UPDATE 2-Kenya acts to get a bigger share of mineral resources

Mon Aug 5, 2013 11:24am EDT
 
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* Licenses issued Jan-May 2013 cancelled

* Minister says Kenya must benefit from mineral potential

* Miners say were not told of new measures

NAIROBI, Aug 5 (Reuters) - Kenya has unexpectedly increased royalties on minerals produced in the east African country and revoked certain mining licenses to get a bigger share of earnings from its mining sector.

The new measures, which came as a surprise to mining companies in the country, followed a sector-wide review and was aimed at ensuring east Africa's biggest economy got a more favourable deal, Mining Secretary Najib Balala said.

Kenya has proven deposits of titanium, gold and coal. But the country's mining sector is a relatively small contributor to national output although its revenues are expected to grow as new mines come onstream.

Kenya's action follows measures in Tanzania, Africa's fourth-largest gold producer, which passed new mining legislation in 2010 to raise royalty payments on gold exports to 4 percent of gross value from 3 percent of netback value.

The Tanzanian government has also said it would consider windfall taxes on mining companies if they reap huge profits from the commodities.

In Kenya, in addition to royalty increases, the government has revoked all mining licenses issued in the months before and after March's elections.   Continued...