Coal mining to delay for a year, says geologist

It will take at least a year before Kenya can start mining coal in Kitui County.

Kenya is currently in negotiation with a Chinese company, Fenxi Industry Group, which is expected to start mining the coal at the Mui basin in Kitui County. The basin holds coal estimated to be in excess of 500 million metric tonnes.

“We are cross-checking the concession documents to ensure that that they are within the tender specifications before coal mining can begin,” said chief geologist in the ministry of Energy John Omenge.

The negotiations on the concession is what formed the main agenda of a retreat held last week at the Kenya Commercial Bank Leadership Centre in Karen, Nairobi.

Speedy financing

During the meeting by the inter-ministerial committee on coal that is charged with developing a framework for coal exploitation, the Sunday Nation has learnt that among presentations made by the Chinese firm was a requirement that the concession be structured in a manner that will enable the company to speedly access financing for the project.

This will specifically touch on the issue of revenue sharing between the company and the mining firm as well as the lease period.

“Both block C and D have a lease period of 21 years. We intend to remain within the proposals we made to the Chinese company before we began engagements with it to ensure that the country reaps as much income from the resource as possible,” said Mr Omenge.

Besides requests from the Chinese firm, the process will also involve setting up a resettlement and compensation plan for the population around the project area which, according to the ministry of Lands, could take at least 10 months to complete.

“We have mapped out where the coal is and where the proposed industrial park will be set up and we have developed a resettlement action plan for the affected people. Resettlement will be both in monetary form and using other alternatives and will take an average of between six and 10 months,” said Zablon Mabea, Commissioner of Lands during a telephone interview.

According to Mr Mabea, the resettlement process was highly dependent on the availability of funds, giving an indication that in the absence of prioritisation of this exercise during allocation of funds, it could even take longer than anticipated.

“We already have a new Land Act that came into effect in May and we hope this will accelerate the resettlement process. However, it will also depend on the availability of funds,” said Mr Mabea.

From the inter-ministerial committee, the concession documents are expected to be presented to the Cabinet in a month’s time before being tabled in Parliament for approval.

The preliminary structure of the concession shows that the government will assume a 11 per cent stake in Block C and D with a proposed gross revenue share of 23.6 per cent and 21.1 per cent from the respective blocks during the lease period.

Should the proposed amendments to the Mining Act come into place, the revenue earned by government will be shared at a ratio of 80:15:20 between the national and county governments and social projects around the mining areas.

Fenxi Industry Group won the tender for coal mining after the mineral was discovered in the Mui basin in 2009 by Turn-O-Metal, a Kenyan private company that was contracted by the government to carry out exploration for coal in the region.

However, the tender is restricted to only extraction activity with preliminary plans indicating that the ministry of Energy intends to channel all the coal to electricity generating projects.

The Kenya Electricity Generating Company has confirmed plans to set up a coal power plant in Kilifi on a 300-acre piece of land that is yet to be procured.

The ministry of Energy estimates that local annual growth in demand for power will more than double by the year 2030 from the current 7 per cent to 15 per cent.

This has informed attempts to review plans on electricity generation which are expected to culminate into long-term investments in renewable sources of power such as wind, and nuclear as well as the hard to deplete resources such as coal.

Last week, the ministry of Energy advertised tenders for consultation services on the upgrade of the power masterplan that was adopted last year which indicates the country’s power needs and expected generation projects so as to give more emphasis on renewable sources of energy.