Taita mining company on the spot for breaching contractual obligations

Kishushe mining site

Kishushe iron ore mining site in Taita Taveta County. Lucy Mkanyika | Nation Media Group

Photo credit: Lucy Mkanyika | Nation Media Group

The Ministry of Mining has warned that it will shut down Samruddha Resources Kenya Ltd for failing to meet its obligations under the Mining Act.

In a letter to the iron ore miner dated May 5, Mining Cabinet Secretary Salim Mvurya asked the company to show cause why its licence should not be revoked for flouting the law.

The company, which operates in Kishushe, Taita Taveta County, is accused of failing to meet its corporate social responsibility (CSR) obligations under the Community Development Agreement Regulations and submitting fraudulent payment vouchers to the CSR committee.

"As you may be aware, the Mining Act empowers the undersigned to suspend a mining/prospecting licence if, inter alia, the holder of the mineral rights fails to comply with any condition specified in the licence or if the holder provides false information to the Cabinet secretary which is material to the grant of the licence," the CS said.

In February, the CS met with the investor, local leaders, residents and the ranch in an attempt to resolve the CSR dispute.

The company is embroiled in a dispute with the government, the community and Kishushe Ranching Cooperative Society Ltd.

The investor owes the community Sh30 million for CSR activities, the county government Sh53 million in revenue and more than Sh150 million to Kishushe Ranch.

During the meeting, which was held at a hotel in Mwatate, the CS ordered the investor to pay the debt to resolve a stalemate over the remittance of CSR funds meant for community projects over the past three years.

At the meeting, the investor was instructed to make an initial payment of Sh10 million within two weeks and a subsequent payment of Sh5 million until the debt was cleared.

So far, however, a payment of Sh8.9 million has been made.

"We have now established that your company has failed to honour the payment agreement and that you have also submitted fraudulent payment vouchers to the CSR committee, thereby negating the actual amount paid prior to the establishment of the committee," the CS said.

The ranch has already withdrawn its consent, but the decision was halted by the court after the investor appealed.

Last month, Wundanyi MP Danson Mwashako petitioned the CS to revoke the mining licence after Kishushe residents decided to evict the investor.

In a meeting, the residents agreed to shut down the mine, claiming that they were not benefiting from the resource.

Despite the vast iron ore deposits that began to be explored over 20 years ago, the people of Kishushe remain some of the poorest in the county.

The area has no piped water, has bad roads and lacks other basic amenities, while residents rely mostly on food aid from well-wishers to survive.

Mr Mvurya noted that the situation has raised security concerns in Kishushe as frustrated residents target the company's property.

"We have also received worrying reports of community agitation where your company's vehicles have been targeted, affecting security in the Kishushe area," he said.

Earlier, local leaders led by Taita Taveta Governor Andrew Mwadime had issued a notice to the company for breaching its contractual obligations.

The county government has impounded six vehicles belonging to the company over a Sh53 million revenue debt.

The vehicles, which were transporting raw iron ore from the Kishushe site, were impounded in Ndii area three weeks ago but were released last week after the company paid Sh4 million.

Mr Danson Mzenge, the county chief financial officer, said the investor had been ordered to pay another Sh6 million before resuming mining at Kishushe.

He said the investor was also required to make a weekly deposit of Sh2 million until the debt was cleared.

"We had an agreement in March that they would make the payment every week. If the company fails to honour the agreement, we will not allow them to resume work," he said.