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After finding export permits difficult to come by, Base is now ramping up delivery of its mineral
sands product to shipping facilities in Mombasa
The project is expected to contribute an estimated $US225 million in tax revenues to the
Government over its mine life.
Base is also investing heavily in community
and social infrastructure in Kwale County.
Mining, alongside the nations emerging oil
and gas sector, has now been recognised as
a key future wealth creator for Kenya.
However, expectations of a burgeoning
The 35% local equity requirement has also been replaced with
a new provision enabling the National Government to acquire a 10%
free-carried interest in new mining
operations.
Despite the new regulatory
framework,
Schwarz
expects
Bases existing rights and licenses
to remain unchanged.
The major feature of any change
in legislation, particularly in a longterm investment environment like
minerals, is that it must provide
stability. It needs to provide continuity of pre-existing rights for current
licenses and leases going forward
and that really has been the main
focus of concern in this mining bill
for us. It looks like this will occur.
However, Schwarz believes the
new regulations will help prevent
complications for future projects.
The radically new system of
government will take a bit of time to
bed down. The counties do need
to see benefit from their own natural resources. This is going to take
time to evolve properly, but the new
Mining Bill provides for a sharing of
mineral royalties to the counties and a portion
to the communities as well. That will go a long
way to redressing the view that the counties
are being deprived of any benefit from their
mineral resources.
While the new regulations are more certain,
the politics surrounding them are anything
but.
The Bill, which was passed by parliament in
late October and at the time of print is awaiting
President Uhuru Kenyattas assent, has reignited a power struggle between the County
Senate and the National Assembly.
Senate members, who
want a greater percentage of royalties directed
to counties and local communities, said they werent
adequately consulted during
the parliamentary process
and demanded the Bill be
sent back to parliament for
further review.
Investment banker, Amish
Gupta of Standard Investment Bank in East Africa,
said while there was strong
global interest in Kenyas
mineral sector, political and community instability puts it at risk.
He believes if mining companies chose to
make local community members direct shareholders it could help avoid damaging disputes.
The co-operative society movement is
very strong in Kenya. There are many ways in
structuring, in how you can get the community
involved in shareholding, Gupta said.
A lot of the sentiments around politics with
the community can be managed well, in other
words we can de-politicise community issues, he said.
The community can act as lobbyist with
The Kwale mineral sands mine near Mombasa in Kenya. The mine is the countrys first
commercial-scale minerals operation
county governments to ensure they dont restrict the growth of their own company.
Despite many of the inevitable challenges,
Gladys Kianji chair of mineral exploration industry group, the Geological Society of Kenya
is confident about the sectors future.
I see minerals and mining as being one of
the top income earners for this country. I believe that in five years well begin to see the
change and in 10 years it will be clear that
this country has become a mineral economy
country like several other countries around
the world, she said.