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Oil reserves force the government to push through Mining bill

29 January 2014, 15:00

Nairobi - The Cabinet has approved the Mining Bill to help guide the exploitation of minerals in the country following the discovering of mineral resources in the East African nation.

The Bill, which was approved by the Cabinet on Tuesday evening, seeks to facilitate the establishment of a vibrant minerals and mining sector to avoid the pitfalls of other mineral rich countries where they have caused environmental degradation, conflict and social decay.

"The Bill seeks attract substantial investments in geological mapping, capital development, exploration and exploitation of mineral resources, and make Kenya a hub for minerals processing, value addition and trade in the Eastern African region," said a statement which was issued after the meeting.

Delays in enacting the law to regulate the mining sector has made it difficult for mining companies to undertake relevant mining activities as the East African nation is yet to benefit from the titanium exports.

Data from the Mining Ministry indicates that Kenya received only 247,000 U.S. dollars in the last financial year.

The government says that the process of reviewing Kenya's mining laws has been going on for the last 20 years.

Kenya has given priority to the review of laws and regulations in the mining industry in order to make sure that the sector contributes effectively to the economic growth, a government official said on Thursday.

The new mining bill, which is waiting debate by parliament, was developed after consultations with the County governments where the minerals have been discovered to ensure that the benefits accruing from such minerals also reach the local population.

The government has also started a National Airborne Geophysical Survey to improve knowledge of the country's resource potential. The results of the high quality aeromagnetic survey will be made public information, beneficial to interested parties such as you the investors.

Mining Cabinet Secretary Najib Balala said late last year that both Kenyan and Chinese governments have entered into a partnership that will see the latter do a geo-mapping or airborne survey for minerals in all counties beginning 2014.

"In order to effectively regulate activities in the minerals and mining sector, the Bill envisages the enactment of a clear, simple and transparent legal framework in line with the Constitution of Kenya 2010 and Vision 2030 that seeks to turn Kenya into a middle income country by the year 2030," the statement said.

The bill seeks to bench mark with the international best practice especially on issues of regulatory regime, royalties and engagement of communities and other stakeholders ensuring that benefits accrued from the mining sector not only benefit the current generation but fundamentally also the future generations.

Among the policy proposals in the proposed law is the establishment of the National Mining Corporation which shall serve as the investment arm of the national government in respect of minerals.

The government intends to have a stake in local mining deals but the percentage is yet to be agreed. The proposed law also proposes mandatory local equity participation which is also yet to be set.

The law proposes that royalties be shared among the central government, which will take 75 percent, County government 20 percent and the community to benefit from the reminder 5 percent.

Other proposals include requirement by mining companies to execute an environmental protection bond and come up with a plan for rehabilitation of the mined land; the establishment of a mineral commodity exchange; and restricting local minerals dealership to companies with at least 60 percent local shareholding.

Tags mining

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