Interview: Tim Carstens
What specific measures could help improve the country’s attractiveness for mining operators?
TIM CARSTENS: Kenya’s ranking in the highly regarded Fraser Report was clearly disappointing. Most alarming was the dramatic drop from the 2013 ranking of 79th, which unfortunately suggested a perception that Kenya is headed in the wrong direction.
The key to improving investment attractiveness is the development of a clear mining policy that competitively positions Kenya to attract mining investment relative to alternate jurisdictions. This policy would preferably be developed through an inclusive consultative process and should set out a 20-30 year vision for the sector, offering guidance on how this is to be achieved. A process should then be undertaken to ensure that Kenya’s legislation supports this vision. This is an endeavour that Tanzania successfully undertook back in 1997, at which time it implemented a policy aimed at attracting investment into what was then a nascent industry. The success of this approach saw mineral exports increase from $26m per year to over $1bn in the space of a decade.
Encouragingly, in July 2015 there were indications that the government of Kenya had engaged McKinsey to develop a Mining Vision. This is a good start, and the industry would clearly welcome the opportunity to contribute to the development of a vision that builds a sustainable and inclusive industry.
With regards to mineral potential, Kenya needs to take a number of concrete steps to encourage and incentivise investment from exploration companies. These often-small companies, and the money they invest, are the lifeblood of a healthy mining industry and are crucial to the identification of mineral resources. However, they are also very mobile organisations and will invest their money where the conditions are most attractive and stable. Kenya will only begin to get a clearer understanding of its mineral endowment through an increase in exploration activity, which in turn will lead to further investment in mining exploration and development.
How would you rate the country’s current mining and environmental licensing processes?
CARSTENS: The Kenyan mining sector is slowly being modernised. Part of this process has involved the introduction of an online mining cadastre system. This system allows for license applications to be uploaded electronically and includes a publicly available map and the status of all issued and pending licences. The licensing processes, across the entire spectrum of requirements, are expected to become more streamlined as the industry grows and Kenya gains more experience in dealing with these matters. Complete transparency and a consistent application and granting process will be absolutely critical.
To what extent do you see similarities between the geologies of Kenya and its neighbours?
CARSTENS: As the saying goes, geology doesn’t recognise national boundaries. Mineral sands are a case in point. Deposits of mineral sands run from the east coast of South Africa, through Mozambique, into Tanzania and up the coast of Kenya. I have no doubt that they continue into southern Somalia as well.
The only major exploration work being conducted in Kenya at the moment is by Acacia Mining (formerly African Barrick Gold), which is exploring for gold in western Kenya. There is a clear northern extension of the Tanzanian greenstone belt, which hosts a number of large operating gold mines today.
It should be noted that mineral markets are currently very weak, with prices having dropped considerably over the past two years. This has led to a significant cutback in exploration budgets globally. An upturn in the market will partly assist Kenya’s ability to attract exploration investment. An aeromagnetic survey is critical in the bid to attract exploration.
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