Investors in Kenya’s mining sector will no longer face the risk of arbitrary cancellation of their licences, as the country has established a body to oversee the licensing of prospecting and mining activities and the leasing of mining tenements.

Moreover, companies planning to invest in the nascent, but promising, sector will no longer have to contend with cumbersome and bureaucratic processes when they apply for licences to prospect for various minerals.

This comes after the Kenya government established a Mineral Rights Board, which has powers to issue or cancel mining licences, previously vested in the Mining Cabinet Secretary.

The autonomous board will replace the licensing advisory committee, whose mandate was to advise the Cabinet Secretary on policy matters.

The board is part of the widespread reforms provided for by the new Mining Act, which was enacted to spur growth in the mining sector.

“We want make the mining sector attractive to investors in order to drive its growth. The aim is to make the sector a key pillar of the economy,” says Mining Cabinet Secretary Dan Kazungu.

The nine-member board has been given the powers to advise on issues relating to the granting, rejection, retention, renewal, suspension, revocation, variation, assignment, trading, tendering or transfer of mineral rights.

It will also make recommendations on the areas suitable for small-scale artisanal mining and those areas where mining operations may be excluded or restricted, as well as declare certain minerals strategic.

The establishment of the board is expected to restore faith among investors, particularly after former Mining Cabinet Secretary Najib Balala revoked the licences of 65 companies in 2013 on the grounds that they had been issued under unclear circumstances. He then imposed an indefinite moratorium on the issuing of new licences.

One of the companies whose licences were cancelled, Cortec Mining Kenya, has since sued the Kenya government at the International Centre for the Settlement of Investment Disputes, seeking $2-billion in compensation.

The company, a subsidiary of Canada's Pacific Wildcat Resources, was implementing a niobium and rare-earth metals mining project in the Kwale coastal district.

The new mining law came into effect in May, replacing an outdated law that had been in force since 1940. It will enable the East African nation to strike a proper balance between investor interest, public interest and financial obligations to mineral rights holders, as it seeks to increase the sector’s contribution to gross domestic product from 1% currently to 10% by 2030.

“This new law positions Kenya on the path to being the most attractive destination for minerals investment in Africa and enhances the country’s competitiveness globally by providing a stable, predictable and transparent investment climate for exploration and mining companies,” says Kazungu.

Kenya is endowed with various minerals, including soda ash, fluorspar, titanium, niobium, gold, coal, iron-ore, limestone, manganese, diatomite, gemstones and gypsum, besides others.
Last year, Kenya raked in $232.4-million from the mining sector, up from $203-million in 2014.