Friday, September 28, 2012

Kenya pins mining hopes on aerial survey, new law

By Drazen Jorgic

NAIROBI (Reuters) - A new mining bill and a nationwide aerial survey of Kenya will boost the country's nascent mining sector and act as a catalyst for foreign investment, Kenya's minister for environment and natural resources said on Thursday.

The east African nation's mining sector has been neglected by successive governments since independence from Britain in 1963, with foreign companies put off by poor infrastructure and an outdated legal framework.

But a surge in global commodity prices and investor appetite for new frontier markets has revived interest in Kenya's mining potential, although few foreign companies have actually invested significant sums in its mines.

Chirau Ali Mwakwere, minister of environment and natural resources, said the new Geology, Minerals and Mining draft bill, which replaces the 1940 Mining Act, was designed to revitalise the sector and incentivise foreign companies.

He warned, however, that the government will want a larger slice of any profits from mineral exportation.

"Hitherto, it has been sort of lopsided in favour of investors. The government was barely getting 5 percent of the profits that they were making," Mwakwere said.

The minister said he expected the new bill to be tabled in parliament by the end of 2012, a timetable some mining executives say is overly ambitious.

Australia's Base Resources will start extracting rutile, zircon and ilmenite next year at Kenya's first large-scale mine, the $300 million (184 million pounds) Kwale mineral sands project.

London-listed African Barrick Gold meanwhile said in July that it was acquiring a licence to prospect for gold in western Kenya.

The government is also in the process of awarding mining rights to its coal blocks in the eastern part of the country.

Under the new draft bill, the government will create the Kenya Mining Corporation (KEMCO), a government agency which will be responsible for investment in the mining sector.

Most of Kenya's mines remain small-scale projects, and Mwakwere said his ministry has asked the central government to authorise a country-wide aerial survey to map out and assess potential mineral resources.

"Kenya is largely under-explored and this whole mineral potential is still unknown," he said.

The aerial surveys will cost Kenya - which has a surface area of 580,000 square kilometres - around 15 billion shillings to complete, Mwakwere said.

(Editing by Duncan Miriri and Catherine Evans)

News

Friday, September 28, 2012

Kenya pins mining hopes on aerial survey, new law

By Drazen Jorgic