Kenya losing 60pc of mineral export cash to licencing fraud
The government has stepped up efforts to streamline production of minerals in the country with plans to establish a gold refinery in Western Kenya ready for implementation.
Ministry of Petroleum and Mining has already put out an International Expression of Interest tender for the establishment of the refinery in Kakamega county.
“Aim of the project is to add quality to raw gold and improve its value through refining,” it said in a notice, adding that the refinery is expected to serve gold miners locally, regionally and internationally.
The move by the ministry coincides with release a new report showing that the country could be losing nearly 60 per cent of its mineral export revenue due to fraudulent award of mining licenses and false declaration of exports.
Ministry top officials are said to disregard laid down procedure to issue licences with arbitrary verbal orders and letters to well-connected dealers.
The report from the Mining Rights Board (MRB) says the officials collude with investors to ignore an online mining management system in favour of dealing manually to circumvent tax payments and facilitate false declaration of exports.
“There is an apparent breach of the Act as the cadastre system is being by-passed and applicants transmit their documents physically to the offices,” says the report.
The MRB was constituted in 2017 and was tasked with advising and giving recommendations in writing to the cabinet secretary on granting, rejection, retention, renewal, suspension, revocation, variation, assignment, trading, tendering or transfer of mineral rights.
Sources say that senior officials in the ministry have been issuing illegal verbal orders or letters allowing prospective miners to join the trade or extend the term of expired licences.
“Ordinarily, ready consultants should have logged onto the cadastre system online to make the application instead of writing to the CS,” a source privy to the matter said.
This unwholesome practice may have resulted in duplication of licenses and unnecessary interference with the operations of the cadastre system, the report notes.
For instance, the report shows that well-connected officials have been extracting gold in Migori without formal approval.
These entities include Global Site1 and Global Site2 Leaching Plants both of which are owned by a senior official in the county government. The former’s license is expired while the latter has no licence.
Another entity is Christopher Rosana Leaching Plant owned by another county government official.
Mining right
The cadastre software was set up about five years ago, to manage the full life cycle of a mining right from application through approval, licensing, renewals to expiry.
According to the Mining Act, all mining licence applicants must upload documents online on the cadastre system.
The report also recommended that the “government restructures the management of the state department for Mining to boost activities in the sector”.
Kenya whose mining potential has been estimated at Sh250 billion in earnings every year is currently earning just Sh18 billion due to lack of leadership that has led to lack of relevant research and sector audits.
Mining Cabinet Secretary John Munyes could not be reached on phone while officials at the Mining Ministry including the director of Mines Raymond Mutiso said they are not allowed to speak to the media.
The report,among other recommendations, said the Cadastre system needs an urgent technical audit and that its operation and supervision be transferred to Mining Rights Board.
Part of the recommendations is that the system must have one administration and assistant who are accountable for the system, with a reporting role to the MRB.
At the moment MRB has requested the CS to suspend the operation of the system following duplication of data and other suspected malpractices.
The nine member board was formed to increase transparency in the sector by advising and giving recommendations to the cabinet secretary on granting, rejection, retention, renewal, suspension, revocation, variation, assignment, trading, tendering or transfer of mineral rights.
The findings also point to a total disregard of health and safety as the casualty figures among the field workers are continuously on the rise and sanctions are not applied to erring miners.
