Najib Balala, cabinet secretary for mining, says the new Mining Bill is ready. The bill will be forwarded to the Cabinet for approval before publication. Balala gave hints of its contents, which include the establishment of the following:
- National Mining Corporation (NMC) – Investment arm of the government in the mining sector. It will hold interests on behalf of the government in mining companies.
- National Mineral Certification Laboratory
- Minerals and Metals Commodity Exchange
- Minerals Sovereign fund
- A 10% free carry interest
At the presser, Mr. Balala also revoked allegedly irregularly issued mining licenses between January and May of this year.
I like the ideas of the NMC, the certification laboratory and the sovereign fund. I hope the certification lab also includes a program to boost the skills set of government officials in the mining ministry – geologists, valuers, financial experts, etc. As I have written before, African governments remain at a disadvantage when dealing with mining companies that far exceed them in capacity. As a result, more often than not they end up not getting the best of deals, all things considered. For instance, Kenya will only get about 5% in royalties from its massive recent rare earth minerals find in Kwale County.
Also, the fund will be great. As long as it is transparently managed and does not become another NSSF, which is currently a cash cow for well connected individuals.
But the proposed bill also has the ludicrous requirement that mining companies get verification from the government 21 days before publishing any information on mineral discoveries. I see mischief in this. If the intention was to ensure that mining companies do not engage in speculative manipulation of the public [like Cortec Kenya appears to have done] why doesn’t the government just have a rule that those who mislead the public on mineral discoveries will be fined?
Given the revenue implications of mineral discoveries and extraction – the central government must share revenue with county governments – the central government geologists ought not be the sole final deciders on the value of discoveries. And if the government insists on pulling through with the proposed directive then county geologists must also have access to the information from mining companies before it is approved for release by the government.
To put it mildly, so far Nairobi has not been transparent about mineral deals. I hope that when the bill gets to parliament MPs will ensure that at the very least it meets minimum standards of transparency required for the proper management of the nation’s mining sector – including membership in the Extractive Industries Transparency Initiative, EITI (see candidature requirements here).