Muthama's mining firm licence row may be settled out of court

What you need to know:

  • Mr Muthama, who moved to court on grounds that he was incurring millions of shillings in losses after his company Rockland Kenya Limited’s export licence was withheld, has now asked for time to finalise the negotiations.
  • If successful, the out-of-court settlement will lay to rest a dispute that threatened to ruin a business empire built by the vocal former Machakos senator.

Former Machakos senator Johnson Muthama has opened talks with the government for an out-of-court-settlement of the disputed cancellation of his mining firm’s export licence.

Mr Muthama, who moved to court on grounds that he was incurring millions of shillings in losses after his company Rockland Kenya Limited’s export licence was withheld, has now asked for time to finalise the negotiations.

"The matter is almost settled. We ask for more time to finalise and file," John Khaminwa, who represents Rockland in the case, told High Court judge John Mativo.

Dan Kazungu, who was at the time serving as Mining secretary, paralysed Rockland Kenya’s operations with the publication of a list of companies licensed to mine and export minerals but excluded Mr Muthama’s company.

The Mining Cabinet Secretary and the Attorney-General are listed as respondents in the case, which will be mentioned on December 17 when the settlement will also be confirmed.

Business empire

If successful, the out-of-court settlement will lay to rest a dispute that threatened to ruin a business empire built by the vocal former Machakos senator.

Mr Muthama had told the court that his firm had been given a special mining lease in 1991 and the same extended in 1996, before it was renewed in 2012 for the period up to 2033.

Rockland argued that it had complied with all the licensing requirements and paid taxes and other fees to the government based on the exported minerals and therefore saw malice in its sudden exclusion from the list of licensed firms.

Mr Muthama told the court that his firm had invested heavily in work permits for qualified personnel to help run the business, a move it claims is occasioning it heavy losses.

Rockland was registered on August 14, 1991 and granted a Special Mining Lease No 19 of 1991 a day later.

Mr Muthama acquired the company from American geologist John Saul, and thereafter got a licence to mine and export ruby (a precious gemstone) in Taita.

Mr Kazungu in September 2017 wrote to the Mining Principal Secretary and the Director of Mines indicating that only three companies were licensed to deal in gold and carry out ‘mineral dealings other than gold’.

Mr Muthama moved to court and on February 16 got orders suspending the minister’s directive pending the hearing and determination of his suit -- protection he continues to enjoy.

Court documents show that Mr Muthama wrote a protest letter to Mr Kazungu, citing the predicament facing his firm after the September directive but got no substantive response, prompting him to move to court.

Mr Kazungu’s September 7, 2017 memo set new conditions for mining companies and identified Aurical Kenya Limited, Modogashe Agencies Limited and Match Electricals Limited as the only duly licensed firms in the business.

New entrants

Mr Muthama claims all the three firms are new entrants into the mining business and cast doubts on their capability to do the job.

Rockland said it had waited for three years for renewal of its export permit on grounds that the ministry was awaiting the rollout of the new Mining Act before issuing fresh licences.

It was therefore surprised to find new entrants get priority over established firms without the ministry making clear the criteria used to issue the licences.

Mr Muthama likened Mr Kazungu’s action to the 1990s award of exclusive licences to Goldenberg International.

He said the withdrawal of his company’s licence cost it about Sh40 million in the period between last October and January 2018.