NAIROBI, Kenya- Kenya’s mining sector is facing a major shake-up, with licensed miners protesting the government’s recent decision to significantly increase fees and levies.
The new Mining (Licence and Permit) (Amendment) Regulations, 2024, have caused an uproar among industry players, who claim the changes were made without adequate consultation or public participation.
As the sector grapples with these hefty charges, the ripple effects could be felt across the industry, potentially crippling businesses that are already operating on thin margins.
Under the new regulations, miners are looking at nearly ten-fold fee increases that apply to everything from prospecting licenses to large-scale mining operations.
For instance, the annual rent for a prospecting license now sits at Sh3,000 per square kilometre, with a minimum payment of Sh500,000 per year. Retaining such licenses will cost investors an additional Sh6,000 per square kilometre, also subject to the same minimum.
Large-scale mining operators aren’t spared either. A non-refundable application fee of Sh50,000 is required upfront, followed by annual rent payments of Sh2,000 per hectare, with the total amounting to no less than Sh500,000.
Moreover, the new regulations introduce a mineral development levy at one percent of the gross sale value for all minerals—except salt and cement, which have a lower rate of 0.5 percent.
Unsurprisingly, miners are not pleased. Patrick Kanyoro, Chairman of the Kenya Chamber of Mines (KCM), described the new fees as “unfriendly” to businesses already struggling in a tough economic environment.
KCM, representing the interests of miners and industry stakeholders, is calling for urgent dialogue with the government to revisit the new fees and levies.
Kanyoro pointed out that mining contributes only about one percent to Kenya’s GDP, yet the charges imposed are punitive and could deter future investments.
The Chamber has already written to Mining Cabinet Secretary Hassan Joho, requesting a stakeholders’ meeting to address these concerns.
Kanyoro argued that reducing fees and fostering a more supportive environment could lead to higher investment in prospecting, which would pave the way for greater mineral development over the next five to ten years.
This, in turn, could significantly boost Kenya’s mineral output and create thousands of jobs across the country.
However, CS Joho seems intent on shaking things up. He recently warned that mining licenses for operators who fail to show progress could be revoked.
“Speculative and inactive operations will no longer be tolerated,” Joho said, adding that the government is working on a crackdown to curb illegal mining and smuggling .
In addition to the fee increases, the mining sector is also facing other hurdles, such as restrictions placed on strategic minerals.
Last year, former Mining CS Salim Mvurya declared minerals like cobalt, copper, and lithium as strategic, a move that has limited artisanal miners’ access to these resources. Industry players are urging the government to rethink this policy and allow greater flexibility for smaller-scale miners to operate.
Despite the current challenges, experts believe Kenya’s mining sector has the potential to contribute between four and ten percent to the country’s GDP, provided the right regulatory environment is in place.
Opening up the sector, fostering local investments, and ensuring fair regulations could set Kenya on a path to becoming a key player in the global mining industry.
