By: African mining market

Kenya’s mining sector holds immense, largely untapped potential, particularly concerning its strategic mineral deposits. The global demand for strategic minerals, critical for powering electric vehicles, renewable energy technologies and advanced defence systems, is experiencing unprecedented growth. Nations worldwide are securing supply chains for these vital resources, recognising their profound geopolitical and economic significance. From the batteries powering electric vehicles to the components of sophisticated electronics, including key battery minerals like lithium, cobalt, and nickel, these minerals are at the heart of the 21st-century economy.

Against this backdrop, Kenya’s mining sector emerges as a significant, yet largely untapped, frontier. Kenya is endowed with substantial deposits of these critical minerals, positioning it as a potentially key player in meeting global demand.

To ensure their responsible and beneficial exploitation, the Government of Kenya (the Government) established a robust legal and institutional framework, placing the National Mining Corporation (NMC) at the forefront of these endeavors. This article provides an in-depth look at the current regulatory landscape, the pivotal role of the NMC and the critical considerations for private sector entities seeking to participate in Kenya’s strategic mineral sector.

The moratorium: A period of reform and its lifting

In December 2019, the Government imposed a moratorium on the processing and issuance of new mining licences and the renewal of existing licences. This measure was a strategic move aimed at protecting national interests and facilitating comprehensive reforms within the mining sector. A significant turning point occurred in October 2023, when the Cabinet Secretary responsible for Mining, Blue Economy and Maritime Affairs (the Cabinet Secretary) announced the partial lifting of this moratorium with respect to all construction and industrial minerals. In addition to this, the Cabinet Secretary announced the designation of fourteen (14) minerals as strategic due to their profound importance to the economy. These minerals are: (i) radioactive minerals (uranium, thorium); (ii) cobalt; (iii) tantalum; (iv) lithium; (v) coltan; (vi) niobium; (vii) copper; (viii) nickel; (ix) graphite; (x) tsavorite; (xii) chromite; and (xiii) rare earths.

For these strategic minerals, their exploration, mining, processing, marketing, export, and import may only be undertaken with direct government involvement through the NMC or a partnership involving the NMC.

It is crucial for any entity interested in these minerals to understand that dealing in any strategic mineral without the involvement of the NMC constitutes an offense punishable by law.

The National Mining Corporation: Operationalisation and mandate

The NMC is the exclusive entity responsible for overseeing the extraction of all strategic minerals in Kenya. Its mandate is broad, encompassing reconnaissance, prospecting, mining, processing, marketing, and export/import of strategic minerals. The NMC may undertake these activities either on its own or in association with any other person or company.

A mining company may derive several strategic and operational advantages from entering into a partnership with the NMC, including but not limited to the following:

• Access to strategic minerals: It is the only legal pathway to access and secure mineral rights for strategic minerals in Kenya;
• Government endorsement and streamlined processes: provide direct Government endorsement, potentially streamlining regulatory processes and securing necessary Government approvals; and
• Alignment with national objectives: ensures projects align with national economic and strategic objectives, leading to greater Government support.

Notwithstanding the potential benefits, a partnership with the NMC may also give rise to certain legal, commercial, and operational disadvantages, including but not limited to the following:

• Ambiguity in the selection process: a significant challenge lies in the fact that the Mining Act, while allowing for private sector participation, does not explicitly outline the process for selecting or appointing a private entity or finalising an agreement. This regulatory gap may create uncertainty and potential delays in formalising partnerships with the NMC;
• Joint venture or special purpose vehicle (“SPV”) requirement: any licence for strategic mineral exploitation may only be issued either solely in the NMC’s name, jointly in the names of NMC and the private partner, or through a jointly owned SPV. This necessitates the negotiation and finalisation of a comprehensive joint venture or shareholders’ agreement with the NMC, which may be a complex and time-consuming process;
• Cabinet Secretary approval for private participation: for the NMC to seek private sector participation, the Cabinet Secretary must first determine that the NMC lacks the necessary technical, financial, or other capacity to effectively explore, mine, refine, smelt, process, or market a strategic mineral. This determination, along with the authorisation for private sector involvement, requires explicit Cabinet approval which may prove to be a lengthy process; and
• Capacity limitations: The NMC, being a relatively new institution, is in the process of scaling up its operational and technical capacity. While this is expected during its early stages of establishment, it may affect the pace at which projects are initiated or implemented. Private investors should therefore anticipate the need to support the NMC to ensure timely and effective project execution.

The imperative of a defined procurement path: Ensuring legal certainty

To ensure transparency, legal certainty, and investor confidence in the development of strategic mineral projects, it is paramount that the Government, through the NMC, establishes a clear, transparent, and legally sound procurement path for the selection of private mining companies.

This may include the development of a bespoke selection criteria or the adoption of recognised methods such as the Public Private Partnerships Act, 2021 or the Public Procurement and Asset Disposal Act, 2015.

Constitutional and parliamentary oversight: A key consideration

A critical aspect of strategic mineral exploitation in Kenya is the constitutional requirement for parliamentary ratification. The Constitution of Kenya, 2010 mandates that any transaction involving the grant of a right or concession for the exploitation of Kenya’s natural resources must be ratified by Parliament. This oversight ensures transparency and accountability in the utilisation of national assets.

Action plan: Key strategic recommendations for private mining companies

To successfully navigate Kenya’s strategic mineral landscape and build lasting, profitable operations, private mining companies should adopt a proactive, integrated approach focused on partnership, compliance, community, and capital structuring. In particular (and from a legal perspective) consider the following key actions:

• Engage early with NMC: initiate informal briefings to understand NMC’s priorities, then present targeted proposals showcasing any exploration or processing technologies, solid balance‑sheet support, and concrete plans for local value addition;
• Streamline regulatory compliance: with the aid of local experts, develop a comprehensive licence roadmap from reconnaissance through full mining authorisation, incorporating key issues such as environmental impact assessments, mine site tenure and local community engagement;
• Integrate the value chain: embed local content throughout operations by employing Kenyan workers and sourcing goods and services from domestic providers, both mandatory licence conditions and a means to build sustainable community partnerships; and
• Advocate for better policy: during the life of the mine and post mine closure, work through local experts to provide concise, evidence‑based feedback on licensing and environmental processes, helping shape a more predictable, investor‑friendly regime.

Conclusion: Key insights for investors

Kenya’s designation of fourteen (14) minerals as “strategic” provides clarity on national priorities and signals strong investment potential. The mining of strategic minerals in Kenya represents a frontier of significant opportunity for both national development and private investment. With significant untapped deposits across the country, Kenya offers real opportunities for capable investors. The lifting of the moratorium and the active role of the NMC underscore the government’s commitment to harnessing these vital resources. However, navigating this landscape requires an understanding of the evolving legal framework, the mandatory involvement of the NMC, and the critical need for a clearly defined and legally defensible procurement process for private sector participation. With the right approach, Kenya’s strategic minerals landscape presents a compelling frontier for long-term, sustainable investment.