Large mining firms caught up in messy licensing scandal

Mining Cabinet Secretary Najib Balala.

By Macharia Kamau

Kenya: Major mining companies have over the last decade grossly violated the law as well as basic rights of residents in the areas they have been undertaking activities.

A report done after an evaluation of mining licences issued between 2003 and 2013 found out that many miners — including local affiliates of multinational companies and Nairobi Securities Exchange (NSE) listed firms — disregarded the Mining Act as well as the rights of the people in the localities they were operating.

Many firms, for instance, failed to get consent from landowners, despite undertaking mining activities on their property.

Cortec Mining was among the companies mentioned as having acquired licences without following the due process. The company, which held Exclusive Prospecting Licence (EPL) for parts of Samburu in 2007, failed to get consent from both the local authorities and landowners in the county. The company was also found to have obtained licences in a suspect manner in the course of last year.

Carbacid held two mining licences for extraction of carbon dioxide gas in Kiambu, and the task force could not ascertain whether the firm had met some of the requirements.

Shang Zhang Co Ltd also held an EPL for prospecting for minerals in Kitui County issued in March 2010, but the task force could also not ascertain whether the firm had fulfilled any of the legal requirements.

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Other firms that held mining licences in different areas across the country but failed to meet some key requirements include Tile and Carpet Centre, EABL affiliate Central Glass Industries, Elba Mines, Legend Lapidary, The Rolling Hills Ltd, Exclusive Mines, Apex Africa Resources and Tula Mining.

The list also includes numerous licences that were issued to individuals, who have been viewed as speculators. In the report handed to the Mining ministry Wednesday, the task force notes that licences had been issued to firms even in instances where the requirements specified in the Mining Act were not met.

“In some instances, licences were issued to entities that at the time of application for the said licences were not incorporated, that is to say that they were neither in possession of a Certificate of Incorporation nor a Certificate of Business Name Registration, making it impossible to establish if in fact they were a legal entity at all,” said the Mohamed Nyaoga-led task force in the report.

The team reviewed 253 licences issued over the 10-year period between 2003 and 2013.

“The task force recommends that relevant appropriate authority should exercise their powers within the Act to ensure compliance with laid down law and procedures. This is an important sector for the Kenyan economy and we need to manage it as such ensuring the maximum benefit to Kenya of her resources.”

In order to address these challenges, the ministry is in the process of digitising all records at former Mines and Geology Department.The task force also scrutinised licences issued between January and May last year. Mining Cabinet Secretary Najib Balala last August revoked all mining licences issued during the period, which he termed as transitional — prior and immediately after the general election — and no major decision could have been made without substantive ministers in office.

Revoking the licences led to an uproar from a segment of the industry, even accusing the cabinet secretary of having solicited a bribe so as not to revoke their licences.