Obtaining a Mining Licence in Kenya: A Legal Guide

Kenya’s mineral sector, ranging from small artisanal gold workings in western Kenya to large-scale titanium mineral sands operations on the coast, is governed by a single statute, the Mining Act, 2016 (No. 12 of 2016), together with regulations made under it. Anyone proposing to search for or extract minerals in Kenya, whether a multinational investor planning a large open-pit mine or a Kenyan cooperative seeking to formalise an existing artisanal working, must obtain the correct category of mineral right from the national government before any exploration or extraction activity begins. The Act sets out a graduated system of permits and licences, each with its own scope, duration and conditions, and getting the category wrong, or overlooking the environmental, local content or state participation conditions attached to it, can result in an application being refused or a right later being suspended or revoked. This guide sets out the licence and permit categories under the Mining Act, 2016, the institutions that decide applications, and the environmental, local content, royalty and state participation obligations that attach to a mineral right once granted.

Licence and Permit Categories Under the Mining Act, 2016

The Act divides mineral rights into large-scale rights, small-scale rights and artisanal mining permits, and it is important not to conflate these categories, since each carries different eligibility criteria, area limits and durations. For large-scale operations, section 32 recognises a reconnaissance licence, a prospecting licence, a retention licence and a mining licence. A reconnaissance licence, dealt with in sections 61 to 63, confers a non-exclusive right to conduct surface investigations such as aerial or geophysical surveys over an area of up to 5,000 blocks, for a non-renewable term of two years; it does not permit drilling, excavation or any invasive investigation. A prospecting licence, under sections 72 to 84, is the exclusive right to search for minerals within a defined area of up to 1,500 blocks, granted for three years and renewable twice, and an applicant must submit an approved programme of prospecting operations, an environmental rehabilitation and restoration plan, and its proposed employment and procurement plans before the licence is granted. A retention licence, under sections 85 to 91, is a narrower right available where a prospecting licence holder has identified a commercially viable deposit that cannot presently be developed because of adverse market or infrastructure conditions; it is granted for renewable terms of up to two years on the basis of an independent expert assessment of the deposit. A mining licence, under sections 101 to 109, is the exclusive right to extract minerals from an area of up to 300 blocks, granted for a term that section 107 caps at twenty five years or the forecast life of the mine, whichever is shorter, and its grant depends on a feasibility study, proof of financial and technical capacity, approval of an environmental and social impact assessment, and a community development agreement.

Small-scale operations, defined by criteria set out in the Second Schedule to the Act relating to the scale of investment and production, use a parallel but distinct set of rights: a reconnaissance permit, a prospecting permit and a mining permit, each administered under the Mining (Licence and Permit) Regulations, 2017. Prospecting and mining permits for small-scale operations are granted for terms of up to five years. Separately, an artisanal mining permit, under sections 95 to 100 of the Act, is reserved for individual Kenyan citizens of majority age, including members of a registered artisanal mining cooperative, who use traditional or customary methods; it is granted for a three-year term, renewable once, and requires the consent of the landowner or lawful occupier of the land in question. A large-scale mining licence and an artisanal mining permit are not interchangeable routes to the same activity, and an operator mining at a scale beyond what an artisanal permit allows without first securing a small-scale or large-scale right is operating unlawfully regardless of how the operation is described locally.

The Application Process, the Ministry and the Mineral Rights Board

Section 12(1) makes the Cabinet Secretary responsible for the general administration of the Act, and it is the Cabinet Secretary, acting through the Ministry of Mining, Blue Economy and Maritime Affairs, who grants or refuses mineral rights under section 32, sets the conditions attaching to a mineral right under section 42, and prescribes fees and royalties. In practice, applications for mineral rights are lodged through the online mining cadastre system, and an application is generally considered in the order in which it is received for the area applied for, so that a properly filed application secures priority over a later one covering overlapping ground. Before the Cabinet Secretary decides on the grant, refusal, or terms of a mineral right, section 30 establishes the Mineral Rights Board as the technical advisory body in the process. The Board is chaired by a person with mining or geological expertise appointed by the President, and its other members include the Principal Secretary responsible for mining, the Principal Secretary for the National Treasury, a nominee of the Council of County Governors, the Chairperson of the National Land Commission, the Director of Geological Surveys, and two persons with mining industry qualifications, with the Director of Mines serving as secretary. Under section 31, the Board’s functions include advising the Cabinet Secretary on the grant or rejection of mineral rights, on areas suitable for small-scale mining, on areas to be excluded from mining, on the declaration of strategic minerals, on directions to cease or suspend production, and on the fees, charges and royalties that should apply. Section 16 separately allows the Cabinet Secretary, with Cabinet approval, to declare a mineral strategic, and provides that all radioactive minerals are strategic minerals by operation of the Act, which brings additional restrictions, including the State’s right of pre-emption over strategic minerals raised before they are sold.

Local Content, Employment and Local Equity Requirements

The Act builds local content obligations into the grant and ongoing conditions of a mineral right rather than treating them as optional best practice. Section 46(1) requires an applicant for a mineral right to submit a detailed programme for the recruitment and training of Kenyan citizens, and section 47(1) requires the holder to give preference in employment to members of the local community and to Kenyan citizens generally, at every level of skill for which suitably qualified Kenyans are available. Section 50 requires a holder to give preference, to the maximum extent possible, to materials and products made in Kenya, to services provided by Kenyan citizens and Kenyan-owned companies, and to locally available goods and services more generally, when procuring for its mining operations. Section 49(2) adds a local equity dimension for larger operations, requiring a holder whose capital expenditure exceeds a prescribed limit to list at least twenty percent of its equity on a local stock exchange within three years of the commencement of production; the Act leaves the specific capital expenditure threshold that triggers this obligation to be prescribed, so an investor should confirm the current threshold with the Ministry or the Nairobi Securities Exchange rules in force at the time rather than assume a figure. These local content obligations are assessed as part of the application under sections 46, 47, 72(3) and 101(2), and a mineral right can be made subject to further community development and local procurement conditions under section 42.

Environmental Compliance and Community Development Obligations

Mining projects in Kenya sit under two overlapping regimes: the Environmental Management and Co-ordination Act, administered by the National Environment Management Authority (NEMA), and the Mining Act’s own environmental conditions. Independently of the Mining Act, a mining or prospecting project of the kind that has a significant effect on the environment cannot proceed until NEMA has issued an environmental impact assessment licence, and this remains a separate approval process running alongside, not instead of, the mineral right application. Within the Mining Act itself, section 42(b) allows the Cabinet Secretary to attach conditions concerning protection of the environment to any mineral right, and section 72(3) specifically requires a prospecting licence applicant to submit an environmental rehabilitation and restoration plan before the licence is granted. For a mining licence, section 101(2) requires the applicant to provide proof of submission and approval of an environmental and social impact assessment report and an environmental management plan, and section 103 confirms that the Cabinet Secretary may grant the licence only where satisfied that the applicant has obtained the approved environmental impact assessment licence, a social heritage assessment and an environmental management plan. The Mining (Licence and Permit) Regulations, 2017 add a further financial safeguard distinct from the environmental impact assessment: a mineral right holder must provide a bond, in an amount the Cabinet Secretary determines in consultation with the Government Valuer, as security against claims for compensation payable to landowners for loss of land use, damage to land or loss of earnings caused by operations, and a holder remains obliged to take measures to protect and restore the environment within its operational area, to submit environmental audit reports at renewal, and, on expiry or revocation of the right, to remove boundary markers, camps and temporary structures and make good any damage to the surface within sixty days. A mining licence holder must, in addition, enter into a community development agreement with the community in the area where mining operations are to be carried out, a requirement referred to in section 47(2) and elaborated in regulations, covering the benefits the community can expect from the project over its life.

The Online Mining Cadastre Portal

Beyond simply determining filing priority, the portal itself is worth understanding as a practical tool. It lets an applicant view a live map of mining blocks across the country, check which areas are already held or under application before committing to a filing, enter the geographic coordinates for a proposed licence area, upload supporting documents, and track a pending application’s status. Once an area is marked as taken on the portal, overlapping applications for the same ground are automatically prevented, which is the practical mechanism behind the priority-by-filing-order rule described above.

Assigning, Transferring or Mortgaging a Mineral Right

A mineral right is not freely transferable once granted. The Cabinet Secretary’s consent is required before it can be assigned, transferred, mortgaged, or otherwise traded, and while that consent cannot be unreasonably withheld, a decision is required within thirty days of a complete application. This matters most in project finance structures: a lender taking security over a mining project needs to factor the consent requirement into how it structures a charge over the underlying mineral right, since the security itself is subject to a regulatory approval step the lender doesn’t control.

Royalties and State Participation

Every mineral right holder is required to pay royalty to the national government on minerals extracted, an obligation set out in the financial provisions of the Act; the current rates are prescribed under the Mining (Royalty Collection and Management) Regulations, 2024, which took effect on 3 July 2024 and revoked five earlier mineral-specific royalty regulations dating from 2013 to 2015. Under the 2024 Regulations, royalty is charged as a percentage of the gross value of the minerals extracted, and the rates differ significantly by mineral: precious metals, including gold and platinoid group metals, attract a royalty of three percent, down from the five percent that applied under the regulations the 2024 Regulations replaced; rare earth elements and radioactive minerals attract eight percent; coal attracts seven percent; metallic ores such as copper, zinc, lead, aluminium, vanadium and manganese, and titanium mineral sands, titanium ores and zircon, attract five percent; rough gemstones and rough diamonds attract six percent, while cut gemstones attract one percent and cut diamonds three percent; industrial minerals such as limestone, gypsum, dolomite, silica sand, talc, dimension stones, other construction minerals, clays and soda ash attract three percent; diatomite and fluorspar attract four percent; cement and salt attract 1.6 percent; and any mineral not separately listed attracts four percent. An investor should check the current schedule before modelling project economics, since these rates are set by regulation and have already been revised once since the Act came into force.

Separately from royalty, the Act gives the State a direct, cost-free equity stake in large-scale mining. Section 48(1) provides that the State shall acquire a ten percent free carried interest in the share capital of the holder of a large-scale mining right, for which no financial contribution is payable by the State, and section 48(2) extends this to mining operations relating to strategic minerals; section 48(3) additionally allows the State to negotiate further participation with the holder on arm’s length terms. The Mining (State Participation) Regulations, 2017 set out how this is implemented in practice: the Cabinet Secretary requires the holder to issue the ten percent interest to the State within a prescribed period after the mining licence is granted, the State is registered as a shareholder with ordinary voting and dividend rights proportionate to its holding, but the free carried interest does not give the State any right to participate in day-to-day management of the operation. The National Mining Corporation, established under section 22 as the investment arm of the national government in the minerals sector, holds this free carried interest and any additional equity the State acquires, and may itself enter joint ventures or farm-in arrangements with prospecting licence holders.