October 20, 2017

Mining companies face regulatory uncertainty in Africa

Underground Mining/ Photo:Daily Maverick

The Kenyan government is working with the United Kingdom Department for International Development to come up with a revised mining law that balances investor returns with government-revenue needs and international best practice.

The highly anticipated review is expected to be submitted to the ministry in the next few weeks, according to Dan Kazungu, Kenya mining minister.

“We want to be attractive, but we also want to get the most out of our resources, based on the spirit of win-win. The investor must get a good return on their investment, but win for government, and win for the community as well,” Mr. Kazungu said.

Mining companies are facing a similar fate in other African countries. In South Africa, the main industry lobby group is going to court to challenge new rules that seek to give the black majority a bigger stake in the country’s mineral wealth.

Tanzania’s parliament is debating new laws that will allow it to renegotiate contracts, while the Democratic Republic of Congo plans to overhaul its mining code to increase the state’s share of revenue from the industry.

Mining contributed 1.1 percent to Kenya’s total gross domestic product in 2016, compared with 1 percent in 2012, according to data published by the Kenya National Bureau of Statistics. The country has lagged behind neighbors like Tanzania, where the industry contributed about 4.8 percent to GDP in 2016, according to the country’s statistics agency.

Kenya is the world’s third-biggest producer of soda ash, used to make glass, and ranks seventh in output of fluorspar, used in steel, according to the U.S. Geological Survey. It also has deposits of rubies and sapphires.

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