Business

Kenya minister scraps mining licences and ups royalties

The mining minister Najib Balala
Image caption The mining minister Najib Balala said the licences had been issued in a hurry

The Kenyan government has revoked all prospecting and mining licences granted during the first five months of this year after complaints about the issuing process.

The country's commissioner of mines, Moses Masibo, has been suspended.

The East African country has also raised royalties on minerals mined within its borders.

Kenya has proven deposits of titanium, gold and coal.

New deposits of minerals such as titanium, copper and niobium have recently been discovered that are thought to be worth billions of dollars.

Mining minister Najib Balala told a news conference the licences in question had been issued in a hurry and without transparency.

"We want to ensure the country gains from the mineral potential," he said.

"Any licence issued between 14 January and 15 May is hereby revoked immediately as we review each case to determine their nature and benefit to the country."

'Shrouded in secrecy'

Earlier this year, the mining secretary promised to review laws regulating the sector, which currently includes more than 300 local and foreign firms either searching for minerals or in small scale production.

BBC World Service's Africa editor, Richard Hamilton, said traditionally Kenya had not had a large mining sector.

But recent discoveries have encouraged a rush by local and international speculators.

"Among those discoveries is a rare mineral called Niobium which has been found along the Kenyan coast," he said.

"Its properties make steel more heat-resistant and it's used in everything from oil pipelines to jet engines and MRI scanners."

Last week, the IMF expressed concern over the new mining contracts, saying they were shrouded in secrecy.

Mr Balala now says he wants to make sure that such deals are more transparent and is introducing new legislation in the sector.

Under the new plans, royalties on gold would rise to 5% of gross sales value from the current level of 2.5%-3%.

Other minerals, including rare earths, niobium and titanium ores, would see royalties rise from 3% of gross sales value to 10%.

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