MINERALS

A mineral is a naturally occurring inorganic element or compound having an orderly internal

structure and characteristic chemical composition, crystal form, and physical properties. Section
4 of the Mining Act defines mineral as a geological substance whether in solid, liquid or gaseous
form occurring naturally in or on the earth, in or under water, in mine waste or tailing and
includes the minerals specified in the First Schedule but does not include petroleum,
hydrocarbon gases or groundwater;

Mining is the process of extracting useful materials from the earth. Some examples of substances
that are mined include coal, gold, or iron ore. Section 4 of the Mining Act defines mine as

- when used as a noun, includes an excavation or system of excavations made for the purpose of, or in
connection with, the extraction of minerals or mineral products, and includes an open-cast pit, quarry
and any area where a mineral is won by dredging brine pumping, evaporation or other means; and

- when used as a verb, means the carrying out of a mining operation and includes tailing;

Currently the mining industry is under the ministry of mining and petroleum headed by Davis
Chirchir.

The ministry is farther divided into two state departments: State Department of mining
State Department of Petroleum

Functions of the State Department of Mining

The State Department for Mining was created under the re-organization of the Government of
the Republic of Kenya vide Executive Order No. 1 of January 2023. Previously under the
Ministry of Petroleum and Mining, it is currently under the Ministry of Mining, Blue Economy
and Maritime Affairs.

The State Department was established to provide leadership in the management of the extractives
sector in the Country. The mandate includes development of mining and mining policies,
Inventory and Mapping of mineral resources and building capacity for effective management of
programmes and projects in the mining sector.

Section 17(1)(a) of the Mining Act, 2016 gives the following functions;
  Development and review of policies, legal and regulatory framework for guiding
geological survey and mining
 Coordination of provision of geoscience expertise and data to the government on all
matters related to geology and the development of minerals
 Development of a national repository of geo-science information and facilitation of
access to this information by the general public
 Exercising regulatory administration and supervision over all prospecting, mining,
processing, refining and treatment operations, transport and any dealings in minerals
 Monitoring of compliance and ensuring compliance with the law, regulations and
conditions relating to mineral rights

*Preparation of the necessary reports required under this Mining Act, 2016;

Functions OF State Department of Petroleum

The State Department of Petroleum was created in November 2015 following government
reorganization which saw the elevation of the Ministry’s Petroleum Directorate. The State
Department is under the Principal Secretary for Petroleum Mr Andrew Kamau. The Petroleum
Directorate is headed by Commissioner for Petroleum who reports to the Principal Secretary for
Petroleum.

Functions include;

*Development and review of policies, legal and regulatory framework for

spearheading upstream and mid/downstream petroleum operations;

*Developing and reviewing fiscal and contractual terms for oil and gas;

*Assessment of Oil and Gas Potential in Kenya’s Exploration Blocks;

*Ensuring the security of supply of petroleum products;

*Monitoring the implementation of agreed solutions on short, mid and long term
downstream petroleum challenges identified by Stakeholders;
 *Gazettement of Open Tender System (OTS) terms and conditions;

*Negotiation and the regulation of Production Sharing Contracts (PSCs);

*Advising on change of administration in active Production Sharing Contracts;

*Enforcement of Environmental Protection and Management regulations in liaison

with National Environmental Management Authority (NEMA);

STATE OF THE MINING SECTOR IN KENYA

- Current minerals mined in Kenya in reasonable quantities include: soda ash and salt in lake
Magadi, Fluorspar in Kerio Valley, Limestone in Kariandusi and small quantities of gold in
Western Kenya.
- Soda ash is main mineral that is mined and exported in Kenya.
- The government in December 2019 issued a moratorium on the issuance of licenses across the
country after mineral smuggling was declared an economic crime . On 4th October 2023, the
Cabinet Minister, Davis Chirchir, lifted the ban placed on the issuance of prospecting and mining
licenses across the country.
- The South Lokichar Basin in Turkana is estimated to hold about 560 million barrels which are
commercially viable. Tullow Oil Company has announced the commencement of the
Commercial Exploration Stage which will see Kenya extract and export high-standard crude oil
for a minimum of 25 years.
- Tullow Oil Kenya already submitted its Development plan to formally commence extraction of
the crude oil to the Ministry of Energy in 2021. However, 2 years on, there is no response from
the government.

2023 Performance of Tullow Oil Company– Delivery during a transformative year

Operational
  Full year working interest production averaged c.63 kboepd in 2023, including c.6
kboepd of Jubilee gas.
 Water injection issues at Jubilee encountered in 2023, have now been resolved.
 Excellent drilling performance with four Jubilee producer and three Jubilee water
injection wells brought onstream.
 Start-up of Jubilee South East marking a material step up in Jubilee production that
surpassed 100 kbopd.
 Gabon swap agreement and licence extensions boost reserves and centre portfolio around
Tchatamba production hub.
 Continued portfolio optimisation through sale of Orinduik licence in Guyana to focus on
core production assets.

Financial

 Revenue of c.$1.6 billion (including c.$140 million hedge costs) at an average realised oil
price (post-hedging) of $77.5/bbl.
 Capital and decommissioning expenditure were c.$380 million and c.$70 million,
respectively.
 Underlying operating cash flow1 of c.$800 million and free cash flow of c.$170 million,
ahead of guidance.
 Net debt reduction of c.$250 million resulting in year-end net debt of c.$1.6 billion and
gearing of 1.4 times, ahead of target of 1.5 times.
 Gross debt reduction of c.$400 million from tenders of the 2025 and 2026 notes
combined with annual amortisations.
 Executed material step in refinancing strategy with new $400 million debt facility agreed
with Glencore.
 Ghana gas commercialisation via interim gas sales agreement, delivering c.$30 million
revenue.