Counties eying Sh2.9 billion mining royalties’ windfall

Wundanyi,

Thursday, December 21, 2023

KNA by Arnold Linga Masila

Counties rich in minerals are poised to make a financial windfall after the government allocated Sh2.9 billion for disbursement as mining royalties.

Mining, Blue Economy, and Maritime Affairs Cabinet Secretary Salim Mvurya said that the monies had been set aside in the 2023/24 financial year and would be distributed to the counties to supplement what the counties receive from the exchequer as an equitable share of revenue.

The CS was speaking in Kishushe village in Wundanyi, Taita-Taveta County on Wednesday where he presided over the issuance of a Corporate Social Responsibility (CSR) cheque worth Sh20 million to the community for development projects.

This money is part of a Sh 30-million kitty that a local iron ore investor is mandated to give to the community as part of CSR to promote development and support other progressive initiatives by the community.

Mvurya said that an audit was conducted in 2016 for all mining companies that have been remitting their royalties to the government.

After calculations from revenue received from mining firms in 32 counties, the government settled on Sh2.9 that would be plowed back into those counties.

“We have set aside Sh2.9 billion where royalties from the mining activities have been collected,” said Mvurya.

Of this amount, Taita-Taveta County is poised to receive Sh55 million, with a handsome portion of the share going to development activities in communities in and around mining zones. 

The CS further disclosed that the Ministry had developed regulations and a revenue-sharing framework that will guide and inform modalities of sharing royalty monies with the communities living in the mining areas.

He added that the regulations would be gazetted by January which would allow the 10 percent revenue share meant for the communities living in mining areas to be included in the budget.

Mvurya was accompanied by Principal Secretary, of the State Department for Mining Elijah Mwangi, Taita Taveta Governor Andrew Mwadime, Deputy Governor Christine Kilalo, and Wundanyi MP Danson Mwashako.

The Mining Act 2016 stipulates that royalties from the mining activities will be shared in a tripartite formula with the national government getting 70 percent; the county government receiving 20 percent and the community around the mining areas getting 10 percent.

Additionally, the law prescribes that one percent of the gross revenue from sales by an investor is supposed to be given back to the community as CSR to support development projects.

The CS stated that no miner would be allowed to engage in mining without a mining permit. He warned that the government would close down the operations to enforce compliance.

He further added that getting consent from landowners needed to be backed up by permits.

Already, 1,546 licenses are set to be canceled after the owners failed to comply with regulations.

“Compliance is not debatable. Many investors are willing to invest in the sector and follow the law. We will close down all mining operations that are undertaking mining without permits and licenses,” said the CS.

PS Mining Elijah Mwangi disclosed that in addition to the Sh20 million the community was receiving, the investor was expected to add another five million before New Year.

The PS stated that the government was keen on promoting sustainable exploitation of minerals as a heritage for posterity. He added that the future of mining was pegged on the successful formation of marketing cooperatives that would allow members to earn increased revenues from their labor.

Through cooperatives, the PS noted, miners would be issued with permits that would allow them to engage financial institutions for funding to promote their activities. Additionally, the cooperatives would engage in value addition and even be issued with export permits.

Already, approximately 70 artisanal miners marketing cooperatives have been formed in Kenya.

The PS further said that investors would first be required to acknowledge and formalize their relations with the Community Development Agreement Committee to avoid future wrangles and delays over remitting the one-percent monies of gross sales.

“Investors must agree with the CDA committees before they embark on mining. This will avoid delays and conflicts when it comes to remitting monies intended for CSR projects,” he said.

PS Mwangi further urged the community to engage in prudent utilization of the funds when deciding on the community project to engage in.

Governor Andrew Mwadime noted that the county government was ready to partner with the State Department for Mining to allow regulated mining activities in the park. He added that such a move would allow for proper screening and vetting of those miners who had complied with the law.

Courtesy; KNA