15 February 2014

Kenya: Kwale Governor Complains About Mining Royalties

COAST governors yesterday complained that they had not been consulted over the royalties from Base Titanium. The mining company made its first shipment to China of 25,000 tonnes of ilmenite worth Sh387 million on Thursday from its new dedicated harbour at Likoni.

Kwale governor Salim Mvurya said Base Titanium exported the minerals without involving the residents and county government as required under devolution laws. Speaking at Flamingo hotel on Friday, Mvurya, flanked by Mombasa governor Ali Hassan Joho and local MPs, said the law requires that the national government works with the county governments in such undertakings.

The county government has given planning permission for the construction of roads, factory and harbour so they are fully acquainted with Base Titanium operations. However Mvurya appeared to be indirectly targeting the issue of royalties. The draft Mining Bill now under consideration provides for national government to share up to 25 percent of mining royalties with counties and local residents.

Mining Cabinet Secretary Najib Balala witnessed the first shipment of the minerals on Thursday. Base Titanium is expected to export 330,000 tonnes of ilmenite worth Sh17 billion each year, making it Kenya's fourth biggest foreign exchange earner ahead of coffee. "Calculations of royalties will only be done after shipments have been dispatched from Kenya. So, those other details of calculations will come in due course," Balala said.

Company officials declined to comment on royalty payments, only saying that they are still discussing the issue. "We are privy to information that the Cabinet Secretary for Mining issued the export license to the company without involving the people of Kwale and the county government thus leaving the residents out of this issue," Mvurya said. In fact Balala delayed signing the licence until Wednesday and only did so under pressure from Vision 2030 and State House. Balala had been pushing to get Base Titanium to increase its payment of royalties from 5 to 10 percent and to hand over 10 percent of its equity to government. Base Titanium argued that government should stick to the terms it signed five years ago. The Kwale governor said they were going to seek legal interpretation of the agreement between Base Titanium to know how residents will benefit. "Undertaking regarding minerals or other resources must be done with full involvement of the residents.

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