How Sh6 trillion mining licence was given to a Canadian firm for a song

Sunday October 28 2018

Jacob Juma. Cortec had not made any discovery at Mrima Hills but by working with government officials and brokers, it almost got a chunk of Kenya’s wealth for a song. PHOTO | FILE | NATION MEDIA GROUP


At the burial of Jacob Juma — everyone thought he was a whistle-blower and an astute businessman. His critics thought he was a vicious smart alec, corrupt and a busybody.
Jacob Juma had friends in high places: On his speed dial were politicians Raila Odinga, Moses Wetang’ula, Cyrus Jirongo and businessman Jimi Wanjigi among many others. They spoke positively about him — after Mr Juma was shot dead by unknown people in Nairobi.

Mr Juma was an ardent critic of President Uhuru Kenyatta’s government and his twitter handle @Kabetes displayed his anger — a no holds barred salvo on lawyers, magistrates and politicians who blocked his path.
In the world of business, Mr Juma was not very clean. He was restless, boisterous and litigious.
But how this businessman left high and dry a Canadian firm that had given him a colossal 30 per cent shareholding in the international mining company was a story that would emerge later after the firm lost a licence it had acquired through dubious means to mine niobium in Kwale County. That was this week.

Before Jacob Juma came to the scene, David Anderson, the managing director of the local subsidiary of Canadian Pacific Wildcat Resources, had been told by a Mr Robbie Louw, the CEO of a South African mining company of a Kenyan hill which was rich in niobium and rare earth minerals.
It was not a discovery as such for students of geology had since the 1960s read a paper by P.M Harris on the discovery and recovery of niobium from Mrima Hills. Also, the department of Mines and Geology had in 1966 published a comprehensive report titled ‘The Mrima Hill Niobium Deposit, Coast Province, Kenya’ and which was authored by F. W. Binge and Pieter Joubert. It was also reported that there were traces of radioactivity in the area — meaning that the area could have had minerals such as thorium, actinium, and uranium.

He then proceeded to incorporate a Kenyan company, Cortec Mining Kenya Limited (CMK), to start prospecting and was advised by the Commissioner of Mines Lojomon K. Biwott to appoint Harie Ndungu as the agent for the company.
Why the mining commissioner would be the one advising a company on the agent is not clear. But court records indicate that on May 15, 2007, Mr Ndungu applied for a prospecting licence for a company that was not yet incorporated and on the same day he applied, Mr Biwott gave him the licence. That was fast, for a prospector!
While individuals are normally given prospecting permits, they cannot be agents of a non-existent company such as CMK, as it was then. Thus, Mr Ndungu could not have transferred this right to another company.

The problem was that Mrima Hill had been closed in 1997 to mining by a previous mining commissioner, Collins Owayo, after it emerged that construction companies had exposed locals to high radiation levels after they built a road using material from the hill.
A University of Nairobi geophysicist Jayanti Patel, who had studied Mrima Hill for long, had published a 1990 study on the hill's dangerous radioactivity and concluded that radiation levels on some areas of the hill were more than 50 times higher than what scientists consider safe. He warned that the sedimentary rock from the hill should not be used for either building homes or road constructions.

That was the place that Cortec said it had “discovered” niobium — or rather it wanted to prospect for minerals. Cortec would later call a press conference and tell the media that since 2008 it has drilled 7,897 metres on Mrima Hills at a cost of over Sh200 million, with analysis of the drilling leading to the identification of niobium and rare earth deposits.
Cortec said it had engaged a South African geologist, Mike Saner, to conduct the initial prospecting and exploration work at Mrima Hill on its behalf.
But nobody, including prospectors, was allowed inside Mrima Hills because this was designated in May 1989 as a nature reserve which gave it extra protection — more than a forest reserve. It was also gazetted in January 1992 as a national monument for it was a historic Kaya forest, a sacred grove for the Digo community.


With these designations, it was hard for a commissioner of mines to reopen the forest for prospecting and could not remove the protection given to Mrima Hills as a national monument. The only areas he could give prospectors were those outside the Mrima boundaries. A nature and forest reserve can only be re-opened by the ministry in charge of forests while the authority to mine must be received from the National Museums — in the case of a national monument.
So connected was CMK that even before its application for a prospecting licence was issued, it had been allowed by Mr Biwott to conduct “preliminary prospecting and reconnaissance surveys.”
A day after their agent, Mr Ndungu, received a Prospecting Right No 8258 from Mr Biwott, he got a consent letter from Kwale County Council to proceed, dated May 17, 2007, but CMK either ignored a rider that excluded Mrima Hill Nature Reserve — or decided to use political influence to get it.

What we know is that on November 30, 2007, in gazette notice 11828, Mr Biwott gave notice that that CMK had applied for a special prospecting licence and on the same day, he issued another notice re-opening Mrima Hill for prospecting. CMK was not entitled to such a licence, but received one No 256 dated April 2008 with just a few conditions.
Mr Anderson had no money to do the groundwork and had planned to raise money through a company known as African Strategic Minerals, an Australian mining company in which Donald O’Sullivan — one of the later shareholders of Cortec — had an interest. It was Mr O’Sullivan who would bring in another firm Terra Search to study the area. Their report has, however, been dismissed by some geologists as having “done little more than indicate the potential of substantial niobium resources” which had been known for ages. But CMK wanted to use this report as the “turning point” for Mrima Hills in order to get a mining licence.

And because they had received their permit through the back door, they started facing obstructions from the Kenya Forest Service (KFS) which denied Mr Anderson access to Mrima Hill in 2009 since no consent had been received from KFS and National Museums.
The locals also lodged a dispute at the High Court in Mombasa arguing that CMK was destroying their heritage. The court stopped any encroachment and prospecting in Mrima Hills while John Michuki, then minister for Environment, asked CMK, in a letter dated August 2011, to halt any mining there until the community concerns were addressed.

Mr Anderson had thought that his solace would only come from politicians and senior civil servants and he knocked on doors. His licence was expiring and on January 7, 2010, he had a meeting with Prime Minister Raila Odinga. According to Mr Anderson, Mr Odinga summoned the commissioner of mines, Dr Bernard Rop, and they agreed “in principle” to grant the extension of Special Prospecting Licence No 256 that the Canadian had sought since November 2009.
With the political intervention, Dr Rop would not only issue the prospecting licence but also enlarged it to include the entire Mrima Hills. KFS also issued a consent, but insisted that it was only restricted to “existing pits”. National Museums also issued a no-objection note as long as certain conditions were met.

But CMK did not want to abide by the conditions which included Mine Feasibility Report and Environmental Impact Assessment.
In August 2010, Dr Rop was replaced with Moses Masibo, the man who would fasten things for CMK. In January 2012, CMK applied for a mining licence but by September there was no movement on it. That is the time they brought in Jacob Juma, who would offer to assist and in return he would get 30 per cent shareholding.
After only one meeting with Francis Kimemia and Mr Masibo, the Canadians finally got what they wanted: An exclusive 21-year mining licence for a hill with minerals worth Sh6 trillion.

The government would later allege that Jacob Juma worked corruptly with Mr Masibo to later get a mining licence after that meeting with secretary to the Cabinet, Francis Kimemia.
Actually, Mr Ndungu — the man who was initially given a licence — would tell the tribunal hearing the dispute that Mr Juma would give him and Mr Masibo “pocket money” of Sh150,000 each after every meeting. But the allegation of CMK receiving the licence corruptly was not proved — only that it used dubious means.
What we know is that Cortec had not made any discovery at Mrima Hills but by working with government officials and brokers, it almost got a chunk of Kenya’s wealth for a song. When that licence was cancelled, Mr Juma made a lot of noise. It became part of him.

[email protected] @johnkamau1