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Licence hitch could delay mining of multi-trillion-shilling deposits

Sunday October 6 2013

Base Titanium workers at Maumba, Kwale, where the mining firm is constructing a dam to provide water for processing the mineral. Photo/FILE

Base Titanium workers at Maumba, Kwale, where the mining firm is constructing a dam to provide water for processing the mineral. Photo/FILE 

IMMACULATE KARAMBU
By IMMACULATE KARAMBU
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Mining of Kenya’s multi-trillion mineral deposits is set to delay after companies that were licensed to prospect were found to have been awarded the permits illegally.

This follows the findings of a taskforce set up by the Ministry of Mining to audit licences issued between January and May this year, that was released on Friday.

The task force said Base Titanium and Cortec Mining — that are licensed to mine titanium, niobium and rare earth minerals in Kwale, respectively — failed to comply with at least two requirements for licensing under the Mining Act.

Base Titanium had earlier indicated that it could start mining titanium by next month, while Cortec Mining had said it would set up a mineral separation plant starting this year to facilitate extraction of niobium and rare earth minerals.

FAILED THE TEST

According to Mr Mohammed Nyaoga, almost all the companies that were audited failed the test.

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Consequently, the task force has recommended that the Ministry should exercise its powers to ensure that the affected companies comply with provisions of the Act.

“After reviewing the above and making our findings in each and every file, licence or application, the taskforce recommends that the relevant appropriate authority should exercise their powers within the Act to ensure compliance with the laid-down law and procedures,” reads a recommendation by the task force.

In August, Mining Cabinet secretary Najib Balala revoked all mining permits issued between January and May, saying the issuance procedure was characterised by irregularities.

POLITICAL AFFILIATIONS

His action also pointed at a possibility that the licences were hurriedly issued to facilitate financial support of certain political affiliations by the mining firms.

In addition to revoking the licences, Mr Balala suspended the then commissioner of mines, Mr Moses Masibo, saying he had presided over “irregular” allocation of mining permits.

Mr Balala also ordered that all mining companies should give a 21-day notice to the mining secretary before making public details of mineral finds to avoid speculation.

Mr Balala’s action has since drawn opposition from stakeholders in the mining sector, with the Kenya Chamber of Mines terming the decision as “not being inclusive of the interests of the industry stakeholders”.

“The pronouncements by the Cabinet secretary, which although made for the good of the industry and country, have gone against the spirit of collaboration between the industry and the government,” said Mr Adiel Gitari, chairman of the Kenya Chamber of Mines.

Cortec Mining Kenya, which has already accused Mr Balala of demanding a bribe of Sh80 million in exchange for the company’s mining permit, has already filed a suit against the decision by the Cabinet Secretary to withdraw its licence.

The local mining industry is governed by a law dating back to 1940 which has been reviewed only twice.

The ministry is in the process of drafting a new mining law that seeks to establish State corporations that will be tasked with marketing and promotion of the country’s mining industry as the government races to increase income from the sale of local minerals.

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What the firms are said to have breached

Cortec Mining Kenya Ltd

The initial issuance of Special Mining Licence 256 was not done properly. The task force recommended cancellation of the licence.

The company’s Prospecting Right was not in the name of Cortec Mining Kenya Limited but in the name Harrie Kinoste Ndungu.

The County Council’s consent and the Mining Deposit Receipt were also in the name of Harrie Kinoste Ndungu and not in the name of the company.

Licence type issued not in line with those available for issuance under the Mining Act.

Base Titanium:

Upon review the following documents were not on record: Expenditure programme and tax compliance certificate.

Also, it was indicated that the application was to be considered in the Prospecting and Mining Licensing Committee of June 30 yet the application was considered on the January 31, 2013

Dangote Quarries Kenya Ltd

The company is associated with Aliko Dangote, who is said to be Africa’s richest man. The tycoon was among a delegation of Nigerian investors who recently came to the country and expressed investments interest in the oil, gas and extractive sectors.
Upon review the following issues were noted: No Tax Compliance on record

Bank statement is from a foreign company, Dangote Cement PLC, and not the entity applying for the licence.

The 35pc equity condition had not been complied with.

PMLC approved 0.72 square km but the gazettement was for two (2) blocks – Block A 6.75 square km and Block B 39.59 square km.