Case Study: The Titanium Issue

The Senate of the Republic of Kenya
C/o Hon. David Ekwee Ethuro
Speaker of the Senate

C/o Hon. Boy Juma Boy
Senator, Kwale County

1st February 2017

RE: A letter from Constituents of Msambweni Sub-County, Kwale County, Raising Concerns about the Mining Operations of Base Titanium Ltd. (Kenya) / Base Resources Ltd. (Australia) in Our Ancestral Lands

We, the residents of several villages in Msambweni Sub-county, Kwale County, urgently call upon the Senate of the Republic of Kenya, to address serious concerns regarding the mining-related activities of Base Titanium Ltd. (a wholly owned subsidiary of Base Resources Ltd., Australia) in our ancestral lands.

The seriousness of our grievances cannot be fully appreciated unless they are placed in their proper historical context. The loss of ancestral land by the Mijikenda is a well-known historical injustice that was initiated by the Sultanate of Zanzibar, and perpetuated by the British colonial and independent Kenyan governments. This has been conceded by the Kenyan government, which appointed a Parliamentary Select Committee in 1976 to investigate the issue of land ownership within Kenya’s Coastal strip (Mwambao). This committee made extensive recommendations, including:

(a) enfranchisement of actual occupiers/users of land;
(b) restitution of land where appropriate;
(c) compensation at market prices or reparations in respect of land lost either to the Arabs or the Government (colonial and Kenyan); and
(d) facilitation of purchase by local communities of land held by absentee landlords.

In many parts of Kenya, land is still communally owned and community members do not have title deeds. Nevertheless, these customary rights to land are recognized under the Constitution of Kenya (2010), the Community Land Act (2016), and the Land Act (2012) as stated below –

Articles 63 and 40 of the Constitution of Kenya (2010):

63(2)(i) Community land consists of land that is lawfully held, managed or used by specific communities as community forests, grazing areas, or shrines;

63(3) Any unregistered community land shall be held in trust by county governments on behalf of the communities for which it is held.

63(4) Community land shall not be disposed of or otherwise used except in terms of legislation specifying the nature and extent of the rights of members of each community individually and collectively.

40(3) The State shall not deprive a person of property of any description, or of any interest in, or right over, property of any description, unless the deprivation –

(a) results from an acquisition of land or an interest in land or a conversion of an interest in land, or title to land, in accordance with Chapter Five; or
(b) is for a public purpose or in the public interest and is carried out in accordance with this Constitution and any Act of Parliament that –

(i) requires prompt payment in full, or just compensation to the person; and
(ii) allows any person who has interest in, or right over, that property a right to access to a court of law.

40(4) Provision may be made for compensation to be paid to occupants in good faith of land acquired under clause (3) who may not hold title to the land.

Sections 4, 5 and 6 of the Community Land Act, 2016:

4(3) Community land shall vest in the community and may be held under any of the following tenure systems –

(a) customary;
(b) freehold;
(c) leasehold; and
(d) such other tenure system recognized under this Act or other written law.

5(2) Customary land rights shall be recognized, adjudicated for and documented for purposes of registration in accordance with this Act and any other written Iaw.

5(3) Customary land rights, including those held in common shall have equal force and effect in law with freehold or leasehold rights acquired through allocation, registration or transfer.

5(4) Subject to Article 40(3) of the Constitution and the Land Act, no interest in, or right over community land may be compulsorily acquired by the State except in accordance with the law, for a public purpose, and upon prompt payment of just compensation to the person or persons, in full or by negotiated settlement.

5(5) Subject to the provisions of section 46 of this Act, any person who immediately before the commencement of this Act had a subsisting customary right to hold or occupy land shall upon commencement of this Act continue to hold such right.

6(1) County governments shall hold in trust all unregistered community land on behalf of the communities for which it is held.

6(6) Any transaction in relation to unregistered community land within the county shall be in accordance with the provisions of this Act and any other applicable law.

6(8) A county government shall not sell, dispose, transfer, convert for private purposes or in any other way dispose of any unregistered community land that it is holding in trust on behalf of the communities for which it is held.

35. Subject to any other law, natural resources found in community land shall be used and managed –

(a) sustainably and productively;
(b) for the benefit of the whole community including future generations;
(c) with transparency and accountability; and
(d) on the basis of equitable sharing of accruing benefits.

36(1) Subject to any other relevant written law, an agreement relating to investment in community land shall be made after a free, open consultative process and shall contain provisions on the following aspects–

(a) an environmental, social, cultural and economic impact assessment;
(b) stakeholder consultations and involvement of the community;
(c) continuous monitoring and evaluation of the impact of the investment to the community;
(d) payment of compensation and royalties;
(e) requirement to re-habilitate the land upon completion or abandonment of the project;
(f) measures to be put in place to mitigate any negative effects of the investment;
(g) capacity building of the community and transfer technology to the community; and
(h) any other matters necessary for determining how local communities will benefit from investments in their land.

(2) An agreement relating to investment in community land shall only be made between the investor and the community.

(3) No agreement between an investor and the community shall be valid unless it is approved by two thirds of adult members at a community assembly meeting called to consider the offer and at which a quorum of two thirds of the adult members of that community is represented.

(4) The community may request the guidance and assistance of the county government or any other relevant stakeholders in considering the offer of investment.

Section 5 of the Land Act, 2012:

5(2) There shall be equal recognition and enforcement of land rights arising under all tenure systems and non-discrimination in ownership of, and access to land under all tenure systems.

111(1) If land is acquired compulsorily under this Act, just compensation shall be paid promptly in full to all persons whose interests in the land have been determined.

Pursuant to this, according to the Constitution of Kenya (2010):

69(1) The State shall–

(a) ensure sustainable exploitation, utilization, management and conservation of the environment and natural resources, and ensure the equitable sharing of the accruing benefits;
(d) encourage public participation in the management, protection and conservation of the environment;
(g) eliminate processes and activities that are likely to endanger the environment; and
(h) utilize the environment and natural resources for the benefit of the people of Kenya.

69(2) Every person has a duty to cooperate with State organs and other persons to protect and conserve the environment and ensure ecologically sustainable development and use of natural resources.

70(1) If a person alleges that a right to a clean and healthy environment recognised and protected under Article 42 has been, is being or is likely to be, denied, violated, infringed or threatened, the person may apply to a court for redress in addition to any other legal remedies that are available in respect to the same matter.

According to the “General Principles” of the Environmental Management and Co-ordination Act of 1999 (EMCA 99):

Entitlement to a clean and healthy environment

(1) Every person in Kenya is entitled to a clean and healthy environment in accordance with the Constitution and relevant laws and has the duty to safeguard and enhance the environment.

(2) The entitlement to a clean and healthy environment under subsection (1) includes the access by any person in Kenya to the various public elements or segments of the environment for recreational, educational, health, spiritual and cultural purposes.

(2A) Every person shall cooperate with state organs to protect and conserve the environment and to ensure the ecological sustainable development and use of natural resources.

(3) If a person alleges that the right to a clean and healthy environment has been, is being or is likely to be denied, violated, infringed or threatened, in relation to him, then without prejudice to any other action with respect to the same matter which is lawfully available, that person may on his behalf or on behalf of a group or class of persons, members of an association or in the public interest may apply to the Environment and Land Court for redress and the Environment and Land Court may make such orders, issue such writs or give such directions as it may deem appropriate to—

(a) prevent, stop or discontinue any act or omission deleterious to the environment;
(b) compel any public officer to take measures to prevent or discontinue any act or omission deleterious to the environment;
(c) require that any on-going activity be subjected to an environment audit in accordance with the provisions of this Act;
(d) compel the persons responsible for the environmental degradation to restore the degraded environment as far as practicable to its immediate condition prior to the damage; and
(e) provide compensation for any victim of pollution and the cost of beneficial uses lost as a result of an act of pollution and other losses that are connected with or incidental to the foregoing.

Furthermore, according to the Environmental (Impact Assessment and Audit) Regulations, 2003, the EIA for Base Titanium’s “expansion phase” cannot be issued without the involvement of the project affected communities:

17. Public Participation

(1) During the process of conducting an environmental impact assessment study under these Regulations, the proponent shall in consultation with the Authority, seek the views of persons who may be affected by the project.

(2) In seeking the views of the public, after the approval of the project report by the Authority, the proponent shall–

(a) publicize the project and its anticipated effects and benefits by–

(i) posting posters in strategic public places in the vicinity of the site of the proposed project informing the affected parties and communities of the proposed project;
(ii) publishing a notice on the proposed project for two successive weeks in a newspaper that has nationwide circulation; and
(iii) making an announcement of the notice in both official and local languages in a radio with a nationwide coverage for at least once a week for two consecutive weeks;

(b) hold at least three public meetings with the affected parties and communities to explain the project and its effects, and to receive their oral or written comments;
(c) ensure that appropriate notices are sent out at least one week prior to the meetings and that the venue and times of the meeting are convenient for the affected communities and the other concerned parties; and
(d) ensure, in consultation with the Authority that a suitably qualified co-ordinator is appointed to receive and record both oral and written comments and any translations thereof received during all public meetings for onward transmission to the Authority.

21. Submission of comments

(1) The Authority shall within fourteen days of the receipt of an environmental impact assessment study report, invite the public to make oral or written comments on the report.

(2) The Authority shall, at the expense of the proponent–

(a) publish for two successive weeks in the Gazette and in a newspaper with a nation-wide circulation and in particular with a wide circulation in the area of the proposed project, a public notice once a week inviting the public to submit oral and written comments on the environmental impact assessment study report; and
(b) make an announcement of the notice in both official and local languages at least once a week for two consecutive weeks in a radio with a nationwide coverage.

(3) The invitation for public comments under this Regulation shall state–

(a) the nature of the project;
(b) the location of the project;
(c) the anticipated impacts of the project and the proposed mitigation measures to respond to the impacts;
(d) the times and places where the full report can be inspected; and
(e) the period within which the Authority shall receive comments.

(4) The notice to be published in the newspaper as specified under subregulation (3) shall be in Form 8 set out in the First Schedule to these Regulations.

22. Public hearing

(1) Upon receipt of both oral and written comments as specified by section 59 and section 60 of the Act, the Authority may hold a public hearing.

(2) A public hearing under these regulations shall be presided over by a suitably qualified person appointed by the Authority.

(3) The date and venue of the public hearing shall be publicized at least one week prior to the meeting–

(a) by notice in at least one daily newspaper of national circulation and one newspaper of local circulation.
(b) by at least two announcements in the local language of the community and the national language through radio with a nation-wide coverage.

(4) The public hearing shall be conducted at a venue convenient and accessible to people who are likely to be affected by the project.

(5) A proponent shall be given an opportunity to make a presentation and to respond to presentations made at the public hearing.

(6) The presiding officer shall in consultation with the Authority determine the rules of procedure at the public hearing.

(7) On the conclusion of the hearing, the presiding officer shall compile a report of the views presented at the public hearing and submit the report to the Director-General within fourteen days from the date of the public hearing.

29. Access to information

Information or documents submitted to the Authority by any person in connection with an environmental impact assessment together with the Authority’s decision and the reasons thereof shall be made available to the public on such terms and conditions as the Authority may prescribe.

39. Audit petition by public

A member of the public may, after showing reasonable cause in writing, petition the Authority to cause an audit to be carried out on any project.

47. Registers

(1) The Authority shall maintain the following registers–

(b) a register of all environmental impact assessment licences issued under these Regulations;
(c) a register of environmental impact assessment reports, audit study reports, strategic environmental impact assessment reports and monitoring reports; and

(2) The registers referred to in subparagraph (1) shall be public documents maintained at the offices of the Authority for inspection by any person on the payment of the prescribed fees.

Regarding the “Ownership of Minerals”:

Under the old Mining Act (Cap 306), natural resources belonged to the Government. This Act had been existence since colonial times and was enacted to “bequeath all minerals to the Crown for ease of exploitation and repatriation to the parent country.”

It was only in 2011 that the Government contemplated redrafting the old Mining Act, a process that culminated in the new Mining Act, 2016.

In stark contrast to the old Mining Act, the new Mining Act states as follows (regarding the ownership of minerals in Kenya):

(1) Every mineral–

(a) in its natural state in, under and upon land in Kenya;
(b) in or under a lake, river, stream, or water courses in Kenya;
(c) in the exclusive economic zone and an area covered by the territorial sea and continental shelf,

is the property of the “Republic” and is vested in the national government “in trust for the people of Kenya.” (My emphasis)

In addition to this, according to the Constitution of Kenya, 2010:

62(1) Public land is–

(f) all minerals and mineral oils as defined by law;

62(3) Public land classified under clause (1) (f) to (m) shall vest in and be held by the national government in trust for the people of Kenya and shall be administered on their behalf by the National Land Commission.

67(2) The functions of the National Land Commission are–

(a) to manage public land on behalf of the national and county governments;
(d) to conduct research related to land and the use of natural resources, and make recommendations to appropriate authorities;
(e) to initiate investigations, on its own initiative or on a complaint, into present or historical land injustices, and recommend appropriate redress;

In closing, we would like to bring it to the attention of the Senate, that Base Titanium Limited was issued with a “Special Prospecting Licence” (No. 173) on 26th May 2016 under the old Mining Act – six days after the new Mining Act had been gazetted, and a day before the new Act came into effect. (To see this licence, please refer to Annex 1).

The timing in this licensing process begs a number of pertinent questions. We believe that this was done in order to enable Base Titanium Limited to continue exploiting the weaknesses of the old Mining Act, Cap 306, as the company prospects for more mineral reserves – under the protection of armed state personnel.

Pursuant to the above, since the titanium mining project began a few years ago, we have been experiencing serious health impacts (including birth deformities in both humans and livestock, possibly from radioactivity associated with titanium mining) and harmful environmental impacts (including the drying up of crucial water sources and loss of arable land). Therefore, we are strongly opposed to any further mining-related activities – including exploratory drilling – in our ancestral lands. In fact, we would like Base Titanium Limited to leave upon the completion of operations at their present mining site, and not cause us any further suffering.

Honourable Members of the Senate, we urgently seek your assistance in addressing this very important matter, according to the laws of the Republic of Kenya, and in the context of the recommendations made by the Parliamentary Select Committee established in 1976 to investigate the issue of land ownership / historical injustices within Kenya’s Coastal strip (Mwambao). To reiterate, these recommendations included:

(a) enfranchisement of actual occupiers / users of land;
(b) restitution of land where appropriate;
(c) compensation at market prices or reparations in respect of land lost either to the Arabs or the Government (colonial and Kenyan); and
(d) facilitation of purchase by local communities of land held by absentee landlords.

Thank you.

Most Sincerely,

The communities of Gazi, Vumbu, Maumba, Magaoni, Fihoni, Majikuko, Mwaloya, Bumamani, Madongoni, Masindeni, Mwandimu, and Zigira.

Represented by:

Name & I.D Card No.

Omari Shee Mbega 2190729
Athman Ali Shee 8413973
Mwanaisha R. Kalume 5431132
Annah Waema 2224902
Hassan Bakari Mwajambia 0765329
Bakari Hamisi Kitendo 8404819
Ali Suleiman Gumbo 9470419
Juma Ali Mwakinyezi 3166049
Masudi Said Mnyeto 2191162
Omar Ali Kukana 2199807
Hamisi Salim Mwachigondo 5421183
Mohammed Hamadi Kirumu 0769773
Juma Betunda Kaihu 6740405
Suleiman Hassan Kiyala
Mwalimu Abdalla Mbembe
Mwanaisha Mwagadi
Nyawa Kombo Mwero 12896817
Mohammed Malau Jindah 11876636
Salim Ali Mwang’anzi 10505663
Rashid Chigamba Jira 20672693
Juma Hamisi Mboga 146071716
Pashua Siasa Pashua 28103779
Suleiman Bakari Mwajambia 32249194
Mary Ndunge Mbai 2219462
Amina Ali Kiwaka 8435830
Khamis Mwinyi Tsumoi
Bakari Ali Mwamajeni 5414388
Nicholas Kilonzo 2225453
Swaleh Ramadhan Mwinyi 8420870
Hamis Omari Mwandae 10955097
Julius Njoki Masele 2191237
Mbeyu Mwero 2190534
Ali Said Mnyeto
Shaban Mrinzi 21471788
Hamadi Mrinzi 31511871
Juma Salim Nyeto 12894664
Nasir Ali 5415152
AbdulBassid Mohammed Said
Ali Hamisi Shiba
Ramadhan A. Mwanjama 8404057
Hamadi Saidi Mnyeto
Alice Mutua Ndugwa 2224416
Shadrack Munga 5006223
Amina Ali Mwamutwa 0769265
Mariam H. Bakari
Rama Suleiman 0689998
Sudi Bakari Mwarima 2199119
Hamis H. Mwagoga 2225938
Ali Shee Malumbo 2191338
Mwalimu Abdalla Mbega
Abdalla Bakari Mwarima 5420668
Lali Abdulrahman 13418726
Dala Enea 14623010
Abdalla Shee Bege 2225423
Tima Athman
Mdoe Mwero Rai 4623137
Philomena Mutiso 21233386
Amina Mwatime Bakari 8421813
Mwanalima Mohamed Boi 9770722
Wanyee Kinuthia 33342921

Contact Persons:

Omari Shee Mbega (Chairman) – 0728 950574
Swalehe Ramadhan Mwinyi (Speaker) – 0722 139559
Athuman Ali Shee (Secretary) – 0717 411056
Rama A. Mwanjama (Signatory) – 0723 738394

C.C: Hon. Uhuru M. Kenyatta (President, Republic of Kenya)
Hon. William S. Ruto (Deputy President, Republic of Kenya)
Hon. Salim Mvurya (Governor, Kwale County)
Hon. Fatuma Mohamed Achani (Deputy Governor, Kwale County)
Hon. Boy Juma Boy (Senator, Kwale County)
Hon. Dan Kazungu (Cabinet Secretary, Ministry of Mining)
Kwale County Commissioner
Mombasa County Commissioner
Msambweni District Commissioner
Mr. Keith Spence (Non-Executive Chairman, Base Resources Ltd., Australia)
Mr. Tim Carstens (Managing Director, Base Resources Ltd.)
Mr. Colin Bwye (Executive Director, Operations & Development, Base Resources Ltd.)
Mr. Sam Willis (Non-Executive Director, Base Resources Ltd.)
Mr. Michael Anderson (Non-Executive Director, Base Resources Ltd.)
Mr. Michael Stirzaker (Non-Executive Director, Base Resources Ltd.)
Mr. Malcolm Macpherson (Non-Executive Director, Base Resources Ltd.)
Mr. Joe Schwarz (General Manager, External Affairs, Base Resources Ltd.)
Mr. Colin Forbes (General Manager, Base Titanium Ltd., Kenya)

Annex 1(a)

The Special Prospecting Licence (No. 173) Issued to Base Titanium Ltd.
Under the old Mining Act (Cap 306)

Annex 1(b)

The Special Prospecting Licence (No. 173) Issued to Base Titanium Ltd.
Under the old Mining Act (Cap 306)


See Also:

Millions feared lost in mining sector through lax regulations
Regulatory lapses and poor monitoring systems are giving firms which export billions worth of minerals annually the leeway to determine what royalties to pay.



Regulatory lapses and poor monitoring systems are giving firms which export billions worth of minerals annually the leeway to determine what royalties
to pay

Kenya could be losing millions of shillings in revenue from the extractive sector, with companies left to voluntarily declare how much they produce since the authorities lack capacity to validate the figures.

According to the Auditor General’s report for the year to June 2015, regulatory lapses and poor monitoring gave two major mining firms, which export billions worth of minerals annually, the leeway to determine what royalties to pay without audits by the ministry of Mining.

Carbacid (CO2) Ltd — a leading producer of natural, food grade, compressed carbon dioxide — is said to have failed to file reports on its production.

The multinational, which paid the government Sh1.008 million in 2015, is said to have done so on its own volition without providing records of how much it extracted.

“Clause 10 of the signed mining licence requires Carbacid to file progress reports and sales returns which form the basis for royalty payments. Carbacid has to date not complied with the provision. Thus, it has not been possible to confirm the accuracy and completeness of the royalties received,” the auditor wrote.

The company, owned by Carbacid Investments Ltd and listed on the Nairobi Securities Exchange, made a profit before tax of Sh580 million in 2015 after a Sh186 million tax investment allowance on new investments that was made in 2014.

In another case, Base Titanium, which is among the biggest foreign firms in the mining sector, paid royalties amounting to Sh260.7 million in 2015 by declaring on its own will the amount of titanium exported, according to the auditor general.

The declarations were based on the quantities licensed by the Commissioner of Mines but no verification was made on the actual quantities of export.

Self-declared quantities

“The receipts are based on self-declared export quantities for which the Commissioner of Mines and Geology has issued export permits. There has been no evidence of subsequent verification of the actual exports vis-à-vis declared quantities to validate their accuracy. It is, therefore, not possible to confirm the completeness and validity of royalties’ income as reported,” the auditor wrote.

The Australian multinational — which controversially claimed Sh2 billion in Value Added Tax refunds from the government last year, sparking a backlash from then Mining Cabinet Secretary Najib Balala — said it had invested heavily in building its own port and ship loading facility.

The revelations now put the Mining ministry on the spot with regard to the system of tracking operators and the actual revenue due to the government. The ministry’s licence monitoring was also questioned as it potentially allows dealers to operate beyond what they are allowed to do.

“There has been no dealer premise visits conducted in the year under review to verify validity and compliance with the existing licence terms. Information available indicates that revenues totalling Sh820,000 in the form of dealer licence remained uncollected and undisclosed in the financial statements as of June 30, 2015,” noted the auditor.

The scenario paints the image of a wide revenue leakage which, if sealed, could have enabled Kenya to collect more than the Sh1.3 billion it did last year from dealer licences. The ministry, which the auditor general said had no records of its fixed assets, is also yet to map the minerals available in Kenya.

This means those involved in exploration have a free hand to identify locations and quantities of minerals available.Mining Cabinet Secretary Dan Kazungu, who recently revealed that Sh3 billion had been set aside to map mining resources, did not respond to enquiries by the Sunday Nation sent to him two weeks ago despite several reminders. Our questions were on the regulatory lapses and the timelines set, which have been pending since 2012.

Base Titanium, which confirmed it was still waiting for Sh1.7 billion relating to the construction in 2014, had reported paying Sh225 million in royalties, an amount the government in May 2015 disputed; recognising only Sh100 million received from the company, which was expected to have paid Sh400 million.

Base Titanium told the Sunday Nation it had complied with all requirements but at the same time blamed the ministry for failing to audit exports.

“Base Titanium complies with the full range of reporting requirements set out under its Special Mining Lease and the relevant laws and regulations.

“While the auditor general refers to lack of evidence of verification by the Ministry of Mining of Base Titanium’s exports, the company’s adherence to the regulatory requirements and its robust internal systems means the royalty payments accurately reflect the sales made in a given period. Every shipment is made under an export permit granted by the Ministry of Mining,” the firm wrote in response to our queries.

Base Titanium’s export data shows that it has sold titanium worth Sh29.4 billion since 2014.

Carbacid also denied the allegations on lack of records and possible revenue losses for Kenya. It said it plans to exist “for a very long time”.

“We are not aware of these allegations; all we know is that we have been complying,” the management said without giving further details.

The auditor general also faulted the issuance of export permits to mining companies as the licences are dished out irregularly with negative revenue consequences.

“Information available indicates that export permits with a value of $18,619,645 (approximately Sh1.9 billion) were issued during the year by an unauthorised officer whose employment contract expired on April 19, 2014.

This is contrary to the Mining Act which stipulates that export permits are to be signed by the Commissioner of Mines or an authorised officer whose authority has been delegated in writing. Consequently, the validity of the revenue collections on the export permits issued by the officer could be challenged,” the auditor wrote.

In many scenarios, multinationals are also accused of exaggerating expenditures on corporate social responsibility exercises and huge investment expenditures which inflate their costs and create tax reliefs.

Mining, which contributes a paltry 3.2 per cent of the country’s Gross Domestic Product, is said to be capable of generating up to 10 per cent by 2030, according to a recent mining forum in Nairobi.

Analysts believe Kenya risks losing more billions in the more complicated oil industry owing to such glaring loopholes.“We may as well be creating a huge avenue for scandals and massive losses if managing the simple extractive sector has become hard,” Nairobi-based analyst Robert Shaw told the Sunday Nation.

According to advocacy group Tax Justice Network Africa, a huge revenue lapse in the extractive sector is hurting the continent’s potential revenue growth, with various tax incentives given to multinationals to attract investments.

TJNA estimates that East Africa loses up to Sh200 billion a year by granting tax incentives to multinationals in the extractive sector. In a report released in June, TJNA and ActionAid asked the governments to review their tax incentives.

East African nations continue to lose huge amounts of revenue through unnecessary tax exemptions and incentives given to corporations,” reads the report.