In a span of just two weeks, both Kenya and Tanzania made radical policy decisions that baffled investors in East Africa’s nascent mining sector.
Firstly, Kenya’s Parliament passed new operating rules that require all mining companies licensed in the past year to cede a portion of their business to the government for free. Companies awarded the mining licences much earlier, however, were exempted from the rules that handed the government the right to a 10% stake in all mining operations licenced after May 2016.
“The State right to a free equity participation shall not apply to any right that has been granted to a holder to mine or exploit a mineral before the coming into force of the Mining Act,” the Mining (State Participation) Regulations 2017 reads in part.
Furthermore, the law gives the Kenyan government the option of purchasing additional interest or share capital in the holder of the licence but only with the agreement of the licensee.
“Any additional interest that the State may acquire shall be agreed with the holder of the mining licence and the purchase shall be at a fair market value,” the rules further state.
This story is from the August 2017 edition of Forbes Africa.
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This story is from the August 2017 edition of Forbes Africa.
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