What Might Bite the Mining Sector

In 2010, every other newspaper article had the word “promulgation” somewhere.  Then soon after, we were treated to “devolution” “gubernatorial”, “running mate”  “strongholds” “amicus curiae” among several others. Kenyans love buzzwords and titles. They discover one, and they will dwell on it like it has an expiry date coming soon. There is a new buzzword in town: nascent.

Nascent has been widely used to describe the Kenyan mining sector by, well, everybody. This mirrors the view that Kenya is poised to be a mineral resource powerhouse and so is this well founded given the fact that there has been good news coming from Turkana, Kitui, Kwale among many other places.

Looking back, anyone might remember the then energy minister, Mr. Kiraitu Murungi, rounding up journalists to show them a bottle with some dark liquid that was supposed to be a sample of oil. The visibly excited minister announced that we had struck oil in Turkana (and Turkana became famous again). The excitement was widely shared as we all pictured a country full of wealth. What was even better, we knew there was more from where the bottle came from and perhaps other places. A few years down the line, we have not been disappointed as evidenced by the spate of mineral discoveries not only in Turkana but in other places in the country.

However, it is important to note that a lot has happened since the “ngamia” moment. To start with, there is been a bill going around and is set for cabinet approval. It (the Mining Bill 2013) is ostensibly meant to ensure everyone, that is, the mining firms, the local communities and the government, get a fair share of the mining proceeds.  Besides, it places burdens on mining firms to remediate the environment after closure of the mining activities among other mitigating measures including undertaking real development projects to benefit local communities. This is however not a new concept considering that, best practices, the environmental management and coordination Act and the Environmental Impact Assessment regulations already dictate so.

What is however, a little new is the aspect of the local’s 35% equity in the mining firms. This obviously scared financiers in the mining sector. Kenyans should be made to understand that before a bottle or deposits are confirmed, there is an expensive and time consuming gamble that is heavy investments on exploration and other preliminary activities. One would recall that so many explorations have been done and abandoned in Kenya, with mining firms counting their losses.

This should inspire us to put ourselves in the shoes of the firms. The firms take heavy business risks and therefore deserve their often nice profits if any. It is how business works. Big risks mean heavy losses (sometimes everything) or better profits. It is what the government should understand, its what the local communities should understand.

We, as Kenyans, miss the point when we start feeling exploited when there would have been nothing to fight had someone not taken the trouble to find it. Whereas we are entitled to a fair share in the benefits, we should not scare away mining firms while at it.

The recent events of arbitrary license revocations can only hurt Kenyans, the government and the mining firms we so much need to access our hidden treasures. Notably, mining issues, just like as it is in exploiting a common resource, requires extensive consultations at all levels. Transparency and accountability is in therefore the key to success in benefiting from mineral resources both as local communities and the government. There must be goo faith and genuine and clear intentions This, arguably, leaveS no place for arbitrary, unilateral, knee-jack reactions by any powerful individual. This is particularly so if such actions have such consequences as cancelling mining licenses and stopping the mining activities altogether. Kenyans are in the same breath hoping that such actions were not based on individual interests or corruption as alleged.

We all know that corruption as well as lack of transparency and accountability is the main reason neither the government nor the local communities do not benefit from what would otherwise be a blessing to  everyone. In fact, history is replete with extreme examples of places where there are enviable mineral resources such as diamonds and gold that have been reduced to warzones and misery. The local communities regard the diamonds or gold as a curse, a source of all their troubles.  Equally plenty are events of mining activities that result in avoidable environmental disasters that leave long lasting impacts eating into several generations of local communities. Better still, we  have seen or read severally in the media of mining proceeds that only line the pockets of corrupt politicians and mining firms for many years.

The above scenarios are what we need to avoid and to do so, every stakeholder must be accommodated.  It is the only way our government will earn revenue; the local people will get their share while ensuring environmental sustainability as well as full disclosure and fair sharing of proceeds without hurting investor confidence.


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