The future is Coltan: An up-to-date Kenyan mining law outlook

The future is Coltan: An up-to-date Kenyan mining law outlook

Posted on March 20th, 2024

In this day and age, the prospect of unearthing any new natural resource discoveries seems unlikely. Unless, of course, we are talking about minerals and deposits from outer space.

It would seem – at least on the face of it – that we have reached the age of a type of enlightenment, where most of the earth’s mysteries have either already been discovered or have been explained, thus, doing away with mystique and mystery about the earth.

That is, until recently, when in January 2024, a rare metallic ore known as Coltan was discovered in Embu County in Kenya. This valuable mineral is used in the manufacture of electronic goods like mobile phones, laptops, and video console games. Previously believed to have been – mostly – found in the Democratic Republic of the Congo, finding the mineral in Kenya is a massive opportunity for international investors and more so, can be seen as a positive development in the world of mining.

The Cabinet Secretary for Mining and the Blue Economy went on record to state that the Government was determined to make the mining industry more vibrant. In doing so, more workers would be employed to assist in the exploration of the minerals and laboratories would be decentralised to fast-track the testing of the Coltan. The Cabinet Secretary went on to state that they would be setting up 8 test laboratories in various regions for testing samples and analysing the quality of the minerals found in a particular area.

On the face of it, Coltan seems to be the answer to the slump in mining in Kenya over the last few years. The discovery of this mineral will also see the creation of jobs on a large scale, thereby reducing the rate of unemployment – which according to Statista is set to increase to 1.64 million people in 2024.

Good news all around it would appear.

Mining in Kenya

According to Business Daily Kenya’s largely untapped mining sector is estimated to have the potential to earn the country USD 6.6 billion (about KES 977 billion), or 10 percent of GDP.

Those are substantial numbers providing the country with amazing opportunities for Foreign Direct Investment, in a market which has, until recently, been unable to attract new investments resulting in most investors redirecting their investments to neighbouring countries. This is due to the fact that the previous administration– in 2019 – had placed a moratorium on the issuing of exploration licences. This was to allow for the fresh mapping of mineral resources through a national airborne survey, and the subsequent building of a digital database for the sector.

The Ministry of Mining has also not renewed licences for companies in the sector since 2015. Those companies that have remained operational have been running under a gazetted notice, with licensees often operating with permits that have already expired. And that means having to seek special clearance from the ministry.

But that’s all about to change….

What are some of the positive steps that have occurred so far?

Firstly, towards the end of 2023, a special police unit to fight illegal mining activities was formed. This occurred after the lifting of the 4-year ban on exploration and prospecting of minerals. This seems to have come at just the right time since the discovery of Coltan – opening up the doors to the exploration and mining of Coltan.

In January this year, the government suspended two Chinese mining companies – Zhengwei and Chuanshan who were mining diatomite in Baringo. They had failed to comply with the requisite regulations and were told – in no uncertain terms – to stop operations immediately.

To enhance transparency when issuing of mineral rights, the state department has taken measures to ensure that the online mining cadastre (OMC) is operational.

With the above in mind, it would seem that there is a definitive move towards zero-tolerance of non-compliance with Mining (Strategic Minerals) Regulations, 2017.

And this should be welcomed wholeheartedly as it would allow for safe prospecting and exploration for minerals such as limestone, gypsum, and diatomite as well as the newly discovered Coltan. Strategic minerals such as uranium and cobalt will, however, be approved on a case-by-case basis guided by mining regulations.

The Mining Laws in Kenya

With good news all around and with the mining sector said to experience a massive upturn in the years to come, thought, naturally, moves to the regulations in place.

Kenya is following in the footsteps of Uganda insofar as the enactment of mining laws to improve the state’s control and oversight of the mining sector is concerned.

Kenyan lawmakers are seeking to make changes to the Mining Act of 2016 (the Act) by passing the  Mining (Amendment) Bill – which was tabled in parliament on 1st of September 2023. The Bill proposes, (amongst other things), to establish a Mining Regulatory Authority – that will control the exploration, extraction, production, processing, refining, transportation, storage exportation, importation, and sale of minerals. The Mining Regulatory Authority is due to replace the current Mining Rights Board, and a Mining Rights Tribunal is to be set up to deal with dispute resolution in the sector.

In addition, the Bill introduces other important amendments that could shift the policy perception rankings of the Kenyan mining sector and attract deeper investment.

In addition (and in a nutshell), the Bill provides for separate implementation of the three key functions in the Act, specifically – policy formulation, administrative, and dispute resolution functions.

The three new sets of regulations that are being proposed include dealing with royalty collection and management, mineral royalty sharing, and gemstone identification and value addition.

The establishment of an independent Mining Regulatory Authority signals an important move in the mining sector, one that’s consistent with other regulatory regimes in Kenya. Also, the establishment of structured institutions with qualified mining experts at the helm will drive further reforms in the sector, making for a welcome change.

The Bill signals a move in the right direction by enhancing the exploration of Kenya’s mineral endowments.

If you have any questions about the information we have set out above or need assistance with a legal matter that we have the experience and expertise to assist with, please don’t hesitate to contact us at TripleOKLaw.

(Sources to whom we give a huge shoutout to their insightful views  – Nation Africa; and here; Business Daily Africa; The Star; The East African; Statista and PWC ).