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Kenya to develop state owned mining company

Bloomberg reports that Kenya will form a state-owned company that will hold stakes in mines and establish a sovereign wealth fund to manage revenue from the industry, quoting Mining Secretary Najib Balala.

The government is repealing a law that required at least 35 percent domestic ownership, reducing it to 10 percent that will be held by the government, Balala said in an interview on July 9 in the capital, Nairobi. The new legislation, creating what will be known as the National Mining Corp., is expected to be enacted by November, he said.

Kenya is the world’s third-biggest producer of soda ash, used in the manufacture of glass, and ranks seventh globally in output of fluorspar, used to make steel, according to the U.S. Geological Survey. The country also has deposits of gold, rubies and sapphires, though the industry represents less than 1 percent of its gross domestic product, according to the African Development Bank.

Australia company Base Resources Ltd. owns the Kwale mineral-sands project in southeastern Kenya and Goldplat Plc operates a gold mine in western Kenya. Cortec Mining Kenya Ltd., a Nairobi-based exploration company, plans to start production at its niobium project in southeastern Kenya by 2016.

The government estimates there’s as much as 1.5 billion metric tons of coal in four of 31 exploration blocks in Kitui, eastern Kenya, he said.

The proposed new law calls for the creation of a Mineral Sovereign Fund into which a quarter of mining royalties received by the government will be held for future investment, Balala said. The state is proposing that three-quarters of total royalties go to the national government, 20 percent to county administrations and 5 percent to local communities, he said.
Source: Bloomberg

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