Gemstone dealers under fire as state moves to enforce mining royalties

Mining Principal Secretary Harry Kimutai says the delay in the formation of the CDACs continues to fuel illicit financial flows and deny the country revenue. [File, Standard] 

The government has launched a major crackdown on gemstone dealers, frustrating the formation of Community Development Agreement Committees (CDACs) in their areas of operation.

This is in spite of the existence of the Mining Act and mining regulations enacted in 2016.

Speaking in Taita Taveta on Wednesday, senior Ministry of Mining officials noted that mining operations in the region and across the country have long been characterised by a "veil of secrecy", with a high prevalence of illegal, unregulated, and opaque activities that result in significant revenue losses for the government and minimal benefits for local communities.

During a fact-finding mission in the region, Mining Principal Secretary Harry Kimutai ordered Rockland Kenya Limited to form the CDAC in a bid to streamline mining activities in the region.

The firm has been extracting gemstones inside Tsavo West National Park in Kasigau Location, Voi Sub-County, since 1971.

The PS noted that the delay in the formation of the CDACs continues to fuel illicit financial flows and deny the country billions of shillings in revenue, leading to frequent land disputes, particularly in mining areas where communities are often not compensated.

He noted that the mining sector contributes less than one per cent to the country’s GDP, even though estimates suggest it could account for up to 10 per cent if properly managed.

Kimutai said the formation of the CDAC will compel the mining investor to annually pay one per cent of gross gemstone sales to the Kasigau community for rural development.

The PS promised to ensure all mining investors like Rockland form the CDAC and pay revenue for the benefit of the local community.

“I will implement the law and will backdate the payout since the enactment of the law in 2016. Those failing to comply will face the full force of the law,” he warned.

“We would like to know how much Rockland has collected so far since 2016 and what is due to the local community. The money will directly go to the people, and payment will be backdated,” the PS added.

Kimutai was reacting to complaints by residents that investors have not been supporting development in areas where they operate.

“The county has challenges in on-source revenue, and we have not seen any benefits from the vast mineral resources available in the region,” Wundanyi MP Danson Mwashako said.

“I have a problem with Rockland, Aqua and Bridges International Mining Companies. The investors have not paid even a single cent to the local community for over 40 years they have been operating in the region,” said Mwashako, who is also a member of the National Assembly Parliamentary Budget Committee.

On Wednesday, senior officials of the Rockland Kenya Limited appeared before the County Mining Officer Thomas Kipngeny in Wundanyi town, where they were directed to immediately form the CDAC in line with the new Mining Act.

The official said his office will soon issue notices for public participation forums to Rockland, among other companies operating in the region, in a bid to form the CDACs.

Mr Kipngenyi said investors are required to pay to the community and the government one per cent and six per cent, respectively, of gross gemstone sales to the community and government as royalties.

“The management of Rockland told me that 30 per cent of the workforce is derived from the Kasigau community, and we will go to the ground to prove their claims. Formation of the CDACs is a must,” the official told The Standard yesterday.

Records of the Mining Ministry indicate that about 70 per cent of gemstone mining in the country is carried out in the region, but the mines are only benefiting outsiders at the expense of locals, who are living in abject poverty.

Former Deputy Governor Majala Mlagui said there were many mining investors extracting minerals in the region and not contributing to the rural development.

“The highest royalties come from the local gemstones, which also contribute more resources to the GDP and economy at large, but nothing is ploughed back for development,” she notes.

The county is rich with a wide variety of minerals in the world. Gemstones like ruby, tsavorite, ruby and green garnets have caused many people to migrate to the area.

Despite being home to valuable gemstones like tsavorite, many miners operate without proper licensing, often relying on brokers to sell minerals through illicit channels.