How State officials aid rogue foreign miners steal billions

Local miners work at Masara gold miners in Suna west Migori County on May 14, 2020 (Caleb Kingwara, Standard)

Death of workers arising from mine operators’ failure to implement safety standards, unlicensed players – some of them foreigners who sneak out minerals are among the factors pulling back the mining sector.

This is aided by senior ministry officials who don’t play by the rules they have set, and demotivated mid-level managers who have been in acting capacity for six years according to the findings of a study commissioned by the Mineral Rights Board (MRB).

These actions have seen the country lose billions of shillings.

The board plays an advisory role to Petroleum and Mining Cabinet Secretary on a range of issues including the issuance of mining licences, when to suspended a miner’s operations and what minerals can be declared strategic due to their unique qualities relative to the needs of the country.

The study unearthed major challenges that may have stagnated the industry, despite its vast potential.

It noted that rogue players are deeply entrenched in the industry, to the extent that only a handful of companies that operate processing plants are licensed.

No formal operations

The unlicensed players even lack plans to formalise operations, at least from the documents that have been lodged with the ministry.

According to the study, the industry’s operations are increasingly coming under foreign firms with increasing number of Tanzanians and Chinese nationals operating processing plants in the country illegally.

The rogue players also fail to offer protective gear to their employees who handle dangerous chemicals. This has led to deaths of many mine workers while more are left nursing what could be lifelong health complications.

The report, singling out Migori County, noted that while there are numerous miners operating gold processing plants, only a handful have met the necessary legal requirements.

 “There are more 60 gold processing plants (in Migori County) and probably less than five have the required licences, a situation worsened by many foreigners (Tanzanians, Chinese among others) who export their final minerals without declaring,” said the report submitted to MRB.

“No single Artisanal Miners Permit has been issued to date in the whole republic, hence all artisanal mining activities are not paying revenue or avoid paying by selling to illegal dealers.

Equally, they do not reveal illegal buyers to continue in their unscrupulous business. Such illegal dealers then export this gold through Tanzania or Uganda, denying government sale royalties.”

Despite there being a single artisanal miner licensed, the United Nations Development Fund estimates that there were about 250,000 artisanal miners in Kenya as of 2017, a figure that has since grown.

Artisanal mining accounts for over 60 per cent of annual gemstone production in Kenya.

The report observes the mines are a hazard for the workers as safety guidelines by the Mining Act are disregarded. It estimated that about three people working at the mines die monthly due to use of poisonous chemicals

“There is a total disregard of health and safety as the casualty figures among the field workers are on the rise and sanctions are not applied to erring miners. In Migori for example, an average of three mine workers die every month as a result of unregulated mining activities,” said the report.

“This is what has been officially documented thus; the actual casualty figures could be higher as a result of use of poisonous Cynide and Mercury.”

The industry’s fortunes have been on the decline in the recent years. Last year, for instance, total earnings from mineral production declined by 5.5 per cent from Sh30.8 billion in 2018 to Sh29.1 billion, according to data by the Kenya National Bureau of Statistics.

 The report faulted the ministry for the casual manner it has approached in licensing of miners in the country. Senior ministry officials have been by-passing the licensing mechanism they have in place and partly paying a role in derailing the industry.

The ministry has in the past given written or even verbal approvals to miners instead of using the Mining Cadastre, a Sh600 million system for licensing and monitoring mining activities.

“There is a breach of the Act as the cadastre system is being by-passed and applicants transmit their documents physically to the offices. This unwholesome practice may have resulted to duplications of licenses and unnecessary interference with the operations of the cadastre system,” said the report.

Often, the miners have gotten approvals through written replies - resulting in duplication of licences as similar processes take place on the cadaster.

The cadastre was developed five years ago to manage the sector - from application through approval, licensing, renewals and expiration.

While ministry officials could be faulted for not using a system, the application could also be faulty. The servers are hosted in a foreign country, threatening the security and safety of Kenya’s mining data.

It was developed in line with the World Trade Organisation’s requirements for simplification and harmonisation of international trade procedures. Besides licensing procedures, the system allows miners submit export or import documents in a bid to reduce clearing time significantly.

“This system is actually hosted on a cloud server in South Africa. This is quite risky as if the information in the system disappear the Government can be sued and will cause the state of chaos in the industry. The MRB suspects the cadastre system is faulty and the CS needs to carry out a system audit on it.”

The board has requested the CS to suspend the operation of the system due duplication of data and other suspected malpractices.  

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