Muthama wants proposed 6% royalty on rough gemstones reduced to 1%

Friday, February 23rd, 2024 15:00 | By
Johnson Muthama
Johnson Muthama. PHOTO/Johnson Muthama

Commissioner for Parliamentary Service Commission Johnson Muthama has urged the Ministry of Mining, Blue Economy and Maritime Affairs to reduce the proposed six per cent royalty on rough gemstones to not more than one per cent.

Speaking during the third day of the third edition of of Geo-East African Conference and Expo (GEOEACE 2024), Muthama said the Mining Act, 2016, which is going through public participation, should be amended to give miners friendlier terms and levies.

"The Ministry of Mining, Blue Economy and Maritime Affairs should reduce the proposed six per cent royalty on rough Gemstones to not more than one per cent," the former Machakos Senator stated.

He also wants the government to eliminate the bureaucracy in the process of clearing the exports by limiting clearance to be done within 12 hours.

"The government abolishing discriminative tax policies and bureaucracies in terms of acquiring licenses can help the government revolutionalize the mining industry by attracting a lot of investors with friendly policies," he said.

"Miners should be given 120 days for royalty payment. Do away with one per cent development levy and instead deduct it from the paid royalty."

Muthama wants geologists hired

Muthama lamented that despite the country having many trained geologists, the government is yet to engage them to add value to the mining sector.

"For this sector to thrive in terms of its economic potential, it should be mandatory for geologists to be involved in any kind of mining in this country," he added.

The former Senator, who has interests in mining, says for the past decades mining sector has remained under-exploited.

He says the country has made good strides in creating a conducive environment to invest in the extractives, but believes there is still a lot to be done if Kenya has to enjoy the full potential of its 970 minerals.

"Nevertheless, over years, the government hasn’t been so keen on the mining sector and that is why as a country, we have not analyze our value chains. With the 970 minerals, as a country we know our potential but we focus on other things rather than this sector," he said.

Currently, the sector contributes 1 per cent to gross domestic product (GDP) per annum but Muthama believes it has the potential to contribute 4 to 10 per cent if the untapped mineral potential is fully exploited.

"It is worth noting that out of the 970 minerals surveyed in the country, we have three classifications of minerals that is industrial minerals which are mined by big companies which are well equipped with geologists and mining engineers. The second type is gold which is mined by both the bigwigs in the sectors and artisanal small-scale miners who in most cases operate like ‘bush doctors’ because they have the will to find the minerals they are looking for but with no knowledge on what and how to follow the veins for the mining to be successful. Lastly, we have precious stones (gemstones) which can be mined by both big companies and artisanal small-scale miners," he explained.

Muthama also wants the government to hire trained geologists so that they can go across the country and advise small-scale miners.

"After making good use of our geologists, the government should adopt an open-door policy to make Kenya the mineral giant of the continent and this can be made possible through benchmarking to countries like Israel and Thailand organized through Kenya Chamber of Mines including government officials from Ministry of Mining, Trade and Investment," he added.

Muthama has also urged the government to adopt a collaborative approach in the mining industry to make investors feel safe and persuade more businesspeople to invest by guaranteeing property rights, stability agreements, dispute resolution mechanisms, investor incentives, intellectual property rights and contractual protections among others.

More on Business