Most popular to invest in mining industry in Kenya

2022-08-17
  • Detail

Go to Kenya and invest in mining

Kenya is located in eastern Africa, with the equator running through the middle, the Great Rift Valley running north and south, and the Indian Ocean in the southeast. It covers an area of more than 580000 square kilometers and has a coastline of 536 kilometers. Kenya has 42 ethnic groups with a total population of 41million. Kenya is one of the countries with a good economic foundation in sub Saharan Africa and the most developed industrial country in East Africa. It is also an important fulcrum of the "the Belt and Road" cooperation in Africa and one of the pilot demonstration countries for capacity cooperation established by the Chinese government

China and Kenya established diplomatic relations on December 14th, 1963. Since the establishment of diplomatic ties, the friendly cooperative relations between the two countries have developed smoothly. Kenya is an important partner of China in East Africa. In 2017, China Kenya relations were upgraded to a comprehensive strategic partnership. In recent years, the cooperation between the two countries in economy, trade, culture, education and other fields has been continuously strengthened. In 2015, the bilateral trade volume was US $6.02 billion, and China's new direct investment in Kenya was US $320million, ranking first in Africa. According to Statistics Bureau of Kenya, the total bilateral trade volume between China and Kenya from January to July 2017 was US $2.46 billion. Recently, Kenya's National Bureau of statistics released the "foreign investment survey", which showed that China has surpassed the UK and the United States to become Kenya's largest source of foreign direct investment (FDI)

the transportation capacity has been continuously enhanced

Kenya is the leader and transportation hub of regional economic development, and an important promoter of regional integration and regional interconnection. Kenya is actively implementing the "2030 vision" to promote national economic development and regional integration by increasing infrastructure construction. Roads in Kenya are basically complete, mainly by road transportation, with roads connecting major towns. Kenya's roads are 64000 kilometers long, but only more than 9000 kilometers of asphalt roads, and most of the roads are in poor condition at present. The government is increasing its investment in infrastructure such as roads and making it an important part of its economic development strategy. With a total length of 2765 kilometers, the railway is a narrow gauge railway with 83 locomotives. The railway under construction will connect Kenya's largest port in Mombasa and the border town of Malaba. In terms of water transportation, Mombasa port is the largest port in East Africa, with 21 deep-water berths and 2 large oil terminals, which can berth 20000 ton cargo ships, with a total throughput of 22million tons. With the continuous improvement of air transport capacity, there are four large international airports and more than 400 small or airstrips in China. In addition, the Mombasa Nairobi oil pipeline was built in Kenya in 1978 and has been expanded to Nakuru, Eldoret and Kisumu

rich mineral resources

Kenya is rich in mineral resources, mainly including soda ash, salt, fluorite, limestone, barite, gold, silver, copper, aluminum, zinc, niobium, thorium, etc. in recent years, a variety of mineral resources sufficient for commercial development have been found, including rare metal minerals such as gold, titanium, niobium and rare earth, in addition to coal, iron ore, oil and natural gas. Kenya's oil reserves are expected to exceed those of neighboring Uganda, and the coastal areas are also likely to contain oil and gas resources. The great discovery of new mineral resources will increase the market demand for electronic components and sensors, which used to rely on agriculture and tourism as the pillar of economic development. In just a few years, the country has entered the ranks of "countries rich in mineral resources". At present, except for soda ash and fluorite, most mineral deposits have not been developed, and the major mining enterprises are oil refining, cement, steel rolling, etc

the main mining products in Kenya are barite, diatomite, feldspar, gypsum, lime, silicate, fluorite, salt and vermiculite. The building materials produced include cement, coral, granite, limestone, marble and shale. Kenya also produces a small amount of metal products, including gold, processed aluminum, lead and steel, as well as carbon dioxide, carved gemstones and refined petroleum products

mining of mineral resources is mainly concentrated in oil, gold, diatomite, fluorite, gem, soda ash, etc

constraints and incentives of investment policies

Kenya's stable political environment, good economic foundation, superior geographical location, and huge mining development potential all have great attraction to international investors. The relevant law of Kenya to encourage investment is the foreign investment protection act. The competent investment departments mainly include the investment promotion agency, the National Investment Commission and the competition authority under the Ministry of trade of Kenya. The land management law of Kenya stipulates that all agricultural land is not allowed to be traded with foreigners and non resident enterprises (including non resident wholly-owned enterprises or enterprises held by non residents), including purchase, sale, transfer, lease, mortgage, etc. (except those licensed by the president). Foreign investors can obtain land use rights through leasing, with a maximum lease term of up to 99 years. Kenya's environmental protection laws and regulations include the environmental management and coordination act, environmental impact assessment regulations, etc. According to the regulations on environmental impact assessment, the project must submit an environmental assessment report to the National Environmental Management Commission before starting work or before applying for other licenses. The relevant requirements of the environmental protection regulatory system have been written into the constitution of Kenya, and the vision of "supporting economic development and achieving poverty reduction with a healthy environment" has also been clearly written into an important part of Kenya's 2030 long-term plan. Kenya is expected to become an engine driving the shaft of photoelectric encoder to change the regional "green economy"

Kenya has made building a mining center in Africa its mining development goal. In order to better attract foreign investment, the Kenyan government recently submitted the mining law 2013 (Draft) to the parliament for approval. The draft stipulates that the Kenyan government can occupy 10% of the equity of mining companies operating in Kenya free of charge without capital injection and other financial means. The old law has no similar provisions. The draft of the new law also requires that licenses must be issued on a first come, first served basis to prevent speculation. The new mining law is expected to make major breakthroughs in five aspects, creating an environment for attracting foreign investment and technology from the policy level and changing the backward situation of Kenya's mining industry. First, significantly reduce the handling costs. The focus is to simplify the application procedures for mining licenses, and provide convenience in the application procedures for land ownership certificates for the purpose of exploration and mining. Second, provide preferential treatment in tax, power supply and other aspects. Such as tax relief for a certain period of time, capitalization of exploration costs, delay in paying royalties according to the scale and progress of the project investment, exemption from import tariffs on mining machinery and equipment, and reduction of electricity expenses of mining enterprises. Third, regulate individual mining operators. Fourth, strengthen the construction of roads, electricity, communication and other infrastructure in the mining area. The fifth is to resolve the disputes about mining in national parks and wildlife reserves. According to the current environmental act of Kenya, mining in the reserve is prohibited. The new mining law will regulate mining behavior legally. In addition, the draft does not specify the provision issued by the Kenyan government in October 2012 that mining companies must transfer 35% of their equity to local investors within a certain period of time, but only stipulates that the Minister of mines will announce the minimum shareholding ratio of different mining departments from time to time

at the same time, Kenya treats domestic and foreign enterprises differently in terms of investment capital and tax system. In terms of investment capital, foreign-funded enterprises are required to need at least 500000 US dollars, while domestic capital only needs 65000 US dollars; In terms of the tax system, foreign-funded enterprises need to pay 37.5% of the enterprise tax, while domestic companies only need to pay 30%. Foreign capital still faces ownership restrictions in some areas of investment in Kenya, such as 2.1, errors caused by incorrect installation of experimental machines, uneven installation of experimental machines, telecommunications, energy and other infrastructure, insurance, media and other fields

precautions for Chinese enterprises to invest in mining industry in Kenya

protect the environment and love animals. Kenya attaches great importance to environmental protection. The government has professional inspectors to monitor the implementation of environmental protection measures of enterprises. Once violations are found, they should not only be dealt with in accordance with the law, but also may be exposed to the media. Kenya has the reputation of "bird and beast paradise". 59 national natural wildlife parks and nature reserves, which account for 11% of the land area, are paradise for many wild animals and birds. Kenya is the only country in the world where people make way for animals. In Kenya's animal reserves, animal police have the right to kill animals on the spot if they are injured. Mining investment in Kenya must take full account of environmental protection factors, strictly abide by Kenya's environmental protection laws, and consciously do a good job in environmental protection of portal structure corresponding to single arm structure

undertake necessary social responsibilities and establish a good corporate image. Among the interests of the enterprise, the government and the people, the Kenyan government places special emphasis on the protection of the interests of the people, and stipulates that mineral development enterprises must fulfill their social obligations and repay the local society. In addition to legally obtaining benefits and paying taxes according to law, the most important thing for mining development enterprises is to let local people see the changes that mineral development activities have brought to their lives. To carry out mining investment in Kenya, we should take the initiative to undertake the necessary social responsibilities in terms of localized operation, not only to provide more local employment opportunities, but also to often participate in local public welfare activities. At the same time, the Kenyan government restricts the entry of non-technical labor personnel to work in Kenya, implements a strict work permit system, invests in Kenya's mining industry, and should provide more technical training for local employees to facilitate investment development. In order to invest in mining industry in Kenya, we should complete the investment on schedule, act in strict accordance with the contract and improve the reputation of the enterprise. Kenya government engineering projects and projects funded by international organizations rarely have unreasonable arrears of project funds

deeply study the laws and management systems related to mining investment. The main investment laws in Kenya include the foreign investment protection law, the Trade License Law and the investment promotion law, which stipulate the rights and obligations of foreign investors, the specific procedures of investment, the application for investment license, the investment management department and the investment incentive mechanism. For mining investment, it is more necessary to study more specific relevant regulations, such as: Mineral Law, environmental protection law, transportation license law, land control law, water law, etc. For the investment management system, we should focus on the mining market access, foreign exchange and foreign capital protection, as well as the tax system of mineral resources development. For example, in August 2013, the Ministry of Mines of Kenya increased the royalties of mineral resources in the country, while the gross sales tax of gold, rare earth, niobium and titanium ores was correspondingly increased. Subsequently, it was announced in October that the rate of mining license was set at 10%

special attention should be paid to the prior investigation, analysis and evaluation of relevant risks. At present, when choosing mining investment projects, Chinese enterprises should combine their own advantages, carefully analyze Kenya's resources and market, learn and understand Kenya's policies and regulations, market conditions, transportation service facilities and even customs and etiquette. Do a good job in the feasibility study in the early stage of investment and formulate a positive and stable development plan, so as to avoid investment risks and expand project income as much as possible

Copyright © 2011 JIN SHI