MACIG Connect Series
Director of Bowmans explains Kenya’s new mining act.
Could you provide an overview of Bowman’s evolution from Coulson Harney?
Established in 2008, and recognized as Coulson Harney, our firm has recently rebranded as ‘Bowmans’. Whilst we have always been part of the pan-African Bowman Gilfillan Africa Group, until recently our brand did not reflect this. In Kenya we started as a boutique corporate commercial firm, but it became clear after about a year that our clients were looking for something broader. We are therefore now a full-service firm, working on everything from corporate-commercial matters to intellectual property, dispute resolution, banking and finance, real estate and dispute resolution.
In Kenya, we have 16 partners and around 70 lawyers, with a total staff contingent of over 170. The Bowmans offices are in Antananarivo, Cape Town, Durban, Johannesburg, Kampala and Nairobi. We continually strive to grow Bowmans with top-tier firms across Africa with the same strategic ideals as us.
Bowmans covers many industries; does the scope of your mining focus reflect Kenya’s growing market?
Around 2010, I became very interested in mining, mostly because it seemed that not many other lawyers had expertise in this particular area. A number of lawyers around Nairobi have since become more focused on it. The sector is certainly growing, and if it continues to do so over the next year it will become a much busier area for us. We already have well-known clients such as Base Titanium, Acacia Mining and Kilimapesa Gold.
Bowmans can support mining clients in Kenya on all aspects of their projects. We can assist with incorporation or setting up a branch office in Kenya, and with all documentation necessary to obtain the requisite licenses, as well as with government negotiations, if applicable. For a number of our mining clients, Bowmans has provided ongoing advice on government relations and agreements, employment matters, corporate and financing matters, community relations, tax, land acquisition and many other queries along the way.
What are the main changes in Kenya’s regulatory environment following the enactment of the new Mining Act?
The new Mining Act is a positive move, considering it is the first major revision since the 1940s. All the relevant mining companies and law firms have made submissions. Although not all submissions have been accepted, it is a much more modern piece of legislation and is clear in terms of timelines and structures for the different licenses. The Act requires the establishment of the Mineral Rights Board, which is a positive development in that it takes away some discretion from the Cabinet Secretary. This will end the current state of flux whereby companies have not been able to receive renewals or approvals because the Act prescribes that the Cabinet Secretary will grant approvals on the recommendation of the Board.
Other concerns surrounding the Mining Act include the pre-emption rights of the government in relation to strategic minerals, the government’s 10% free carried interest, and the requirement for the listing of 20% of the equity of large-scale projects. In effect, this all means investors could find a large percentage of their company not being under their ownership and, to some extent, given over for free! While certain other countries do have a free carried interest in mining, Kenya’s relatively new industry may mean that giving away 10% for free is slightly premature. We also have a concern that this provision is unconstitutional: the constitution states that a person or company cannot be arbitrarily deprived of their assets without market value payment.
The community aspect is very prominent in the mining industry. How does the new Mining Act address surrounding concerns?
Wherever a mining operation takes place, the community needs to be involved and to feel a part of the project, or it will never go ahead. Some of the royalties prescribed by the new Act go some way to assisting with this, as they are directed specifically to communities. However, there is an additional need to engage the community and ensure there is local employment.
Another issue, not just for mining, but for all sorts of large-scale projects, relates to ensuring land rights. In the Mining Act, landowner consent is required even for getting a license, which is extreme. Considering the huge areas over which exploration licenses may be granted, there may be 200,000 or more individual landowners and it is simply not possible to get consent from all of them in writing. We will hopefully see this provision reviewed and revised shortly. I expect a number of foreign mining investors to hold back and wait to see whether the current issues surrounding the new Mining Act will be ironed out over the next year or so.
How does Bowmans aim to serve the mining industry as it develops over the next few years?
If we can iron out the issues with the new Mining Act, the next 18 to 24 months should be an exciting time for us. I think the new Cabinet Secretary has the opportunity to turn the sector around because of his enthusiasm and the fact he has gained the trust of a lot of mining companies. Bowmans is a member of the Kenya Chamber of Mines, which we support legally from time to time. We will continue to support our clients as they require, and are certainly ready to assist and advise anyone else entering the sector.