Mining firms will be required to commit to carry out a certain amount of work or have their licences revoked by the government under proposed new regulations.
The ministry of Mining plans to issue the new guidelines by the end of the year that will commit licence holders to spend a certain amount of money and carry out specific activities on their fields within a given period. This could open a new battle ground between Kenya and the miners.
Mining secretary Najib Balala said the ministry is coming up with the new proposals as a way of discouraging speculation by licence holders, one of the major contributors to the slow development of the industry.
“If you are not working I’ll enforce the three-month rule. I’ll take it (the licence) from you and I will put it in the cadastre (register of properties) and whoever is interested can apply,” Mr Balala told the Business Daily in an interview.
The ministry will come up with a schedule on how much a licence holder should spend per square kilometre and activities to be done on a quarterly basis.
The regulations are expected after the Mining Bill is passed in coming weeks.
Mr Balala says that some companies have had licences for more than 28 years but are yet to do any tangible work.
In February, the ministry introduced the mining cadastre portal, an online registry that shows the location of mining blocks and their status, meant to improve transparency in the issuance of licences.
Additionally the portal allows for potential miners to apply for licences online.
Mr Balala said he would stick to his guns and demand that mining companies either shape up or ship out, adding that the sector should account for at least three per cent of GDP and not the current one per cent.
A study by the Institute of Economic Affairs found that the mining industry has the potential to generate Sh255 billion annually for the next 25 years.
The mineral export estimates are based on coal, mineral sands, rare earth, gold and other deposits found in Kitui, Kwale and Nyanza.
Licensing has been a thorny issue for the industry, especially after Mr Balala cancelled 42 licences in mid-2013 on grounds that they were irregularly issued, and appointed a task force led by Mohammed Nyaoga to vet the permits afresh.
The ministry eventually reinstated licences for 10 companies. Cortec Mining Kenya, one of the firms whose permits were revoked, has since gone to both the local and global courts to affirm its rights.
READ: Balala revokes licences of 65 mining companies
Cortec, whose parent is Canadian Pacific Wildcat, went to the Court of Appeal to get back its licence mid this month and also instituted arbitration against the government at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID).
“We are pleased that the arbitration is moving ahead and we look forward to the dispute with Kenya being resolved through the ICSID process,” said Cortec chairman Don O’Sullivan in a statement.
The ministry has come under criticism from lobby groups such as Canadian think tank Fraser Institute which ranked Kenya as the second worst mining destination in the world.
Miners have come under withering criticism from transparency groups for denying developing countries the chance to implement policy.
Pacific Rim (unrelated), now owned by OceanaGold, has also taken El Salvador to World Bank tribunal over denial of extraction licence. The firm is claiming $250 million for mapping out the country’s El Dorado mines.