There have been increased cases of gold scam in the country involving unscrupulous business persons conning unsuspecting foreigners. The government last year lifted a moratorium on mineral mining and prospecting to give way to implementation of the new mining sector reforms. Kenya Chamber of Mines(KCM) Chairman Dr. Patrick Kanyoro spoke to Barack Oduor on how to end fraud and mineral smuggling alongside other happenings in the mining sector.
Q: How has the mining sector been affected by illicit and cross border smuggling of minerals into and out of the country?
A: Smuggling has been our biggest challenge especially for gold and gemstones. We are now offering training so that our miners begin appreciating the real value of the minerals they are mining. One of the issues that fueled smuggling was that artisanal mining was a criminal activity and therefore most miners in this cadre did not want to come to the limelight for fear of arrest. Now we are able to have permits and licenses processed for them.
I want to ask people to come to the Chamber of Mines when they want to buy gold. We will help them with names of licensed dealers and they won’t be fleeced of their hard earned money.
Q: Cabinet Secretary (CS) for Mining, Blue Economy and Maritime Affairs Salim Mvurya recently during a field visit to Embu County announced discovery of coltan deposits. What does this discovery mean?
A: This is good news for the country and the sector. There will be need to do ground trothing, pre-feasibility studies and some work before we can reap the benefits. The cycle between a discovery and turning it to a mine is usually four to ten years.
Ground trothing is the process geologists will use to establish how deep a mineral is spread. This process helps to understand if the mineral exists in a wide area or not.
Q: How has the state of mining been since the government lifted the moratorium last year?
A: Let me begin with the online mining portal. The online mining system or cadaster has been back since lifting of the moratorium and investors can now ask for mineral rights such as permits and licenses. From where we sit as a private sector, we have had our members interact with the online system and there are no complaints. When we come to artisanal or small miners, some of them are not tech savvy and some are not having access to laptops or smart phones and that offers challenges. In Taita Taveta we have opened an office for such miners to get assistance on how to access government mining services online.
Q: Investors had raised the issue of bureaucratic processes in dealing with the Treasury and also in obtaining mining and prospecting licenses. Has this now changed?
A: The issue that was causing a challenge around the Treasury was the royalty question. The law provides that 70 percent of the royalties mining companies pay goes to the national government. First, the entire royalty is paid to the treasury then the 70 percent goes to the national government, 20 percent to the counties then finally the 10 percent goes to the community within the mining areas.
Mining and Blue Economy Cabinet Secretary Salim Mvurya had set a committee to look into this matter and there is some streamlining along this area, funds have been released to counties and communities. Sometimes last October there was an introduction of regulations, among them was the issue of royalties. They were subjected to public participation. I trust that the delay time will be reduced so that when funds are released it can reach the communities swiftly.
Q: The local communities have demanded shares in mineral mining and even professional opportunities. Has this been addressed?
A: Depending on the level of investment, for large investors, there are the community development agreements where at least the investor should commit up to one percent of their revenue to approved community projects. An investor is however at liberty to make a contribution of more than one percent. The government through the state department of mining also came up with regulations which we were part of; for instance, we looked at how to appoint a development agreement committee at community level to make sure there is transparency and quicker decision making.
For medium and small scale artisanal miners, there is nothing in law that commits them in regard to Corporate Social Responsibility, however most directors of such communities still commit funds to community development initiatives.
Q: Before the moratorium there was the issue of the government dragging its feet in issuing new mining permits and licenses. Has the situation now changed?
A: We had been on ice because of the moratorium. Before the moratorium there was definite concern and outcry because for both domestic and foreign investors, there was no application for the licenses but now it is possible. The president has also appointed the chairperson for the mineral rights board, and there are now regular meetings of the board. It is the board that has the right to advise the cabinet secretary on the issuance of permits and licenses. So far we are happy that the applications that we have launched are under consideration. The pace could not be what we want but there is progress.
Q: What next after Kenya’s mining sector after Base Titanium announced it will exit the country this year?
A: The mining sector contributes about 1.4 percent of the country’s GDP and 80 percent of this is from the operations of Base Titanium in Kwale County. This means that the company has been a very significant player in the mining sector. This will have a devastating impact on the sector. There will be loss of direct revenue to the treasury and there will be up to 1,600 jobs lost as a result of their exit.
Besides this they have been doing a lot of community development agreement in their area and that is a bigger concern. They have offered several scholarships to learners from communities around their area of operation. The questions should be how we are going to sustain such kinds of activities.
I know that the decision to exit was made by their board in view of the prevailing circumstances that it was making economic sense for them to keep engaging. The sector however still has huge potential for investors.
Q: How is your organization dealing with matters of partisan and communal interests among artisanal miners in the country in the wake of the directive to have them organize themselves into cooperatives?
A: I want to thank the government for being magnanimous by decrimalising artisanal mining. Artisanal mining was criminalized by the colonial government and 60 years down the road it has been a criminal activity. During the lifting of the moratorium they were recognized and now their activities are recognized by the law.
There is currently an artisanal mining strategy that is under discussion so that we see how to formalise the sector and make them as part of the mainstream contributors to the economy. When they are organised into cooperatives, they can engage bigger players and do business with them.
It is important to know that most artisanal miners are not in the mining industry as a business but as a source of livelihood. I think that is the point most of us have been missing. We must know that they cannot survive if they are stopped from their activities. County governments must be at the forefront of supporting artisanal miners so that they do business. They must make it easy for them to acquire licenses and other requirements needed.
The systems at the counties should not be so bureaucratic such that it becomes difficult for the artisanal miners to operate smoothly. Mining is being frustrated at the local level and this should change.
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