BRIEF OUTLINE
1. INTRODUCTION
This Report has been prepared in connection with a project being undertaken
jointly by the EACS and COMSEC on the promotion and development of
extractive mineral industries and mineral processing industries in the EAC. The
Report presents information of mineral resources and utilisation potential in
Kenya and the applicable laws and regulations, and other arrangements for
investment in these industries.
Although minerals and their products play an important role in Kenya’s
economy, the mineral sector contributes only about 1% to the GDP, which is
rather low compared to the available potential
2.0 Mineral Resources and Utilisation Potential
2.1 Background
Kenya is well endowed with bulk mineral resources, some of which are already
being exploited by private companies and some are yet to be prospected and
exploited.
Minerals found in Kenya include inter alia soda ash, fluorite, diatomite, carbon
dioxide, gold, iron ore, lead, vermiculite, Kyanite, manganese, titanium, silica
sands, gemstones and precious minerals, gypsum and limestone.
2.2 Mineral Products
2.2.1 Soda ash is produced from the mineral trona that occurs at Lake Magadi
which is situated within the Great Rift Valley. The commodity is produced by
the Magadi Soda Company Limited in one of the biggest known natural sources
of trona in the world. The bulk of the soda ash is exported but a good deal of the
commodity is used in various local industries.
Trona occurs together with common salt and Lake Magadi is also a major
source of crude salt.
2.2.2 Fluorspar is mined to the east of the town of Eldoret within the Rift
Valley. The Kenya Fluorspar Company Limited operates the mine. The mine
produces acid grade Fluorspar of which the bulk is for export.
The production of fluorspar was 130,100 tons in 2008 but decreased to 5,500
tonnes in 2009 due to a decline in the world market.
2.2.3 Diatomite is produced about 130 kms to the north west of Nairobi, but it
is known to occur in a number of localities within the Rift Valley. The
commodity is produced for both export and local markets. Its potential is high.
2.2.4 Vermiculite is mined in the northern central part of the Rift Valley
Province within the pre-Cambrian rocks of Mozambique belt.
2.2.5 Limestone and Lime Products are produced for the manufacture of
cement and other industrial products. Cement and construction industries take
the bulk of the limestone mined and quarried. Limestones, marbles and
dolomites widely occur in the country and huge deposits of the commodities are
known to exist. Along the coastal belt, Bamburi Portland Cement Company
Limited exploits kunkar and crystalline limestone mainly coral reefs in the
vicinity.
Currently, five cement factories; Athi River, Bamburi, National, Mombasa and
East Africa Portland produce over 1.5 million tonnes of cement to meet local
needs.
Natural Carbon dioxide associated with the rift system, is currently being
extracted from Kereita , about 50 kms north west of Nairobi by Carbacid (CO2
Mfg) Limited and marketed for industrial purposes within the East African
region.
Other Industrial Minerals exploited include gypsum which is mined in Tana
River in the Coastal belt, Kajiado near Nairobi and in Turkana in North Western
Kenya. The Gypsum mined is supplied to local cement plants and some is
exported to Uganda
Gemstones: Kenya boasts of a wide range of coloured and ornamental stones,
which are mined in the country. These include mainly in order of importance,
ruby, tsavorite, sapphire, corundum various types of garnet, peridot,
tourmaline, aquamarine, Zoisite and rhodolite.
Gemstones and gold are mainly for the export market though small-scale
processing takes place locally to manufacture various ornamental products.
Most of the precious minerals produced undergo some degree of processing to
conform to some specific market requirements. The commonest forms of
processing are size reduction, drying, concentration and grading.
To a certain extent these forms of processing ultimately add value to the mineral
products which in turn enhance revenue earnings, create jobs and promote
import substitution of various products.
Between 1999 and 2003, Ruby was the leading gemstone produced in Kenya
Lead was being produced from galena, which was being mined in small
quantities in the coastal belt, where it was smelted together with scrap lead to
manufacturer lead batteries.
Gold is known to occur in a number of places in gold bearing greenstone rocks
of Nyanzian Craton in Western Kenya. Areas with alluvial gold are being
harvested by local miners through conventional panning in the northern part of
the country.
Titanium is known to occur in large quantities at the coastal area. Mining of the
mineral is expected to commence soon.
Iron Ore Deposits are found in the form of oxides: Magnetite (Fe3O4), hematite
(Fe2O3), goethite, limonite: carbonates-siderite and anchorites.
There are four main types of iron ore deposits being worked on namely:
magnetite, titanomagnetite, massive hematite and pisolitic ironstone deposits.
Considerable deposits occur in:
• Marmante in the greater Tharaka district,
• Ikutha in Kitui now mutomo district,
• Migori in South Nyanza
• Wanjala in Taita district
• Ishiara in Mbeere District
• Baragoi in Samburu District
• Bukura south west of Kakamega
• Uyoma in Bondo District
• Maturu in Lugari District
• Malakisi in Bungoma District
• Ruri in Suba District
• Homa Hills at Homa Bay
• Mfangano Island in Suba District
These deposits occur as bands among the regionally metamorphosed sediments
and also within sedimentary rocks. There are others associated with carbonatite
complexes as is the case in Homa, Central Nyanza where they occur as
segregations with lengths and widths of about 400m and 200m respectively.
Banded Iron formation is found on Samia hills in Busia district where it is
associated with volcanic rocks. It has been smelted in early days by the local
communities to make implements for various uses.
Summary of iron ore deposits Resources
Location Type Quantity Quality
Marimante Iron Ore
Deposit
Approximately 108
mile NE of Nairobi
in Meru District
(38o 57’ E 0 10’ S)
Titaniferous
magnetite (Ilmenite)
Area extend float
material over 200ft
traced for strike
distance 0.5 miles
Grab sample
assay yield
40-50 % iron
and 5-15%
Tio2
Mraru Ridge Iron
Deposit
Mraru Ridge, 1.8
Km SSW of Ndile
Shopping Center 3o
21’ S and 38 o
28’ E
sheet 189/4
Magnetite Not known Fe2O3 66.98%
and 8.7%
TiO2
Wanjala Magnetite
Ore Deposit
Taita District at
location 38 o
10’ E
Magnetite Main occurrence
750m long by 3m
thick on average
Float lateral estimate
59-63 % iron
and 3 o 15’ S).
50m and thickness
0.3-1.5 m
Ikutha Iron Ore
Deposit
7 Km south of
Ikutha shopping
center, Kitui District
approximately 38 o
11’ E and 2 o 8’ S).
Magnetite veins
Ore reserve estimate
80,000 tonnes of
66% Fe2O3 magnetite
concentrate and
31,000 tonnes of 35
% P2O5 apatite
58.7 %
Fe2O3and 7.6
% P2O5
Bukura Iron Ore
Deposit
15 kilometers south-
west of Kakamega
Pyrite veins
This lode is
estimated to contain
17 million tonnes of
ore down to a depth
of 90 metres and it is
likely the reserves
may exceed this
figure since lateral
extensions are known
to exist.
Not done
Ndere Island
In Kisumu District
the whole of the
Ndere Island in the
Winam Gulf
Banded limonite
ironstones
Many of the
ironstone bands are 5
metres thick, but
some, less persistent
range from 15 to 60
metres in thickness
Not done
At Mrima Hill
South of Mombasa
Goethite (limonite)
and magnetite
3 and 15 million
tonnes of Fe2O3.
10 to over
50% Fe2O3.
Uyoma Peninsular,
northern shores
Lake Victoria
Titaniferous
magnetite
(Ilmenite)(containing
13% TiO2) beach
sands
The tonnage present
is not known but
appears to be large
and sufficient to
warrant further
investigation
Magnetite
concentrations
of up to 90%
are known to
occur.
2.3 An overview of legal and financial framework for Mining Investment
in Kenya
2.3.1 Mineral Resources Development
All mineral exploration, exploitation and trading activities in Kenya are
currently regulated under the auspices of the Mining Act Cap. 306 of the Laws
of Kenya. This act, promulgated in 1940, has since been reviewed on two
occasions, which is 1972 and 1987 to try to match it to contemporary
international mining practice. However, it has still been found to be wanting.
As such a full review was undertaken recently, to enable it meet current and
future challenges of Mineral Resources Development in the country. This
reviewed draft mineral law is supposed to provide for lesser discretionary
powers to the licensing authorities, and hence provide for greater security of
tenure. It also aims to provide for greater environmental protection, as
embodied in the Environmental Management and Coordination Act No. 8 of
1999 (EMCA), from the undesirable effects of mining activities on the
environment. Together with the review of the Mining Act, the Government of
Kenya is also in the process of formulating a National Minerals and Mining
Policy. This draft policy aims to provide for a written declaration of the
framework of principles and policies that will guide the reform of the mining
sector.
2.3.2 Property and Land Use Laws
The Kenya Constitution provides a guarantee against expropriation of private
property. Expropriation may only occur either for security interest or public
purpose, where upon fair and prompt compensation is guaranteed.
2.3.3 Foreign Investment Codes
Under the Foreign Investment Protection Act (FIPA), foreign investors can
repatriate capital and profits. To be eligible for FIPA guarantees, investors are
required to obtain a certificate of Approved Enterprises from the Ministry of
Finance. The Act also protects foreign investment against expropriation.
Kenya is also a member of the Multilateral Investment Guarantee Agency
(MIGA).
2.3.4 Trade Law, Export and Import Regulations
A trade license is required for anybody who wants to undertake any business
within the country. However, the key reforms that the Government has carried
out have lead to:
- Abolishment of export and import licensing except for a few items listed in
the Imports, Exports and Essential Supplies Act (Cap. 502);
- Revocation of all export duties;
- Rationalization and reduction of import tariffs.
2.3.5 Dispute Resolution
The laws of the country have provisions for dispute resolution. In mining, the
Mining Act Cap 306 of the Laws of Kenya has provisions for solving mining
disputes. Kenya is also a member of the International Centre for the Settlement
of Investment Disputes (ICSID).
2.3.6 Mining and Related Operations
All un-extracted minerals under or upon any land, as per the Mining Act, are
vested in the Government subject to any rights which, under the Act, have been
granted to any other person.
The following five types of licences can be granted:-
1. Mining Location;
2. Exclusive Prospecting Licence (EPL);
3. Special Licence;
4. Mining Lease;
5. Special Mining Lease.
2.3.6.1 Mining locations are mostly granted to small-scale miners. The
conditions attached to their grant are less onerous than in the case of other titles.
A location consists of a block of not more than ten claims. A claim is an area
of:
(a) 20,000m2 (or 200 metres x 100 metres) in the case of precious metals (gold,
silver etc) and precious stones (ruby, emerald, opal etc)
(b) 50,000m2 (or 250 metres x 200m) for all other minerals (copper, lead,
graphite, barite etc).
2.3.6.2 An Exclusive Prospecting Licence or Special Licence is granted
over an area selected by the applicant who has a valid Prospecting Right, has
deposited a sum of KShs. 2,000/= with the Provincial Commissioner of the
Province in the area over which the application made is situated, has written
consents from relevant local authorities, has consents from land owners, etc.
2.3.6.3 A Mining Lease or a Special Mining Lease is granted for the
exploitation of a mineral deposit, which has been discovered following
successful prospecting and exploration under the first three types of licences.
2.3.7 Taxation
Taxation issues are covered in the Income Tax Act and VAT Act. The
maximum rate of income tax is 30%. The highest rate of VAT is 16% and
lowest is 12%. Imported goods are charged import duties. Some goods are zero
rated or tax exempted entirely.
2.3.8 Royalties
The law provides that royalties are paid for all minerals. The rates of royalties
are negotiable within the commonwealth countries’ rates. The proposed
legislation will specify rates for different classes of minerals.
2. 4 Mineral Availability and Supply
2.1 Mineral Resources (Mineral Potential)
Key parameters (Table and Map)
Table 1 Mineral production from 2005 to 2009
QUANTITY AND VALUE ( IN KSHS ) OF THE MINERAL PRODUCTION FOR THE PERIOD 2005 TO 2009
2005 2006 2007 2008 2009
MINERAL Unit Quantity Value Quantity Value Quantity Value Quantity Value Quantity Value
Soda Ash MT 360,161 3,782,249,000 374,210 4,532,391,000 386,578 4,769,457,000 502,846 8,881,714,000 404,904
6,085,430,000
Fluorspar MT 109,594 1,061,908,000 132,030 1,155,794,000 85,115 995,867,000 130,100 1,949,194,287 5,500
122,540,000
Crushed Refined Soda MT 640,291 3,287,710,000 662,939 4,317,757,000 843,043 5,448,046,000 865,788 6,974,924,000 948,076
13,202,957,000
Salt (from Magadi) MT 26,595 110,382,000 35,024 164,438,000 11,596 58,068,000 24,345 139,171,000 24,125
154,730,000
Carbon Dioxide MT 8,723 63,310,000 9,359 66,730,000 11,028 78,630,000 22,030 117,884,660 15,711
84,071,080*
Diatomite MT 243 9,865,000 185 7,735,000 201 8,859,000 72 3,483,917 239
14,482,508
Gold GMS 616 653,339,000 432 583,865,000 3,023 3,922,892,000 339,923 592,890,948 1,055,070
2,283,686,205
Gemstones GMS 5,035 101,501,000 5,044 94,046,000 8927 110,975,000 20,933,983 178,606,352 474,992,600
158,162,279
Grand Total 9,060,459,000 10,922,756,000 15,392,794,000 18,837,869,164
22,021,987,992
Table 2 QUANTITY AND VALUE( IN KSHS) OF THE MINERAL EXPORT FOR THE PERIOD 2005 TO 2009
2005 2006 2007 2008 2009
MINERAL UNIT Quantity Value(Kshs) Quantity Value (Kshs) Quantity Value (Kshs) Quantity Value (Kshs) Quantity Value (Kshs)
Soda Ash MT 321,429 3,858,117,000 316,077 4,026,646,000 307,289 3,937,130,000 389,100 7,214,146,000 365,358 5,086,583,000
Gold GMS 616,156 653,398,888 432,371 583,864,799 3,023,325 3,922,891,880 339,923 592,890,948 1,055,070 2,283,686,205
Fluorspar MT 109,594 1,061,907,940 132,030 1,155,794,760 85,115 995,867,000 130,100 1,949,194,287 5,500 122,540,000
Diatomite MT 243 9,865, 390 185 7,734,573 201 8,858,820 72 3,483,917 239 14,482,508
Crushed Refined Soda MT 3,293 24,017,000 5,085 35,736,000 54,695 430,391,000 38,280 321,140,000
16,331 140,929,000
Salt (Magadi) MT 72 1,300,800 837 6,627,600 2,109 15,505,000 1,106 12,574,000
592 6,655,000
Carbon Dioxide MT 5,048 118,664,603 5,645 127,875,238 22,030 117,884,660
5,834 129,413,044
Gemstones GMS 68,404,514 340,157,980 50,439,006 240,467,344 119,286,901 199,135,181 20,933,983 178,606,352 474,992,600 158,162,279
Other Minerals MT 58,260 179,594,065 95,012 90,020,643 218,043 409,491,000 67,486 63,745,187
23,109 43,841,005
TOTAL 6,128,359,063 6,265,865,322 10,047,145,119 10,453,665,351 7,986,292,041
Summary of the Mineral resources
Mineral Type Location Land Ownership Quantity
(Tonnes)
Remarks
Iron ore Marimante Private / Communal Not quantified
but estimated
in millions
Small scale exploitation
and evaluation going on
Kitui Private / Trust land Not quantified
but estimated
in millions
Considerable
exploitation and
evaluation going on
Wanjala Trust land Not quantified
but estimated
in millions
Exploitation and
evaluation going on
Migori Private Not quantified
but estimated
in millions
Exploitation and
evaluation going on
Manganese Baringo Private / Communal Not quantified
but estimated
in thousands
Discovered recently,
further investigations
being planned
Kilifi Private / communal Not quantified
but estimated
in thousands
Evaluation going on
Garnierite
(Nickel Silicate)
Telot, West
Pokot
Private / communal Estimated 5.3
Million
Evaluation going on
Sphalerite (Zinc
Ore)
Kilifi Private / Communal Estimated
0.2million
Not proven
Migori Private / Communal Inferred
1.5million
Not proven
Titanium Coastal Kenya Private / Communal Estimated 3.1
billions
Full potential not
determined and
exploitation to start
soon
Limestone Various parts Trust/ communal,
private
Vast,
estimated in
billions
Full potential not
determined
Gypsum Various parts,
mostly North
eastern, Coastal
, Rift valley,
Eastern parts
Trust/ communal,
private
Vast,
estimated in
billions,
regenerates
The deposits ,
renewable, regenerates
themselves
Trona Lake Magadi, Trust. communal Vast also
estimated in
billions
Regenerates itself and
exploitation has been
going on for long.
Major mining operation
in the Country
Diatomite Gilgil, Naivasha Private Estimated at
thousands
Being exploited
Clay Various parts Trust/ communal,
private
Estimated at
billions
Being exploited and
evaluated
Glass Sands Coast, Eastern Private Estimated at
billions
Being exploited at the
coast
PART II (not considered as yet)
APPLICABLE LAWS AND REGULATIONS
LEGISLATIVE AND ADMINISTRATIVE FRAMEWORK
5.1 Applicable policy and guidelines
Mining Act Cap 306
Trading in Unwrought Precious Metals Act, cap 309
Diamond Industry protection Act, Cap 310
Environmental Management and Coordination Act, EMCA 1999
Vision 2030
Below is a list of policies and guidelines (national, regional, sub-regional
level) applicable to the activities related to mineral exploration,
processing, development and production; mineral export and import and
fiscal incentive schemes in the mineral sector in Kenya.
5.2 Applicable legislation
Below are list of laws, regulations, orders and other legal instruments
(national, regional, sub-regional level) applicable to the activities related
to mineral exploration, processing, development and production; mineral
exports and imports and fiscal incentive schemes in the mineral sector in
Kenya.
5.3 Applicable Agreements, Contracts, Licences, Permits, Forms
Below are list of agreements, contracts, licences, permits, forms and other
legal instruments (national, regional, sub-regional level) applicable to the
activities related to mineral exploration, processing, development and
production; mineral exports and imports and fiscal incentive schemes in
the mineral sector in Kenya.
PART III
3.0 Challenges and Constraints for Investment and Development
of the Extractive and Processing Industries
3.1 Access to land to for mineral exploration and mining
Land is owned either by State in trust, privately or communally on
freehold or leasehold terms. The intricacies involved in its access depend
on who owns it. Trust lands may not pose major challenges but private
and communal ones may despite, the fact that, minerals are vested in the
State.
3.2 Conflict between land rights and mineral rights
This is intertwined with access to land, only that in this case there is an
element of competing land uses. It is only in cases where public interest is
at stake that the state may compulsorily acquire land and avail it for
mineral resources development or any other use beneficial to greater
public, otherwise a mineral developers are required to seek consents the
owner(s)
3.3 Population Density
Areas with high population densities often pose challenges related to land
rights, ownership and compensation. At times exploration or mining
companies have to deal with a large number of people whose consent
must be sought. The Central, western and coastal parts of Kenya have the
largest rural populations. However, as can be seen in the following map,
large mineralized parts of the country have low population densities To
address issues related to land acquisition or leasing, the Government has
put in place a putting in framework to assist in the leasing and acquisition
of land for exploration and mining.
3.4 Mineral Occurrences is Game Parks and Reserves
Game parks and reserves pose a challenge to mining and mineral
processing because they are usually categorized as environmentally
sensitive areas. Consent has to be sought from the relevant authorities and
comprehensive Environmental Impact Assessment is required prior to any
consent being issued. The following map shows various parts of the
country that are gazetted as game parks or game reserves
3.5 Mineral Occurrences in Forest Reserves
Forest reserves are also designated as environmentally sensitive areas.
Some of them like the Mau Forest in central Kenya are water catchment
zones. Others such as the Kakamega Forest in western Kenya are
protected nature reserves. The following satellite image shows forested
areas, some of which are gazetted forest reserves. Consent from the
relevant Government authorities is required prior to any exploration or
mining activities
3.6 Environmental Conservation
Investors in Kenya are required to comply with environmental standards.
Developers of all projects are, therefore, required to carry out
Environmental Impact Assessments (EIA) prior to project
implementation. Companies are required to submit their EIA assessment
reports to the National Environment Management Authority (NEMA),
which is the principal regulatory agency, for verification by the
environment auditors before they can receive an Environmental Impact
Assessment license.
3.7 Availability of Energy
Kenya’s total installed power generating capacity is around 1200 MW, of
which hydropower contributes 71%, oil 22%, and geo-thermal the rest.
The Rural Electrification Mineral Zones Programme (REP) was
introduced in 1973 to promote access for low-income homes, and is
funded by a mix of external (loans) and internal revenue. A few other
independent power producers have been established in the country thus
increasing the generating capacity. The provision of electric power in
areas with mineral resources will encourage mining and processing.
3.8 Inadequacy of mineral and geological data
Most of the geological work done in most parts of the country has been at
reconnaissance level. It focus mainly on rock identification and
understanding o f general stratigraphy. due to the cost involved mineral
evaluation on many mineral occurences has not been done. This has been
lest to the private prospectors and government left to to provide primary
geological data
3.9 Capital for investment in the mineral sector
Minerals and mining industry is a high risk ventures requiring vast capital
outlays and with no immediate registration of benefits. Therefore, most of
the credit providers shy away from the industry preferring instead to deal
with ones with low risks and faster returns.
3.10 Regulation of small-scale mining activities
Small scale mining is undertaken in haphazard manner and most of
those engaged in the industry treat it as a part time vocation thus
making it difficult to regulate their activities and keep track of the
operations.
3.11 Mineral processing for value addition
Most of minerals, especially non industrial ones, produced in the
country are used locally and / or exported without being value added
owing inadequate capacity to so. There are deliberate efforts to
promote carrying out of value addition of the minerals before being
exported in order to maximize benefits accruing from development
of mineral resources. Industrial minerals produced are used directly
in industries to produce various products which include cement ,
ceramics, slabs, etc
3.12 Mineral promotion and marketing
The mineral potential in the country has not sufficiently promote
owing to inadequate appropriate information which could stimulate
interest in the industry. The kind of information available on mineral
potential is scant and does not answer to the needs of the investors.
3.13 Inadequate legal framework
This may not be an issue once the proposed legislative and
institutional frameworks are operationalized. The proposed measures
have been tailored to address the problems that had bedevilled the
industry for a long time with a view to re-engineering the regulatory
regime and revamp and stimulate interest in the industry
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