Kenya after a bigger share of its mineral resources

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Kenya raised royalties levied on minerals and revoked certain mining licenses to get a bigger share of earning from its mining sector.

Mining Secretary Najib Balala told CNBC Africa that the new measures followed a sector-wide review and was aimed at ensuring east Africa’s biggest economy got a more favourable deal.

“We believe that there are a lot of minerals in our country and the country needs to benefit from these minerals and we need to raise these charges. What we are trying to do is that we want to have a transparent and predictable system that there is a regime that is fixed and it is beneficial to the country and the companies,” said Balala

Kenya has proven deposits of titanium, gold and coal. But the country’s mining sector is a relatively small contributor to national output although its revenues are expected to grow as new mines come onstream.

“I believe that the companies must make profit and the country or the government must collect its taxes and royalties and the people on the ground must see a change in their lives. If we have these three balances, then I think we are in good business,” balala said

In Kenya, in addition to royalty increases, the government has revoked all mining licenses issued in the months before and after March’s elections.

Balala said he was cancelling prospecting and mining permits issued from Jan 14 to May 15 this year, a transition period when some ministers from the old government quit their positions and parliament was dissolved.

“We believe the mining sector will transform our economy, through its revenues, streamlining and I believe what we have done today by reviewing any processing that was illegal or was suspicious to be streamlined and put right, if a licensee is proper with all the financial backing and the processing was transparent and in a legal manner then the licensee will be given his licence”.

Royalties on gold, of which Kenya is a relatively small producer, would increase to 5 per cent of gross sales value from 2.5-3 per cent, Balala said.

For rare earth, niobium and titanium ores, royalties would rise to 10 per cent of gross sales value for from 3 per cent previously. Royalty rates for other extracted minerals would vary between 1 per cent and 12 per cent.

According to the Chamber of Mines, Kenya has more than 300 local and foreign firms prospecting for minerals or producing on a small scale, up from less than 30 two years ago.

The new measures do not affect the oil and gas sector, where a number of discoveries have led to a scramble by oil firms keen for a piece of the action.