Will Kenya’s strategic mining reforms catalyse a sector renaissance?

 

 

By Bonface Orucho, via bird story agency

Kenya’s mining and extractives sector is flourishing, reaping the rewards of recent reforms that promise to increase sector revenues as the country positions itself for economic gains from the burgeoning industry.

From legal and legislative reforms to seamless mapping and surveying of available resources, the East African country is showing increased interest in tapping into new revenue-generating opportunities in the sector.

A recent find of Coltan deposits is the latest development that promises to increase the country’s mineral portfolio and generate higher revenues.

State news agency Kenya Broadcasting Corporation (KBC) reported on January 25 that the country’s mining minister, Salim Mvurya, confirmed the availability of the highly valuable mineral.

“We can now begin to assess the economic value of that particular mineral,” he noted, adding that the specific quantities of the resource were yet to be determined.

Coltan is a highly valuable mineral used in the production of tantalum capacitors for a wide range of electronic devices.

The Democratic Republic of Congo (DRC), the world’s largest producer of coltan, generates 860 metric tons of the mineral annually, according to the US Geological Survey. Other big producers on the continent include Rwanda and Nigeria.

According to Oluwale Ojewale, the regional director of the Institute for Security Studies, “coltan is indispensable to the manufacture of all modern technological devices,” making it a vital resource in the age of digitalization.

The discovery of coltan is the result of a nationwide geophysical survey that has been ongoing since 2019 as Kenya strategically pursues mineral sector reforms in a bid to better manage and efficiently increase revenues.

Dubbed the ‘Kenya Nationwide Airborne Geophysical Survey (KNAGS)’, the survey “captured over three-million-nine kilometers of magnetic, radiometric and in-line high density dGPS data to cover the entire Kenyan territory,” according to Oasis Montaj, a geo-mapping company that took part in the survey.

The mineral adds to a long yet mainly unexplored list of valuable minerals discovered in Kenya, including titanium, gold, copper deposits, and manganese, among others.

Despite this abundance, Kenya’s mining revenues averaged just over US$100 million annually between 2009 and 2023, according to data from the Kenya National Bureau of Statistics. This is less than 1% of the country’s GDP.

In an open letter to President Ruto dated December 31, 2023, the Kenya Chamber of Mines, an association of miners, exploration companies, mineral dealers and other stakeholders, projects the industry could contribute 10% to the country’s GDP and more than US $10 billion before 2030.

“We are the sector that offers the promise of employment and wealth creation at the least cost to the exchequer, across Kenya,” Patrick Kanyoro, the chairperson of KCM, notes in the letter.

However, recognizing the sector’s potential, the East African country has been making reforms in the sector to boost revenues.

In October 2023, Kenya lifted a four-year ban on the issuance of mining licenses across the country imposed to streamline the sector by mapping all mineral resources available in the country.

Also, in the past three months, the state has undertaken a comprehensive audit of all mineral rights holders, revoking over 1,500 mining licenses acquired illegally.

According to the State Department of Mining, other ongoing reforms include royalty collection and management, mineral royalty sharing, gemstone identification, value addition and strategic streamlining of the artisanal mining sub-sector.

A government decision to classify cobalt, tantalum, lithium, coltan, niobium, Copper and other rare earth minerals as ‘strategic minerals’ in November 2023 is another critical move to reap higher revenues amidst an economic boom in the local and global mining sectors.

The International Energy Agency projects that the demand for rare earth metals will grow by three to seven fold by 2040.

Already, ongoing reforms have caught the attention of international mining companies, with new applications for exploration surging and general investments in the mining sector registering growth.

With ongoing assessments of the nationwide survey set to unveil more mineral resources across the country, stakeholders believe ongoing reforms could bring significant economic benefits for the east African country.

However, in a past interview with bird story agency, Duma Sisulu, a co-investor in a battery minerals company, insisted on the need to advance local processing of minerals to increase revenues.

“Africa needs to build industries to process and refine its raw, critical minerals,” he explained.

bird story agency