Govt to appeal ruling on distribution of mining royalties
A mining site at Kenya's coast. Confusion has hit the mining sector after a section of the law that sets royalty charges on minerals was declared unconstitutional, dealing a setback to the State and communities that look up to sharing the wealth from the natural resources.
The Ministry of Mining will appeal a High Court ruling that struck down part of the mining royalties distribution law.
Mining Cabinet Secretary Salim Mvurya said his ministry would challenge the decision, arguing that the government and host communities must benefit from such ventures.
“There is no way there will be people doing mining in Kenya and there are no benefits in terms of money to the government or the local communities. That is impossible,” Mr Mvurya said in Kwale on Monday.
Royalties are benefits that communities are supposed to gain from minerals that are done in their localities.
The percentage, which varies, is paid to the government by licensed mining companies in the country.
Mr Mvurya’s response came after a mineral prospecting company Rockland Kenya Limited challenged levies imposed on its mining business by the Petroleum and Mining Ministry in 2019 in court.
The company, which runs mining operations within Tsavo West National Park, said Section 183 of the Mining Act 2016—popularly referred to as the Mining (Prescription of Royalties on Minerals) Regulations 2013—was set without public participation as required by Article 10 of Constitution on the involvement of the citizens in the country’s governance.
Judge Hedwig Imbosa Ong’undi sitting in Nairobi agreed with the company saying that it was unconstitutional because the set laws were not subjected to public participation in line with Section 5(2) and (3) of the Statutory Instruments Act.
The section requires notification for public participation in the exercise and an invitation to submit comments.
The move by the government to move to a court of appeal comes as a relief for hundreds of communities who live in areas where there are minerals.
Already, most stakeholders in the mining sector and communities were hit by confusion following the court’s decision.
At least Sh7.5 billion was collected from mineral royalties according to official government data by 2022.
“The ruling is confusing to us. Communities have been waiting for this money as beneficiaries of the mining activities happening on their settlements,” said Faki Omar, a member of the Kwale Mining Alliance.
Kwale County hosts the largest Titanium Mining Company in Kenya Base Titanium, and residents have been hopeful that the royalties submitted to the government by the Australian mining company will soon trickle down to the county government and communities once a proper law has been set.
In Taita Taveta, the county is staring at losses amounting to millions of shillings after the High Court declared a section of the law on the distribution of royalties as illegal.
Residents and leaders in the county have come out to oppose the ruling saying it oppresses the residents.
The chairperson of the County Assembly's Committee for Mining Amos Makalo termed the ruling as unfortunate.
Mr Makalo, who is also the MCA for Kasigau ward, said that the investors have been making a lot of money from the venture yet they give no or little benefits to the community.
“They are the ones benefiting yet they go to court to challenge a law that benefits the locals, thereby disadvantaging the community,” he said.
He called on local leaders led by Governor Andrew Mwadime, Senator Jones Mwaruma and Members of Parliament to push for the rescinding of the court ruling.
“Let's come together as leaders to push for the appeal of the ruling. The mining activities leave our lands bare. The investors are milking our minerals with even no employment opportunities,” he said.
He said the committee is currently engaging stakeholders including the national government to establish a County Mining Bill that will address some of the challenges facing the sector.
Another local, Ezra Mdamu, who is a resident of Kasigau where Rockland Kenya Limited and other mining companies dwell, says despite the precious stones being mined from the area, they have not benefited from the resource.
“The investors keep getting wealthier as we remain poor. We are against the court ruling because that would mean we will not get any benefit from our resources,” he said.
He says the mining companies in the area also do not offer job opportunities to locals.
“Even where they give the locals employment they are not paid the same amount as those from outside the county. The locals get meagre pay,” he said.
The county is endowed with vast mineral deposits but residents still languish in poverty due to lack of resources to venture into mining.
Only a few individuals, who have taken advantage of the poor residents who work in their mines, have enriched themselves, as locals, who work under unfavourable conditions, get poor pay.
The county has a variety of gemstones including ruby, Tsavorite (green garnets), red garnets, sapphire, tourmalines, and rhodolites, among others.
It is also endowed with industrial minerals including iron ore, manganese, limestone and quartz.
Two months ago, it emerged that Kwale, Kilifi and Kajiado will receive the lion’s share of the Sh2.9 billion mining proceeds held by the Treasury since 2016.
The Ministry of Mining revealed that Kwale will receive Sh1.1 billion, Kilifi Sh950 million while Kajiado will get Sh660 million of the mining proceeds.
Taita Taveta County is set to receive Sh51.7 million from the government as its share of the proceeds.
Since 2016, the government has collected Sh14.7 billion in mining royalties across the country.
The government has been collecting mineral royalties but holding it over the failure of the Treasury to unlock a legal instrument required to release the funds.
According to the Mining Act of 2016, mineral royalties should be shared at a ratio of 70 percent to the national government, 20 percent to the county government and 10 percent to the host community.
Last month, leaders in the county accused mining companies that operate in the area of failing to pay levies and royalties running into millions of shillings.
Further, they accused the national government of delaying the remittance of the royalties it had collected to counties and communities.
Governor Mwadime said the millions of shillings generated from these minerals have not helped the locals.
“The national government is good at collecting the royalties but very poor at making plans to remit it to the counties and the communities," he said.
He also said the government will create a conducive environment for investors to invest in the county.
