Mining Act 2016

This Act was assented by the President on 6th May 2016. The purpose of the Act is to give effect to Articles 60, 62 (1)(f), 66 (2), 69 and 71 of the Constitution in so far as they apply to minerals; provide for prospecting, mining, processing, refining, treatment, transport and any dealings in minerals. This Act however does not apply to petroleum and hydrocarbon gases.

1.1 Ownership of minerals

Every mineral in its natural state in, under or upon land in Kenya; in or under a lake, river, stream, or water courses in Kenya; in the exclusive economic zone and an area covered by the territorial sea or continental shelf is the property of the Republic and is vested in the National Government in trust for the people of Kenya.

In addition to this, the State has a right of pre-emption of all strategic minerals raised, won or obtained within the territory of Kenya before they are sold.

1.2 Administration of the Act

The Cabinet Secretary (CS) in charge of mining is responsible for the administration of the Mining Act and has powers to develop regulations to provide for activities in the mining life cycle. Further, the law provides for a Mineral Rights Board that will support the CS on administration aspects such as granting and revoking licences, designating areas for certain mining operations such as small scale and artisanal mining operations, excluding areas from mining activity.

The CS can declare certain minerals or deposits to be strategic by advising and seeking approval of the Cabinet. The Act also establishes two directorates to assist with the administration – the Directorate of Mines and the Directorate of Geological Survey. Together, they will manage the activities and information related to mining operations in the country including establishing operational linkages between the national and county governments.

1.3 Licencing

The Act provides for the following operations, namely:

1.3.1 Large scale operations

This operation provides for the following licences:

Licence type Eligibility Area Terms Restrictions
Reconnaissance licence Citizen with sound mind, 18 years of age and above, and required technical and financial expertise; or corporate body registered and established in Kenya ·      Minimum – one (1) block

·      Maximum – 5,000 contiguous blocks

§  Maximum: 2 years

§  Condition: Not renewable

§  Non-exclusive Work commencement: 3 months from licence approval

§  Fees: annual charge based on area of recon

§  Reports: semi-annual and annual

§  Amendments: Allowable on application to CS

 

§  Existing mineral rights

§  Mining licence approved for that area

§  Finds and data collected are property of GoK; at end of operations all data and records must be surrendered

§  No subsurface work

§  Not transferable

 

Prospecting licence  

Citizen with sound mind, 18 years of age and above, and required technical and financial expertise; or corporate body registered and established in Kenya

 

 

§  Minimum – one (1) block

§  Maximum – 1,500 contiguous blocks

 

 

§  Maximum: three (3) years

§  Condition: Renewable, not more than two (2) times, not more than three (3) years

§  Exclusive

§  Work commencement: 3 months after obtaining licence approval or at approved time in work program

§  Fees: None

§  Reports: Issued quarterly or on requirement basis by the CS

§  Amendments: Allowable on application to CS

 

 

§  Minerals found belong to the national government

§  Obligation to notify of any discoveries immediately

§  Not transferable unless under consent by cabinet secretary

§  Work program budgets must be paid to MoM if work obligations are not met within stipulated time.

§  Renewals submitted 3 months before expiry

§  Relinquishment required with each renewal: minimum of 125 blocks and not less than ½ the number of blocks

§  Contiguous prospecting licences for same term and mineral are consolidated

 

Retention licence  

§  Holder of prospecting licence that has identified a mineral deposit with potential commerciality but deposit cannot be developed immediately

 

Same as prospecting licence or mining licence

 

 

§  Maximum: two (2) years

§  Condition: Applies to an area whole, or a part, of the area covered by a prospecting licence.

§  Condition: Renewable, once and for not more than two (2) years

 

 

 

§  CS may compel holder to apply for mining licence, if discoveries are commercial and recoverable

§  Licence may be revoked if holder of retention licence doesn’t show just cause for declined application

 

 

Mining licence

 

§  Citizen with sound mind, 18 years of age and above, and required technical and financial expertise; or corporate body registered and established in Kenya

§  Holder of prospecting licence who has notified CS of discovery in their licenced areas

 

 

Same as prospecting licence, reconnaissance licence, or retention licence

 

 

§  Maximum: 25 years or forecast life of the mine (whichever is shorter)

§  Condition: Exclusive

§  Condition: Renewable, for maximum of 15 years or life of the mine, whichever is shorter

§  Work commencement: 6 months after obtaining licence approval or at approved time in work program

§  Reports: Issued quarterly or on requirement basis by the CS

§  Amendments: Allowable on application to CS

 

 

§  Cannot be issued on land which is the subject of a prospecting licence, reconnaissance licence, a retention licence unless the applicant is holder of above licences or a new applicant has consent from the above licences holders

§  Renewals submitted 1 year before expiry

§  Obligation to notify of any new/additional discoveries immediately

§  Obligation to notify CS of:

§  cessation of activities – at least 6 months

§  suspension – at least 3 months

§  curtailment – at least one month

§  or otherwise within 3 days of halting events

 

2. Small scale operations, which shall include –

Reconnaissance permit

Citizen or corporate body with at least 60% shareholding by citizens

 

Not specified

 

Non-exclusive rights

 

§  If rights are over community land, must have consents from community land administrators or county governments, if community land is un-alienated

§  Consent will be given by signing a legally binding agreement with Government or mining rights holder, or adequate compensation

 

Prospecting permit

Citizen or corporate body with at least 60% shareholding by citizens

§  Minimum – not specified

§  Maximum – 2 contiguous blocks

§  Maximum: 5 years

§  Condition: Renewable, once for a max of 5 years

Doesn’t specify whether rights are exclusive or non-exclusive

Mining permit

Citizen or corporate body with at least 60% shareholding by citizens

§  Minimum – not specified

§  Maximum – 2 contiguous blocks

§  Maximum: 5 years

§  Condition: Renewable, for maximum of 5 years or life of the mine, whichever is shorter

§  Exclusive rights

1.4 local content

The Act requires Mineral Right Holders to give preference to the maximum extent possible to materials, products, services, and workforce from Kenya.

Additionally, Mineral Rights Holders must submit detailed programmes on recruitment and training of Kenyans. The approval of this program will be a condition for granting of a mineral right.

The Act provides for the holder of mineral right to develop a comprehensive community development agreement that secures socially responsible investment and provides for employment preference for those living in communities around mining operations.

The CS is expected to publish Regulations under the Act on local content.

1.5 institutions under the Act

1.5.1 National Mining Corporation

The Act establishes a National Mining Corporation as the Government’s investment arm with the responsibility to ensure that mineral wealth is protected and harnessed for present and future generations. It will be a body corporate with perpetual succession, and a common seal.

The Corporation will also be able to invest on behalf of the Government, engage in mineral prospecting and mining, and hold interests in mining projects.

1.5.2 Mineral Rights Board

The Act established the board, whose role is to advise and give recommendations, in writing, to the Cabinet Secretary on the: grant, rejection, retention, renewal, suspension, revocation, variation, assignment, trading, tendering, or transfer of Mineral Rights Agreements; the areas suitable for small scale and artisanal mining; the areas where mining operations may be excluded and restricted among others .

1.5.2 Directorate of Geological Survey

The Act establishes the Directorate of Geological Survey under the Ministry of Mining. Its functions are to consolidate governments efforts in the collection and storage of geological data related to prospecting in a national repository. It will also participate in various geological surveys including geo-environmental studies and facilitate promotion of private sector interest and investment in mineral exploration

1.5.3 Directorate of Mines

The Act establishes the Directorate of Mines under the Ministry of Mining. The Directorate will supervise and promote activities related to the development of exploitation of minerals and mineral resources

In addition, it will take up the chief role in monitoring and enforcement of provisions under the Act and work through appointed inspectors of mines

1.5.4 County Government

An office will be established by the CS for Mining and will be the Ministry of Mining representative in the County Government. The office is responsible for granting, renewing and revoking artisanal mining permits, maintaining a register of artisanal miners and maintaining fair-trade.

An officer who reports to Director of Mines will head the office. It will provide training facilities and assistance necessary for effective and efficient artisanal mining operations and facilitates the formation of artisanal association groups or cooperatives for the miners.

1.6 Royalties

The Act provides for the payment of royalties by a holder of a mineral right to the State. The royalty payable as per the Act will be determined by the gross value of the sales. The Act further provides that the Cabinet Secretary will prescribe the rates of royalties payable.

The payments of royalties will be filed with the Mineral Cadastre Office by the 5th business day of every month. Lack of payment of royalties within 60 days of filing is a ground for the licence or permit to be revoked.

The Act states that the royalties collected will be distributed as follows:

  1. 70% to national government
  2. 20% to county government
  3. 10% to the community where mining operations are carried out.

1.7 Records and Registration of Mineral Rights

The Act establishes a computerized mining cadaster and registry system, and a register of mineral rights. The computerized mining cadastre and registry system will include an online transactional facility to enable applications for granting and renewal of mineral rights to be submitted online. It will be a public document that will be open to inspection by any interested person upon payment of a fee.

The register will contain details of each application, grant, assignment, transfer, notice, surrender, suspension and cancellation of a mineral right.

1.7 Dispute Resolution

The Act provides that any dispute arising as a result of a mineral right issued under the Act, may be determined by the Cabinet Secretary, through a mediation or arbitration process as the disputing parties may agree or as stated in an agreement; or through a court of competent jurisdiction.

1.8 Health, Safety and Environment

The Act expects mining operations to comply with laws on water rights and use the land in accordance with the terms of the permit or licence. In addition to this, persons conferred with mineral rights are expected to comply with the Occupational Health and Safety Act.

Before a person is granted a mining licence, they are expected to obtain an Environmental Impact Assessment, Social Heritage Assessment and an Approved Environmental Management Plan.

1.9 Repeals, Savings and Transitions

The Act repeals the following legislations;

  1. The Mining Act Cap. 306,
  2. The Trading in Unwrought Precious Metals Act Cap. 309 and
  3. The Diamond Industry Protection Act Cap. 310.

Any Regulation that was made under the repealed laws should continue to be in force in so long as they are consistent with the Act until such a time when they are revoked by the Cabinet Secretary.

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