#MindSpeak organised Aly-Khan Satchu at the Intercontinental Hotel, had a discussion panel about the extractive industry and I attended this session from which I gathered some interesting insights.
The event was an eye opener to many especially to the many geologists, engineers and lawyers who were informed of the various opportunities in the extractive industry.
This tweet by @alykhansatchu set the pace and tone for the event.
The panel was diverse with not only players from the extractive industry itself but also experts from the diplomatic core, human rights and business technocrats. They included H.E Jacques Pitteloud Swiss Ambassador to Kenya, who when making his introductory remarks made an interesting remark “In the discovery of oil and gas, We need an Oil Boom and not an Oil Curse”.
Next was Cliff Ortega MD Standard & Mutual, a very informed chap that one, having worked in the extractive industry in Australia he had very useful pointers on where Kenya is and where Kenya needs to be. Interesting from him was The top African countries in the mining field. 1. Angola 2. D.R.C 3. South Africa 4. Nigeria 5.Tanzania. Kenya should learn from Tanzania especially because its mining industry is young and its a neighbour and a major trading partner, Tanzania having grown its revenue from mining by 50% over the last 15 years. He noted for example that the world spent 4 Billion in search of Gold last year and only found 1 viable mine meaning this can be a very risky venture. More importantly he also noted that having mine fields doesn’t necessarily mean that mining conglomerates will come running in order to exploit the opportunity. Policies and legal frameworks have be put in place in order to ensure an attractive environment to invest.
He also gave five pointers on the mining industry
1. Attracting investment: policy legal framework and competitiveness.
“Strategic policy & legislative frameworks are crucial for reaping the most out of the regions natural resource finds” – Otega
“Exploration data; only 10% of explorations yield economically viable concerns.” – Ortega
“Mining is a Business no different to Safaricom or Agriculture” – Ortega
2. Resource Nationalism: Tax Rates, LEP, Royalties.
“The Government is not always wrong and the Mining companies are not always right” – Ortega
3. Artisanal & small scale mining. (Safety,Access to territory, exploration).
“The extraction industry is dominated by firms with underground networks and dark shafts” – Ortega
4. Value Addition: Energy, cost, Global competition.
Apparently South Africa the biggest mining country in Africa uses 1140 MW at a smelting plant while Kenya generates 1500 MW of electricity meaning Kenya will have a problem in refining our minerals.
5. Social Economic Impact Jobs, Environment, skills, infrastructure.
“Let’s not kid ourselves that this is the industry that will transform our industry in terms of youth jobs” – Ortega
“Mining project development can last for 1-3 life generations it’s not a quick fix” – Ortega
Next was Ms Evelyn Samba, the deputy secretary to the Kenya National Commission on Human Rights, who spoke about some of the human rights violations that multinationals commit especially in other African countries and some that are already being committed in the country. With most of the recent discoveries being found in marginal areas where literacy levels are low they need lawyers and experts to help them out in looking closely at the issues that affect them. She also noted that companies should be held accountable for the environmental issues around extractive mining.
“God works in miraculous ways – Mineral Oil Gas Discoveries are happening in remote challenged areas” – Samba
Most notable however was concern about “ancestral land”.
“Extraction firms dig deeper into places of conflict, burial, and ancestral significance” – Samba
She noted that even though monetary compensation should be the standard for compensation purposes, they should also consider that some of these communities consider the land as their spiritual and ancestral right. Communities have some buried some of their loved ones and use some areas in their lands as shrines and worship places.
“Challenge in our communities is that when companies come in, our people don’t have what the companies are looking for Land has sentimental and cultural value to communities, thus building potential for conflicts. As we embrace the future and the prospects that exist, there are certain questions we must ask” Evelyn Samba
H.E David Angell the Canadian Ambassador, introduced us to Voluntary Principles. Established in 2000, the Voluntary Principles are a set of principles designed to guide companies in maintaining the safety and security of their operations within an operating framework that encourages respect for human rights. Most of the major global players in the world have signed up to to these standards. you can read more at http://www.voluntaryprinciples.org/ . He also noted that stable,transparent and predictable environments are key to mining.
Lastly was Simon Wall, Corporate Affairs Manager, Base Titanium. He pointed out that operations from the mine have already started and showed us some of the infrastructure projects they have carried out since they started development of the mines. He also crunched some numbers for us. Base Titanium will pay $220 m over 13 Years to Government. They will also spend over $900 m on Operational Costs. Base Titanium is Kenya’s first modern large scale mining development.
I did however had some questions for him during the Q & A about their operations especially concerning royalties they will pay, how they plan to transfer their expertise to our local specialists, why they were exempt from having local equity by the government and if the final products are going to benefit our country, and here are some of the answers he gave.
He also had some advice for the lawyers wishing to join the extractive industry “Know the Legislation!!”
It was a very informative discussion but there was a notable absentee
I guess the Hague comes first.