MINISTRY OF MINING

PROGRESS REPORT FOR 2013/14 FY AND WAY FORWARD DURING THE 2014/15 FY

MARCH 2014

1.0

INTRODUCTION

The Jubilee Government established the Ministry of Mining through Executive Order No. 2 of May 2013 as a stand alone Ministry due to its potentiality to contribute toward economic growth in-terms of job creation and revenue generation. The Ministry was mandated to perform the following functions; i.) Mineral exploration; ii.) Mining policy and management; iii.) Inventory and mapping of mineral resources; iv.) Mining and minerals development; v.) Policies on the management of quarrying and mining of rocks and industrial minerals such as COAL, Limestone, Building stones, Gemstones, Cement, sand e.t.c; vi.) Management of health and safety in mines; policy around extractive industry; and vii.) Maintenance of geological data and resources survey and remote sensing. The establishment of the ministry was informed by the potential of mining sector to contribute significantly to the ten (10) per cent economic growth envisioned in the Vision 2030, whose aim is to propel the country into a middle income economy by 2030. Currently, mining contributes about one (1) per cent to the country's gross domestic product (GDP) and three (3) per cent total export earnings. This contribution is expected to rise significantly to three (3) per cent by 2017 and ten (10) per cent by 2030. In addition, the sector will contribute 100,000 jobs directly and indirectly over the next 5 years; spur economic growth through infrastructural development, industrial development and foreign exchange earnings. In a bid to operationalize the Ministry, we have finalized the restructuring of the Ministry and have in place a draft of the organizational structure which we have now forwarded to Public Service Commission (PSC) for endorsement. 2.0 KEY ACHIEVEMENTS TO DATE

In the last one year, the Ministry has recorded the following achievements:

MINES AND GEOLOGY i.) Drafted the Minerals and Mining Policy. Mining Bill 2014 will repeal the existing legislation relating to mining and establish a Predictable, Transparent and Equitable sharing of revenue formula and legal framework for the management of mineral resources in Kenya. The Bill has been approved by the Cabinet, published and is currently in Parliament awaiting debate; ii.) Established a Mineral Audit Unit that will conduct research on mineral valuation, interrogate feasibility studies and carry out research on mineral pricing at the international markets for correct royalty calculations. In addition, the Unit shall advice government while negotiating with mining companies on fiscal regimes and revisions of royalties, taxes and other fees due to their complex nature. This will ensure that he Government gets its true share of mineral proceeds in form of royalties, fees and other charges. Since its formation, the Ministry has realized an increment in revenue collection through royalties. It intends to collect about KES 1 Billion by closure of FY 2013/14 and KES 2 Billion by 2014/15 up from KES 71 Million in 2012/13. iii.) Instituted the establishment of an internationally accredited Mineral Certification Laboratory. Construction of the building for the laboratory is 80% complete and once completed the laboratory will be equipped as the Ministry solicits for a private sector to manage it under the Public Private Partnership arrangement. iv.) Initiated the establishment of Geo-data Bank to act as a centre where relevant geological information including mineral occurrences and resources shall be readily available to interested investors; v.) Facilitated the establishment of Minerals and Metal Commodity Exchange: The Ministry held meetings with the Central Bank of Kenya, Nairobi Stock Exchange and Capital Markets Authority to discuss the modalities of establishing the Minerals and Metals Commodity Exchange. The Commodity Exchange will facilitate trading in futures thus promoting trading in metals and minerals in the region. vi.) Initiated upgrading of Mining Cadastre System to an Online Transactional Portal that is a computerized register of mining rights as well as a management tool for licensing and concessioning. Once the Ministry completes upgrading of the cadastre system, all operations will be transacted online through the portal. This will reduce the cost of doing mining business by enhancing, efficiency, accountability and transparency in licensing and concession management. The portal will be operational by July 2014; vii.) Initiated a nation-wide airborne geophysical survey to reveal areas of potential mineralization which will lead to effective planning, exploration and exploitation of

mineral resources; Towards this end, the Ministry has entered into an MOU with the Chinese Government and expects a commercial contract to be signed in due course. viii.) The Ministry is at advanced stage of conducting ground geological surveys for iron ore in Bala-Homa Bay County, Ikutha in Kitui County and Marimanti in Tharaka-Nithi County. In addition, the ministry has conducted exploration of coal in Taru- Kwale County among others; ix.) To date, the Ministry has been able to facilitate the export of Titanium minerals (Zircon, Ilmenite and Rutile) leading to the creation of 2,000 direct and indirect jobs. The ministry has also facilitated Dangote for a USD 400 Million cement factory and Samruddha Resources for a 1 Million Metric Tonnes Iron ore production facility capable of generating 1,000 direct and indirect jobs.

DEPARTMENT OF REMOTE SENSING AND RESOURCE SURVEYS (DRSRS) i.) ii.) Drafted Natural Resource Data and Information Management Policy Drafted a Natural Resource Data and Information Management Bill aimed at anchoring Department of Remote sensing and resource Surveys (DRSRS) under a legal framework. The goal of the Policy and Bill is to transform DRSRS into an Institute as envisaged by the first Medium Term Plan I (2008-2012). The Draft Policy and Bill was discussed with key stakeholders on March 25th, 2014. Once accomplished, the Policy and Act will facilitate commercialization of some of the vital activities of the Directorate of Resource Surveys and Remote Sensing; Conducted land use and land cover for counties to aid in developing County Integrated Development Plans for planning, conservation and development. The Ministry has completed land use and land cover mapping for Land degradation in Kwale and Makueni Counties; Mapping of Mangroves forest along the Coast; inventory and mapping of wetlands; inventory and Mapping of Dams in Machakos, Makueni,and Kilifi; Mapping of Cherangany and Mt Elgon Water Towers; Mapping of Kakamega; Assessment and mapping of Ewaso Nyiro North Water Towers. Currently, land use/cover is ongoing in Mombasa and Kwale Counties. Already, the Ministry has signed MOUs with Mombasa and Kwale Counties on this exercise to the tune of KES 70 Million. The project is estimated to create over 300 direct jobs during this period; Conducted Rangeland Assessment and Monitoring of Livestock and wildlife Population and Distribution in Narok, Samburu, Isiolo, Lamu, Kwale, Kilifi, Baringo, West Pokot,

iii.)

iv.)

Elgeyo-Markwet, Kajiado, and Turkana Counties. The foregoing data and information were used in mapping wildlife corridors and dispersal areas.

v.) The Ministry through its DRSRS installed and commissioned a web based GIS infrastructure for earth resource mapping, upgraded GIS/Remote Sensing hardware/software infrastructure; Updated geo-spatial databases and metadata in thematic areas (wildlife/livestock, land use / land cover, forest cover, vegetation and land degradation) including data backups; and upgraded existing Local Area Network (LAN).

3.0

REALIZATION OF JUBILEE MANIFESTO

The Ministry has implemented the Jubilee Manifesto especially in the following areas: Wealth creation: The ministry has conducted exploration of mineral resources and facilitated mining companies to exploit and export minerals resources. This has enabled the country earn foreign exchange that is used for economic development of the country. Sustainable development: The Ministry collects royalties and fees from mining activities and the revenue is used by the National Government to develop the country. Equity: The Ministry has developed a formula to share benefits accruing from mineral resources. The formula ensures equity between community, nation and county governments. Corruption: The ministry has developed Minerals and Mining Policy and Bill; is upgrading its cadastre system to introduce web-based application of licensing aimed at improving integrity, transparency and accountability thus minimize corruption. Youth and women empowerment: The Ministry allocated 37 per cent procurement of goods and services to youth and women. This has created job opportunities to youth and women. 4.0 PROJECTS/PROGRAMMES FOR 2014/15 FY

The following projects/programmes are proposed for 2014/15 Financial Year: National airborne geophysical survey The ministry plans to carry out a multispectral airborne geophysical survey on whole country to fast track delineation of the countrys lithology and possible areas of economic mineralization. This will be a very important undertaking of the ministry, which will provide it with comparative advantage when engaging the investors and other stakeholders. The data so generated will be vital and important in planning future ground follow ups for mineral investigations, assessment and exploration. It will be a national asset, which will be availed to the investors at a cost and 5

will also stimulate interest in the industry and hasten investment decisions in mineral exploration. Increased investment in the industry will translate into more income to the government and jobs to Kenyans. Transactional mining cadastre To enhance efficiency, accountability, and transparency the ministry will upgrade its current mining cadastre into an online transactional mining cadaster to minimize human conduct. This will enable all transactions such as applications, processing, issuing, reporting and payments, to be carried out on line. Geological Data Bank To ease access to geological and mineral data and information the ministry will set up a geological data bank from all geological and related data and information will be available. Information is very key in making investment decision and so this data bank will assist a lot in this regard thus increase investments in the industry, create jobs for Kenyans and increase income for the government. Geological surveys and equipment Minerals occurrences and deposits, which were easy to find, have been found. Mineral exploration is both an art and science, which is getting more and more complicated and sophisticated requiring modern and sophisticated equipment to augment the science. For Kenya to benefit from its mineral endowment it needs to invest in mineral exploration to provide primary data required by the investors and other stakeholders. Geological surveys and mineral exploration is a core mandate of the ministry whose results are likely to increase mining investment and returns. Therefore in order intensify mineral exploration and tap on the mineral potential the ministry will procure modern exploration gears and equipment which include inter alia core drilling rigs, stream sediments sampling augers, portable XRF and XRD guns, reliable field vehicles, analytical laboratory equipment.

Establishment and strengthening of enabling institutions In order to maximize returns from mining and empower Kenyans to participate in the mining industry, the ministry will strengthen Mineral Audit Agency so that it can adequately monitor mining operations and compute the right royalties due to the government. It will also strengthen the Minerals and Metals commodities exchange to facilitate trade in the minerals and enable Kenyans participate in industry through the exchange. To capacitate Kenyans to participate in mining industry, the ministry will establish a Mining Institute to impart relevant and appropriate skills especially to small-scale miners to enable them carry out mining operations cost-effectively and professionally. These institutions will enhance revenue collection, compliance and capacity building. Securing Wildlife corridors and Migratory Routes The Ministry will carry rangeland assessment and monitor livestock and wildlife population and distribution to ensure all wildlife ecosystems are fully protected, establish wildlife population trends and wildlife corridors and dispersal areas are intact. Land use/land cover The ministry will continue to carry out land use/cover to assist counties in preparing their County Integrated Development Plans.