Mining Bill gives more powers to county groups

A Titanium Company worker at a project site in Kwale. A parliamentary committee has stripped the CS powers to grant licences to mining firms and gave the authority to the proposed Mining Rights Board. [Maarufu Mohamed/STANDARD]

Mining companies will now have to shoulder the cost of relocating communities affected by their operations. This will be in addition to compensating such communities for land they will lose to give way to mining operations.

Further, the exploration companies will be required to disclose plans on how they would invest in community projects before commencing operations.

A Parliamentary committee warns that these will not be basic corporate social responsibility projects  for photo opportunities with little or no impact on communities.

The Mining Cabinet Secretary will also not hold much leverage in regards to issuing of licences to mining companies. These powers will instead be vested in the proposed Mineral Rights Board, which it is argued, will increase transparency in the sector. In the past, it has been suspected that issuing of licences has led to cases of corruption.

More amendments

These are among the major changes that the Parliamentary Committee on Environment and Natural Resources plans to add to the Mining Bill 2014 when it gets to its Third Reading in Parliament.

The Bill, tabled in Parliament earlier in the year, is currently in the Second Reading stage. “After consultation with stakeholders who gave us more input, we will be moving more amendments to this Bill,” Amina Abdalla, chair of the Committee, told Parliament last week.

In a report drafted after sittings with State agencies including ministry of mining as well as private sector players, the Committee noted that the Bill in its current form had failed to address the relocation of people affected by mining operations.

“The committee noted the socio-economic impact that mining operations have on local communities and the inevitable displacement of people from their land,” reads the Committee's report.

“While the Bill provides for mechanisms for compensation, it does not adequately cater for communities that may be relocated and resettled. The committee agreed that licence-holders will be required to fully compensate the lawful owners or users of the land before commencing operations.”

The committee has also stripped the mining Cabinet Secretary of what were in the past seen as sweeping powers in giving licences to exploration companies.

It has instead proposed setting up a Mining Rights Board that will review applications made by companies before awarding of a licences. The feeling from industry players has been that the CS wields so much power when it comes to issuing licences.

"A minister is responsible for policy direction, and he/she needs assistance on matters regulation. Though he will be the signatory to the Mining Rights provided, he will get assistance on the review of the same, from a Mining Rights Board so that we address the fears of investors and players in this sector, that we were vesting too much power on an individual.” Ms Abdalla said.

Mining CS Najib Balala recently said the proposed amendments were as a result of a consultative process and that a negotiated Bill was what the industry would get once the amendments are factored in.

Recurrent expenditure

The committee also plans to introduce clauses in the Bill that will prohibit the State from using royalties and other revenue from mining companies in its recurrent expenditure in addition to putting a limit as to how much the Government would spend, with a preference on investing most of the proceeds in a sovereign wealth fund.

“The Committee agreed on the need to cap expenditures on revenue accrued from mining resources, to establish sovereign funds and protect the rights of the future generations to derive benefits from the exploitation of the mineral resources,” reads the report.

There will also be a revenue share clause to be introduced in the Bill. Though an initial draft had a clause on how the National and County governments as well as the locals would share royalties, this was missing from the Bill that was tabled in Parliament.

“The committee agreed on a revenue-sharing formula of 70 per cent to the National Government, 20 per cent to County Government and 10 per cent to the community,” the Committee said in its report.

It also agreed to make provisions to ensure revenue allocated to the community is not utilised for recurrent expenditure of the County. Communities from where the minerals are exploited are the primary beneficiaries of the revenue allocated.

The committee agreed that the mining CS, in consultation with The Treasury should prescribe regulations for investment of royalties for future generations at all levels.

Ms Abdalla said amendments at Third Reading will recognise small scale miners, currently deemed as illegal.

Business
Premium Burdened Kenyans walk into Easter weekend broke
Business
Premium Looming crisis as top lenders stare at Sh500b in bad loans
Business
Premium Water PS Korir put on the spot over Sh14m dam land
Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam