We examine the potential impact of the Strategic Minerals Regulations on existing and future mining and prospecting activities in Kenya.
(a) Lack of parameters for determining what constitutes a strategic mineral
Neither the Mining Act nor the Strategic Minerals Regulations provide definitive parameters for the determination of the grounds under which a mineral or mineral deposit could be declared strategic. The only criteria mentioned in the Strategic Minerals Regulations are the “economic significance” of the mineral. As a result, there is significant uncertainty regarding the manner in which such assessments and declarations will be made.
(b) No consultation process with stakeholders
A mineral or a deposit may be declared strategic by the Cabinet Secretary (the CS) either on advice of the Mineral Rights Board or at the request of an agency. If the CS deems it necessary for the mineral or mineral deposit to be declared strategic, the CS submits a request for a declaration to the Cabinet together with a memorandum that details, amongst other things, the reasons why it is in Kenya’s interest that the mineral or mineral deposit be declared as strategic and the economic significance of the mineral to the country. After approval by the Cabinet, the declaration of the mineral or deposit as strategic is published in the Kenya Gazette and on the Ministry of Mining’s website. There appears to be no basis for public participation or stakeholder consultation as to the grounds for the CS’s assessment of economic significance or public interest.
(c) Role of the National Mining Corporation (NMC)
Upon the declaration of a mineral or mineral deposit as strategic, the NMC (on its own or in association with any other person or company) becomes responsible for the exploration and mining of the strategic mineral or deposit, including undertaking the exploration, processing, marketing, importation and exportation of such mineral. If the NMC does not have the technical, financial or other capacity to undertake these activities, then the CS (with the approval of the Cabinet) may authorise the NMC to seek private sector participation.
(d) New regulatory body for strategic minerals
The Strategic Minerals Regulations envisage the creation of a new regulatory authority tasked with regulating the use of specific strategic minerals. It is not clear what additional role the proposed authority would play, but this additional layer of regulation may affect the development of the market for strategic minerals.
(e) Impact on existing mineral rights
The Strategic Minerals Regulations do not apply to existing mining or prospecting rights over minerals which are not classified as strategic at the point when the mining or prospecting right was granted. The Strategic Minerals Regulations also specify that the discovery or declaration of strategic minerals under a pre-existing mineral right (where the mineral discovered or declared is not part of the mineral entitlement already granted to the holder of the mineral right) shall not be treated as a nationalisation or expropriation of the mineral right holder’s rights “under any circumstances”. It is not clear how this purported treatment will be effected as the Strategic Minerals Regulations cannot abrogate a person’s sanctity of property granted under the Constitution.
If you have any questions regarding this legal alert or require more information on the impact of these new laws, please contact Dominic Rebelo.
The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.