State to withdraw mineral dealers’ permits in crackdown

Mining Cabinet Secretary Dan Kazungu (right) during an inspection tour of gemstones dealer Nagin Pattni’s outlet in Nairobi last year. Only 20 per cent of mineral dealers in the country are licensed. [Pius Cheruiyot, Standard]

The Government plans to withdraw all mineral trading licences as it moves to weed out illegal operators and regain control of the multi-billion-shilling industry.

Mining Cabinet Secretary Dan Kazungu told The Standard yesterday all dealers would be vetted afresh in a nationwide crackdown set to begin as early as next week.

“Our estimates show that only 20 per cent of mineral traders are licensed,” he said, adding that the vast majority who did not have permits could be fanning major crimes in the country.

Gold mined in the region, mostly from the unstable Democratic Republic of Congo, is among the various minerals traded informally.

Fresh issuance of trading licences is the first step towards setting up a regional mineral exchange, which will provide a platform for buyers and sellers to transact above board.

Such an arrangement would enable the State to collect revenues from the trade while bolstering confidence since the players would be well known.

A team from the Ministry of Mining has been formed to work with police to crush unlicensed traders – most of whom make huge profits from trading in precious minerals such as gemstones.

Kazungu said the team would start work by Monday next week before new licences were issued.

No new dealer permits have been given since last year, when the ministry suspended issuance as a first step to streamlining the sector.

In 2013, hundreds of mining licences were withdrawn for fear they were issued illegally in an already murky industry.

Weak regulation

Historically, the country has had weak regulation of the mining sector; most of the laws were inherited from the colonial era and hence highly favourable to exporters.

Newly-enacted laws have however sought to remedy the situation by detailing how revenues from the exploitation of the resources are shared between the State and host communities.

The CS is also set to gazette a new notice indicating the royalties schedule for the different minerals and outlining the applicable rates.

Currently, most minerals attract a royalty of five per cent of the value produced. Total mineral production for last year was Sh23.3 billion, more than half being derived from titanium - the lustrous mineral mined in Kwale.

Only 200kg of gold was produced in the country last year, according to official estimates captured in the Economic Survey, but there is a consensus that actual production was much higher.

A new discovery in Western Kenya, thought to be worth billions, would significantly raise gold production going forward.

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