Unpredictable business laws cause jitters in the growing mining sector

Local Mining firms are concerned with what they term as rapid-fire methods of Mining Cabinet Secretary Najib Balala, to the point that some are threatening to quit the country.

Cortec Mining Kenya Ltd (CMK) management told Africa Mining Intelligence, a specialist publication for the mining industry in Africa, that it was thinking of hauling the Government before the International Centre for the Settlement of Investment Disputes (ICSID) to win compensation. Its licence was one of the 65 cancelled in mid-May by Balala.

The firm, which was awarded the permit in 2007, saw it suspended in 2013 when a taskforce set up by Balala to review all the licenses granted since 2013 had completed its work. The licence was handed back to CMK in early 2014, only to be withdrawn again in September last year. That decision was confirmed by a court in March this year.

Run by David Anderson, a Canadian and Jacob Juma - a Kenyan businessman, Cortec has denounced the procedure as illegal and invalid. The company claims it had not been informed about the legal action taken against it in 2014 and was not heard before a judge which went against procedure.

Cortec is now contemplating pulling out of Kenya after it reportedly spent more than $58 million to develop the niobium mine at Mrima Hills.

It is not Cortec alone that appears to have issues in the country's nascent mining industry which is deemed one of the least explored in Africa. Australian-based Mining firm Base Titanium Limited recently said it is owed Sh2 billion in Value Added Tax (VAT) that is yet to be settled by Kenya Revenue Authority (KRA).

This is according to a statement from the conglomerate, which operates a mineral sands project in Kwale County, 50 km South of Mombasa. Most of these refunds were accumulated during the construction phase of the Kwale Mineral Sands Project.

Export market

"Base spent approximately Sh26 billion building the project which now produces minerals exclusively for the export market. This means that under the VAT Act, these products are zero rated for VAT purposes. Base is therefore only seeking a refund of the VAT it has already remitted to the Government and which it is has a legal right to claim," said Base Managing director Tim Carstens in a statement.

Apart from tax issues and royalties, concerns are being raised over Balala's decision to revoke 65 mining licences, which the Ministry lists as having either expired, having been surrendered, are non-performing, non-compliant and or in breach of the provisions of the Mining Act and license conditions.

"Henceforth, any mining or prospecting activities by these persons or companies over the areas that are subject of the revoked licenses shall be illegal," said Balala, in a Gazette Notice published on May 8, 2015.

Among firms whose licenses were revoked were Cortec, Saharco Group and Mid Migori Mining Company.