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MINING IN KENYA UNDER SCRUTINY AS MINISTRY REVOKES PERMITS

There’s something stirring underfoot. Mining Cabinet Secretary Najib Balala and Attorney General Githu Muigai are being

Mining Cabinet Secretary Najib Balala

Mining Cabinet Secretary Najib Balala

taken to court by Cortec Mining Kenya Limited in an action that the mining company has described as “very very urgent”. Cortec are seeking to reverse a decision by Balala to revoke its mining licence.

MINING TASKFORCE

Two weeks ago Najib Balala announced he had set up a taskforce to investigate over 500 licenses given to mining companies since 2003 as it emerges that some of the firms issued with mining license were dubious.

The taskforce chaired by Mr Mohamed Nyaoga will investigate the circumstances under which the licenses were issued as well as look into the status of the companies in question and is expected to submit its report within 60 days.

Mr Balala also revoked thirty-one licenses issued by the ministry between January and May this year and also went ahead to suspend the Commissioner of Mines, Mr Moses Masibo on allegations that he had outstripped his mandate.

Cortec's Managing Director David Anderson

Cortec’s Managing Director David Anderson

CORTEC CLAIM RARE NIOBIUM FIND

Cortec Kenya Ltd, a company linked with the exploration of rare earth minerals in the Mrima Hills in Kwale County, is one of the mining companies whose license has been revoked by the Mining Secretary. Cortec came to the public limelight following an announcement that the firm had discovered deposits of Niobium, a rare earth mineral, worth over $100billion in Kwale.According to Cortec’s Managing Director, David Anderson, the mineral finding is the world’s sixth largest reserve of the rare metal with a mine life of up to 18 years.

In a Press Conference held at his office, Balala told journalists that the government was not even aware of Cortec’s activities in the country hence could not verify the mineral discovery claims in Kwale made by the mining firm.

Cortec’s claims of the commercial extractability of the rare earth minerals discovery was however received with skepticism as experts cited the figures given by the mining firm as exaggerated; considering the financial capacity of the firm and the resources committed to the exploration of the minerals in Kwale.

KENYAN OWNS 30% SHARES IN CORTEC KENYA LTD

As reported on The Standard newspaper, apparently one Kenyan, Mr Jacob Juma, a Director of Erad Suppliers, owns 30 per cent of Cortec Kenya, which is a subsidiary company of UK- based Pacific Wild Cat Resources Corporation (PWCR). The later owns 100 per cent of two UK-based companies, Sterling Ltd and Cortec Pty which owns 70 per cent of Cortec Kenya.

KENYA’S MINING LAWS OUTDATED

Kenya’s mining laws are outdated with the existing ones last revised in 1999. With details emerging that 31 of the licenses that have been revoked were issued during the March 4th elections, the procedure is apparently raises eyebrows.
Kenya is rich in minerals and oil has also been discovered in Turkana but private mining companies have control of them with the government only benefiting from royalties and drilling charges which are way too low under the current law.

MINING COMPANIES TO PAY MORE

Some mining companies are reported to pay as low as 0.01 per cent of their proceeds to the government. For instance, last year Magadi Company is said to have exported Sh16 billion yet the government only got Sh16 million in taxes.
Mr Balala says that the cancellation of the licenses is inline with the government’s efforts to streamline the mining sector adding that a proposed new mining bill has been passed to the cabinet for approval.

“Under the revised royalty rates on extracted minerals, mining companies would pay 12 per cent of gross sales value for diamonds, 10 per cent of gross sales value for rare earth elements and radioactive minerals and 10 per cent for niobium”, he said.

Related media coverage:

‘Miner takes battle for licence to High Court’, Business Daily, August 16, 2013

Uhuru Kenyatta’s inauguration

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