TerraLex Cross-Border Guide to Cross-Border Guide to Mining Rights

Below are the policies and legislation governing the mining sector in Kenya: The Constitution of Kenya, 2010 is the supreme law of the Republic of Kenya and provides the overarching principles regarding the exploitation, utilization, management and conservation of the environment and natural resources in Kenya and ensuring the equitable sharing of the accruing benefits;

The Mining Act No. 12 of 2016 (and its subsidiary legislation) is the principal legislation governing the mining sector in Kenya and it deals with the regulation of the mining industry, issuance of licenses and permits and the overall management and exploitation of mineral resources;

The Mining and Minerals Policy Sessional Paper No. 7 of 2016 is a policy document which defines the government’s plan for the development and management of the mining sector;

The Environmental Management and Co-ordination Act, 1999 is the principal legislation governing the framework for the management of the environment.

Occupation Safety and Health Act No. 15 of 2007 deals with the occupational safety, health and welfare of all workers present at workplaces including mines.

List: - The Ministry of Petroleum and Mining;

• The National Environment Management Authority;
• The Kenya Revenue Authority.

Various licences and permits must be obtained before engaging in large scale or small-scale mining operations. The licences issued in relation to large scale mining operations include:

Reconnaissance Licence

This licence is granted for the purpose of undertaking a reconnaissance or investigation on a given area. An application for a reconnaissance licence is made to the Cabinet Secretary using Form RL1 along with payment of the prescribed fee. Once granted, the holder of this licence is permitted to conduct preliminary exploration for minerals and to collect surface samples, but this excludes intrusive activities such as drilling, trenching or excavation.

Prospecting Licence

An application for a prospecting licence is made to the Cabinet Secretary using Form PL1 along with payment of the prescribed fee. The holder of a prospecting licence has the exclusive right to prospect for minerals in the licence area in accordance with an approved programme of prospecting operations.

Retention Licence

A retention licence applies where the holder of a prospecting licence identifies a mineral deposit of potential commercial significance, and the deposit cannot be developed immediately due to adverse market conditions, economic factors, and other factors beyond the control of the holder the licence. In such cases, the holder of a prospecting licence may make an application for a retention licence to the Cabinet Secretary using Form RTL1 along with paying the prescribed fee. This application is accompanied by an independent expert’s assessment of the prospects of recovery, commercial significance of the mineral deposit, and the adverse market conditions, economic factors or any other factors that may make it impossible to develop the mineral deposit immediately. The applicant will also have to provide details of the area; the experience and financial resources available to the applicant should the factors making it impossible to develop cease to exist; a plan on local equity participation including use local goods and services.

The Cabinet Secretary on the recommendation of the Mineral Rights Board will grant the retention licence if the following conditions are met (a) the application is found reasonable having regard to independent expert assessment; (b) if the applicant has adequate financial resources and technical expertise; (c) if environmental and social impact assessment licence and environmental management plan relating to the operations to be carried out under the retention licence where required under the existing environmental framework; and (d) where the applicant’s proposal on meeting the local equity participation rules is acceptable.

A retention licence holder must also adhere to the various obligations under the retention licence. Notably, the Cabinet Secretary may issue a written notice to the holder of a retention licence to apply for a mining licence if he is satisfied that it is technically possible and commercially viable to mine the mineral deposit.

A mining licence

An application for a mining licence is made to the Cabinet Secretary using Form ML2 along with payment of the prescribed fee.

This application must also provide the following information:(a) the mineral in respect of which the licence is sought; (b) the area in respect of which the licence is sought; (c) a proposed programme of mining operations outlining the mine forecasts and operation plans; (d) a feasibility study; (e) a statement on the minerals sought including all known minerals and the probable mineral reserves; (f) a statement on the financial and technical resources available to the applicant; (g) a plan on local equity participation including use local goods and services; (h) proof of submission and approval of an environmental and social impact assessment report and environmental management plan for the term of the mining licence to the National Environment Management Authority; and (i) a plan with particulars of the applicant’s proposal with respect to social responsible investments for the local community.

Permits issued in respect of small-scale mining operations include (a) a reconnaissance permit (b) a prospecting permit; and (c) a mining permit.

Prospecting and reconnaissance licence applications are determined within 90 days and mining licences are determined within 120 days from the date of submission of complete applications.

Mineral rights licence applications are made through the online mining cadastre and the person submitting an application must be a registered portal user. Below is a summary of the steps involved: Application for licence or permit- licence applications are submitted through the online mining cadastre using a registered user’s account by completing the applicable prescribed form, undertaking payment of the prescribed fee, and uploading proof of payment on the portal;

Notification to stakeholders- upon receipt of a mineral right application, the Cabinet Secretary is mandated to give notice of the pending application for the grant of a mineral right to the landowner, lawful occupier of a land, community, or the relevant county government. A notice of the pending application must also be published in a newspaper of nationwide circulation at the expense of the applicant;

Objections to a pending application may be made by any person or community within twenty one (21) days in the case of an application for a prospecting license and forty two (42) days in the case of a mining licence. These objections are heard and determined by the Cabinet Secretary through the Mineral Rights Board.

Other regulatory approvals required- the Mineral Rights Board shall prior to recommending to the Cabinet Secretary to grant a mineral right application, require the applicant to obtain various regulatory approvals e.g., the National Land Commission approval where public land is involved; relevant county government or state agency where the mineral is on public land; the approval of the appropriate authority where the land the mineral is sought is dedicated or set as a place of burial, religious significance, public building or for any other public purpose; consent of the Cabinet Secretary responsible for wildlife conservation if the land is located within a marine park, national park or sanctuary under the Wildlife (Conservation and Management) Act; consent of the Cabinet Secretary responsible for matters relating to the environment if the land is situated in a protected area, a protected natural environment or a protected coastal zone under the Environmental Management and Coordination Act; and consent of the Director of the Kenya Forest Service where the land is situated within a forest area.

Consent requirement- the consent of the registered owner in the case of private land and the consent of the relevant authority in charge of the administration and management of community land may be required;

Environmental requirements- mineral rights applicant are required to adhere to the requirements under the Environmental Management and Co-ordination Act before any mineral right is granted;

Conditions attached to mineral rights - a mineral right application may be granted subject to certain conditions as determined by the Cabinet Secretary.

There are various licences and permits that must be obtained before engaging in large scale or small-scale mining operations. The Kenya Mining (Licence and Permit) Regulations, 2017 defines exploration as the search for, or evaluation of a mineral or mineral deposit to determine its economic value. The licences and permits issued in this regard include a large-scale mining reconnaissance licence; a large-scale mining prospecting licence; a small-scale mining reconnaissance permit and a small-scale mining prospecting permit.

The reconnaissance licence and permit both grant their holders the non-exclusive right to carry out non-invasive investigations for minerals within the licence area and permit area respectively while holders of a prospecting licence and prospecting permit have the exclusive right to prospect for minerals in the licence area and permit area.

Applicants for a reconnaissance licence and prospecting licence must provide the Cabinet Secretary with the following information before the licence is granted:

• The area in respect of which the reconnaissance licence is sought;
• The mineral(s) in respect of which the prospecting licence is sought;
• The proposed programme for the reconnaissance and prospecting operations;
• Details of the technical expertise and financial resources to be used in the conduct of the reconnaissance and prospecting operations; and
• A plan outlining the proposal for procurement of local goods and services.
• Below are the statutory obligations of a reconnaissance licence holder:
• commence reconnaissance within three (3) months of grant of the licence;
• carry out reconnaissance in accordance with the approved programme of reconnaissance operations;
• expend on reconnaissance in accordance with the programme of reconnaissance and not less than the amount as may be specified in the reconnaissance licence;
• not engage in drilling, excavation, or other subsurface exploration techniques;
• inform and consult with the national and county government and local community about the reconnaissance operations that require entry into their land;
• not remove any mineral except for the purpose of having that mineral analysed, valued or tested;
• ensure the amount of work and expenditure in the approved programme is expended in the course of the undertaking reconnaissance operations within the deadlines stipulated;
• notify the Cabinet Secretary without unreasonable delay the discovery of deposit of potential commercial value;
• notify the Cabinet Secretary of any archaeological discovery;
• comply with the conditions of the licence or any existing and applicable mineral rights agreement and any directions issued by the Cabinet Secretary;
• Submit to the Cabinet Secretary geological and financial reports relating to the reconnaissance operations; and Carry out reconnaissance activities in accordance with international best practices.
• To remove within sixty (60) days of the expiry of reconnaissance licence, any camps, temporary buildings, or machinery erected or installed by the holder and to repair and make good any damage to surface of the ground.

Below are the statutory obligations of a prospecting licence holder:

• commence prospecting within three (3) months from the grant of the licence;
• undertake prospecting operations in accordance with the approved programme of prospecting operations;
• ensure the amount of work and expenditure in the approved programme is expended in the course of the prospecting operations within the deadlines stipulated;
• notify the Cabinet Secretary without unreasonable delay the discovery of deposit of potential commercial value;
• notify the Cabinet Secretary of any archaeological discovery;
• comply with the conditions of the licence or any existing and applicable mineral rights agreement and any directions issued by the Cabinet Secretary;
• submit to the Cabinet Secretary geological and financial reports relating to the prospecting operations; and carry out prospecting activities in accordance with international best practices.

For exploitation/production to be undertaken, a mining licence must be obtained. An application for a mining licence is made to the Cabinet Secretary using Form ML2 along with payment of the prescribed fee.

This application must provide the following information:

• the mineral in respect of which the licence is sought;
• the area in respect of which the licence is sought;
• a proposed programme of mining operations outlining the mine forecasts and operation plans;
• a feasibility study;
• a statement on the minerals sought including all known minerals and the probable mineral reserves;
• a statement on the financial and technical resources available to the applicant;
• a plan on local equity participation including use local goods and services;
• proof of submission and approval of an environmental and social impact assessment report and environmental management plan for the term of the mining licence to the National Environment Management Authority; and
• a plan with particulars of the applicant’s proposal with respect to social responsible investments for the local community.

On the recommendation of the Mineral Rights Board, the Cabinet Secretary may grant a mining licence. The holder of a mining licence has the following statutory obligations:

• commence mining operations within six (6) months of the grant of the licence;
• conduct mining operations in compliance with the approved programme for mining operations;
• comply with the terms and conditions of the approved environmental impact assessment licence, social heritage assessment and environmental management plan relating to the operations to be carried out under the mining licence;
• demarcate and keep demarcated the mining area;
• comply with the conditions of the licence; any applicable mineral agreement and any directions;
• submit to the Cabinet Secretary up to date quarterly returns of mine development and mineral production;
• stack or dump any mineral or waste products in the manner provided for in the licence;
• carry out prospecting and mining activities in accordance with international best practice; and
• sign a community development agreement with the community where mining operations are to be carried out.

The owner of the land in respect of which a mining right has been granted may be entitled to compensation for any loss or damage suffered as a result of the mining work. In particular, a demand for compensation may be made to the holder of a mineral where the exercise of the rights conferred by a mineral right:

• disturb or deprive the owner or any lawful occupier or user of the land or part of the land;
• causes loss or damage to buildings and other immovable property;
• causes damage to the water table or deprive the owner of water supply; and
• in the case of land under cultivation or grazing of domesticated animals, causes any loss of earnings or sustenance by the owner or occupier of the land.

A mineral right holder is also required to deliver a bond as a compensation guarantee against a claim for compensation payable to a land owner or lawful occupier. This bond is an amount prescribed to cover any loss of land use, damage to land or loss of earnings and may be in the form of a letter of credit or cash and is held by the Ministry in a non-interest-bearing escrow account.

The Mining Act also envisions instances where compulsory acquisition of land for prospecting and mining may be necessary. In such a case, land may be compulsorily acquired if the National Land Commission certifies that the land is required for a public purpose or in the public interest.

Section 111 of the Land Act, No. 6 of 2012 requires that if land is acquired, just compensation shall be paid promptly to all persons whose interest in the land has been determined. The acquiring authority is required to deposit with the National Land Commission the compensation funds including survey fees, registration fees and any other costs before the acquisition is undertaken.

Compensation for compulsorily acquired land may take any of the following forms:

• allocation of an alternative parcel of land of equivalent and comparable geographical location and land use;
• monetary payment either in lump sum or in instalments spread over a period not exceeding one year;
• issuance of a government bond;
• grant or transfer of development rights;
• equity shares in a government owned entity; or
• any other lawful compensation.

An application for the transfer of an interest in a mineral right is submitted online through the online mining cadastre by completing the form TR1 along with payment of the prescribed fee and uploading a copy of the signed agreement between the parties. The holder of a mineral right shall not transfer the right without the consent of the Cabinet Secretary which issued on recommendation of the Mineral Rights Board. The Cabinet Secretary informs an applicant of the decision to issue a consent within thirty (30) days of receipt of the application to transfer the mineral right.

Prior to the transfer, and within thirty (30) days of receiving the consent, the holder of the mineral right is also required to notify the Kenya Revenue Authority of the transfer of an interest in the mineral right. An application for transfer of a large-scale mineral right is determined within ninety (90) days of the date of the application while an application in respect of a small-scale mineral right is determined within sixty (60) days of the date of the application.

Before recommending to the Cabinet Secretary to grant a mineral right application, the Mineral Rights Board requires an applicant to the following specific consents: - approval of the appropriate authority where the land the mineral is sought is dedicated or set as a place of burial, religious significance, public building or for any other public purpose;

• consent of the Cabinet Secretary responsible for wildlife conservation if the land is located within a marine park, national park, or sanctuary under the Wildlife (Conservation and Management) Act;
• consent of the Cabinet Secretary responsible for matters relating to the environment if the land is situated in a protected area, a protected natural environment or a protected coastal zone under the Environmental Management and Coordination Act; and
• consent of the Director of the Kenya Forest Service where the land is situated within a forest area.

Environmental impact assessments - on account of the significant impact mining activities have on the environment, the Mining Act requires that a mining licence is only granted once an environmental impact assessment, a social heritage assessment and an environmental management plan has been approved; Environmental rehabilitation and restoration plans- the Mining Act also requires various mineral rights holders to submit environmental rehabilitation and restoration plan before a licence is issued; Sustainable land use- the Constitution of Kenya emphasizes the importance of various land principles including the importance of sustainable and productive management of land resources.

All mineral rights applicants are required obtain an approved environmental and social impact assessment reports.

The Water Harvesting and Storage Regulations of 2021 provides a comprehensive framework regulating the design, construction, operation, and management of water resources including dams. The regulations require that the construction and design of dams and other waterworks must be undertaken by qualified water sector professionals. In addition, persons authorized to construct a dam are required to provide various reports from the commencement of construction of the dam until its completion. These reports include a dam construction progress report, a dam completion report and dam operation report all of which are meant to ensure the safety and responsible management of the dams.

Base Titanium Kenya which operates the largest mine in Kenya and was awarded the flagship program under the Kenya development blueprint (vision 2030) is set to close the mine in 2024 following the depletion of the mineral reserves.

Clarity on royalty sharing- the Cabinet Secretary for Mining, Blue economy and Maritime affairs is seen to be keen in addressing the modalities of sharing mining proceeds with the local communities. He has formed a royalty committee which is expected to spearhead the policy discussions on the framework for royalty sharing under the Mining Act.