotiations are done with local communities and the experience shows that the processes have not been insulated from political manipulation leading to further delays.

The new legislation proposes the creation of a Mining Tribunal that will be charged with the responsibility of settling disputes that arise from mining activities.

Raphael Obonyo is the external advisor with the United Nations Habitat's Youth Advisory Board. raphojuma@hotmail.com

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