MINING IN KWALE COUNTY, WHERE IS THE COMMUNITY?

KCNRN POLICY BRIEF
Policy Brief No 1, 2014
MINING IN KWALE COUNTY, WHERE IS THE COMMUNITY?

This Policy Brief targets Kwale County Government, Senators, Members of the National Assembly, Members of Kwale County Assembly, the National Environment Management Authority (NEMA), the Kenya Forest Service (KFS), the Kenya Wildlife Service (KFS), Mining Companies, International and local communities, among other stakeholders concerned with advocacy for best practices in the Extractive Industry.

Executive summary.
Kenya is headed to a robust mining industry, and it is only prudent that this starts off in the right footing. Existing policies related to mining need to be formulated to favour the community and governments; and policies under review, or those to be formulated (especially at County level) need also to consider value addition to benefits, and safety. The existing policies need to define royalty and it must be pegged on the mineral value rather than the traditional basis of company profit value. The Government needs to take up an oversight role to ascertain records and material quantity and type involved in the mining. Some functions such as monitoring and oversight need to be devolved, so as to ensure efficiency and complementarity between the National and County governments. Additional funds such as Development Fund and Heritage Fund need to be introduced in the Mining Bill to broaden the local benefits from the resource. New mineral discoveries in ongoing mining activities need to be subjected to a new Environmental Impact Assessment (EIA), and if the mining involves a radioactive element, a health survey
should be mandatory. Proponents need to be specific on the mineral extracted, avoiding terminologies such as ‘rare earths’ which stands for diverse elements of different value and effects.
Background
Kwale County is among the exceptionally well endowed Counties with riches in Natural Resources (NR) arising from its landscape diversity, these include: land, forests, water, wildlife, pasture, and minerals. As far as large scale mining is concerned, generally Kenya and Kwale County specifically, are inexperienced hence the need to start on the right footing. Livelihoods, safety, post mining impacts and mitigation, and effective monitoring and evaluation; specifically occupation health and safety, need to be thoroughly thought through visa vis the economic gains (taxes, levies and royalties) related to the minerals. With regard to economic benefits, the percentage gains as royalties and the distribution of these royalties among beneficiaries also need to be
reviewed. World over, it is common that mining activities do not reflect the development of an area. This can be interpreted to mean, the wealth distribution is not in favor of the local community in mining areas. Moreover, royalties have always been defined based on company profit and not the mineral value and this could be attributed to governments and communities’ lack of guidelines and expertise to ascertain the factual accounts related to such losses. There are cases where miners discover new minerals other than what was captured in the original EIA report, and mining licenses/agreements but do not disclose. In some cases, the new discoveries involve radioactive elements, which are hazardous to human lives. For example, in the Kenyan South Coast, Mrima Hill has a discovery that comprise of radioactive minerals (EIA report 2011, volume 5 page. 15), and mining could start soon. Similar cases are potential for neighboring Kiruku and Nguluku Hills. In other cases, proponents may lump individual minerals together and refer to them using one name, for example, rare earths that may include specic metals with different values and effects.BriefThe word “royalties” is not dened in the Mining and Minerals Bill 2011. The Natural Resources (County Royalties) Bill, 2013, denes royalties as ‘non-tax revenue in the form of compensation for the use of natural resources, expressed as a percentage of receipts from using the natural resources or as a payment for each unit produced’. In this context the use of the word “receipts” makes the definition vague. The need for an explicit definition of royalties for easy interpretation is therefore, paramount.

Problem Statement
1. ROYALTIES (Taxes, Levies, Charges and
Corporate Social Responsibility (CSR)
PROBLEM STATEMENT
The Chamber of Mines guidelines dene royalties as ‘a percentage payment from the prot in the mining products trade’; this is irrespective of the mineral value. Guidelines to companies on payment of royalties are not elaborate in the Mining Bill. The distribution is better explained in the Natural Resources (County Royalties) Bill, 2013 as: 75%, 20% and 5% for National Government, County Government and Community respectively.
However, since the County government and the community will bear the highest brunt of the impacts of the mining activities; therefore, their royalty shares needs to be raised.
In other countries, mining policy reviews are bringing in additional but relevant funds e.g. Development Fund, Security Bonds, and Heritage Funds. In Kenya, Environmental Management and Coordination Act (EMCA),1999 and the Mining Bill highlight the Security Bond for mitigation, but leaves the valuing of the Bond at the discretion of the sitting Minister (Cabinet Secretary). A better valuing system is needed here.

KCNRN’S STATEMENT OF INTEREST
Kcnrn Statement Of Interest In The Issue
Kwale County Natural Resource Network (KCNRN) is an advocacy group focusing on Natural Resource Management (NRM), aiming at sensitizing and mobilizing communities to play an active role in NRM, and in formulation and /or review of policies related to NRM, at both the County and National levels. Network membership is diverse hence a wealth of knowledge, expertise and experiences in NRM. For public interest, the Network collaborates with relevant stakeholders to ensure that Natural Resources (NR) are exploited sustainably and equitably. The Network also promotes information sharing between stakeholders on NRM issues.
KCNRN ADVOCACY ACTION IN THE MINNING BILL
1. KCNRN has participated in some of the meetings where these policies were discussed. These include a meeting with a Senate Committee that deliberated on royalty distribution ratios between National Government, County Government and Community as entrenched in the Mining and Minerals Bill 2011 and the Natural Resource (County Royalties) Bill 2013. The Network has been active in EIA reviews and submissions, as well as EIA public barazas (consultations).
2. They reviewed the Cortec Niobium Processing Plant at Kiruku project Environmental and Strategic Impact Assessment (ESIA) report, compiled comprehensive and documented comments which were later shared among stakeholders and submitted to National Environment and Management Authority (NEMA).
3. KCNRN representatives visited the Kwale Governor Hon Salim Mvurya and discussed issues of ecosystem destruction, community compensation and protection of citizen as a result of mining activities anticipated at Mrima Hill Forest. As a result, the County Executive Member for Lands, Mining, Environment and Natural Resources pledged to support the Network. Additionally, this office assured the network that they are not supporting the issuance of mining licenses and approvals without a d d r e s s i n g h ow t h e C o u n t y Government of Kwale will benefit, how the Radioactive elements will be disposed and how the community will benefit.
4. The Executive Committee of the network submitted a letter to NEMA and the Kwale County Government as an appeal not to offer licenses to mining companies. As a result, the Cabinet Secretary for Mining cancelled licenses for 43 companies including Cortec K Limited.
5. The network has partnered with local FM Radio stations to share, inform
and advocate the public on Mining benefits, Challenges, Community participation and Benefit sharing, Conservation of Ecosystem and policy enforcement.
6. The network has written positional papers on mining activities in Kwale mainly to highlight key hotspots, c o m m u n i t y c o n c e r n s a n d conservation measures,
2.| KCNRN POLICY BRIEF | Policy Brief No 1, 2014
RECOMMENDATIONS.
1. All policies and legislation related to mining must define royalties explicitly for the public, mining companies and policy implementers to have the same understanding.
2. The royalties’ definition need to be based on the mineral value rather than on the company profit. Poor trading strategies cannot be an excuse to deny a nation benefits of her mineral resource.
3. There is need for clear guidelines to legalize governments or state departments to be directly involved in the monitoring of mining activities, including operations, financial reports and documentation. This would help in ensuring checks and balances for both trade and environmental aspects, as per the agreed terms and conditions or the policies and agreements.
4. The Mining Bill needs to consider the introduction of a Development fund and a Heritage fund, in addition to the Security Bonds that exists in the Mining Bill. There needs to be an instruction for any new discovery, the proponent has to do a new EIA that puts the new mineral into consideration; and new negotiations and licensing process
started.
5. Proponents should specify the extracted mineral based on the Government geologist’s definitions which must be precise to the metal or stone. Generalized and obscure terminologies such as Rare earths need not be used in agreements and licenses.
6. The Mining Bill must include as a prerequisite a Health Survey for a mining activity that involves radioactive minerals; followed by subsequent health monitoring for the surrounding community and mining employees.
7. In the Natural Resources (County Royalties) Bill, 2013, the Community Natural Resources committee needs to be reviewed and membership must include affected communities , Community-Based Organizations (CBOs), Civil Society Organizations (CSOs), marginalized and professional groups for full community participation in decision making in mining.
8. Devolution of some mining functions, especially day to day overseeing of
mining activities at County level. There is need for County Governments to be supported and their capacity built towards developing legislation that strengthens National policies in mining.