Once seen as an agricultural country, Kenya has promising prospects for minerals at the Coast and around Lake Victoria. The nation is also set to become a member of the enviable club of oil producing countries.

MINERALS

Kenya has struck oil in Turkana, coal in Mwingi and gas in Lamu. It is now set to be the latest member of the enviable club of oil nations. Tullow Oil, the Anglo-Irish company at the centre of the find in Turkana area, says the “black gold” reserves are commercially-viable.

The oil discovery will be the prevalent story of this decade and beyond. This is because Kenya spends a good chunk of its monetary reserves on oil (about Kshs300 billion, in 2012). In fact, one in every three shillings of imports goes to oil purchase. “It is very good news for our country,” President Mwai Kibaki said following the news of the oil discovery in 2012. Thus, the money that has hitherto gone to foot the huge oil import bill could be diverted to other development, such as infrastructure financing, health and education.

Yet, this is hardly all. With oil and coal available, the local processing of minerals hitherto exported in raw form (as ore) will be possible and relatively inexpensive. Thus, the mining industry is set for a major facelift.

The prospect of Kenya becoming an industrialised nation as envisaged in Vision 2030 is gradually becoming real.

History

Turkwel-GorgeThe discovery of coal, oil and a host of other minerals spread in parts of the country was hardly unforeseen. The Geological Survey Department was established way back in 1932. And by 1968, three-quarter of the country had been surveyed and clustered into geographical regions. However, prospecting was sporadic and has remained so ever since.

In fact, William Pulfrey, the then Commissioner of Mines and Geology and his colleague, Chief Geologist John Walsh, wrote and published a lot about Kenya’s geology and mineral prospects in the 1960s. They were able to dissect the country in geological regions in the late 1950s.

By the time Kenya achieved Independence exactly half Century ago, laws were in place to govern the sector. The Mining Act came alive a year to Independence in 1962, as did the Mineral Oil Act, The Trading in Unwrought Precious Metals Act, The Diamond Industry Protection Act and The Gold Mines Development Loans Act.

After Independence, the new government moved fast to review the laws in line with the aspirations of the majority Kenyans. The new legislation was to stimulate entrepreneurship in the sector, and to give private individuals and companies prospecting rights – although minerals (defined to exclude clay, murram, sand, and limestone so as to encourage the making of bricks, tiles and other building materials) belonged to the Government. The legislation clearly defined minerals and the process of mining.

The Commissioner of Mines and Geology was charged with control of the sector.

In addition to the legislation at the core of mining, the new government came up with the Foreign Investments Protection Act in 1964 to attract foreign financiers by detailing investment procedures and how their wealth is safeguarded. It also indicated how their assets and profits could be transferred out of Kenya. Within this period, the Government encouraged communities in mining areas to form marketing cooperatives so as to get the best prices for their minerals.

And in 1966, with discoveries in Kajiado of large quantities of wollastonite (otherwise known as calcium silicate, a paint extender in oil-based products, and a raw material for manufacture of ceramics and tiles), the Government issued guidelines to investors. According to a memo dated January 27, 1967, by the Ministry of Natural Resources, the guidelines were “to encourage a more rapid development of Kenya’s mineral potential by providing mining companies with technical information on specific mineral deposits and other aspects of mining”. The minister for Natural Resources was C.M.G. Argwings-Kodhek.

Authorities felt the best way to develop the sector was to get foreign investors in. “The development of Kenya’s mineral resources depends at present on attracting overseas prospecting and mining companies to undertake the necessarily speculative work of finding and developing mineral deposits,” the ministry stated in one of its bulletins in January 1967.

Two years later, Natural Resources Minister Jeremiah Nyagah amended the Mining Act and developed subsequent regulations. And in March 1970, Nyagah’s successor, William Odongo Omamo, issued an oil-exploration licence to Adobe International Inc of Texas, to survey 8,000 square miles in Mandera and Wajir.

Interestingly, reports about oil finds kept Kenya on the brink since Independence. On December 4, 1970, a government communication leaflet, Natural Resources Information, sensationally claimed “the possibility of an oil-strike” in Kimilili, Bungoma. According to the report, “an oily substance, mixed with water, was present in a borehole then being drilled for water”.

Almost 300 gallons of the stuff was collected although the Government later denied the possibility of an economically-viable find in that area. This was after Minister Omamo visited the area and ordered the digging of another borehole within the vicinity to confirm the reports. No oil was found.

Then, later in the 1980s, there were reports about another find in Turkana area.