Kenya Mining Act 2016

The Mining Act, 2016 (Act No. 12 of 2016) is the main law governing prospecting, mining, processing and dealing in minerals in Kenya. It was assented to in May 2016, commenced later that month, and replaced a mining law that dated back to 1940. For explorers, it defines who may hold mineral rights, how rights are obtained and kept, which institutions make decisions, and what obligations come with a licence.

This article summarises the features of the Act that matter most to exploration companies and investors. It is general information, not legal advice, and the Act, its regulations and related bills should always be checked in their current form.

Mineral Ownership and State Rights

The Act states that every mineral in its natural state, whether on land, under water or in the exclusive economic zone, is the property of the Republic of Kenya and is vested in the national government in trust for the people. Landowners therefore do not own the minerals beneath their land, though they have rights relating to surface access and compensation.

The Act also gives the state a right of pre-emption over strategic minerals before they are sold. The Cabinet Secretary, with Cabinet approval, can declare certain minerals or deposits strategic, and a set of Strategic Minerals Regulations was issued in 2017. Niobium and rare earth elements, for example, have been described by government as strategic minerals.

Who Administers the Act

The Act spreads responsibilities across several bodies.

• The Cabinet Secretary responsible for mining administers the Act, makes regulations and takes decisions on mineral rights. At present the portfolio is the Ministry of Mining, Blue Economy and Maritime Affairs.
• The Mineral Rights Board advises the Cabinet Secretary on matters such as grant, renewal, suspension or revocation of mineral rights and on areas suitable for small-scale and artisanal mining.
• The Directorate of Mines and the Directorate of Geological Survey manage mining administration, technical review and geological information.
• The National Mining Corporation is a state corporation that can hold interests in mining projects and invest on behalf of the government.
• The Mining Cadastre Office runs the online cadastre through which applications, renewals, payments and records are handled.
• County offices and Artisanal Mining Committees support artisanal and small-scale miners.

Understanding which body does what helps applicants direct enquiries correctly and anticipate who must approve each step.

The Licence and Permit Structure

The Act distinguishes between large-scale operations, and small-scale operations that are reserved mainly for Kenyans.

For large-scale operations:

• Reconnaissance licence: a non-exclusive licence for regional, non-intrusive work, with a short non-renewable term and a large permitted area.
• Prospecting licence: an exclusive licence for detailed exploration, with an initial term of up to three years and limited renewals, and mandatory relinquishment of part of the area on renewal.
• Retention licence: for deposits that are of potential commercial interest but cannot yet be developed.
• Mining licence: for mining operations, granted for up to 25 years or the forecast life of the mine, whichever is shorter, with renewal possible.

For small-scale operations:

• Reconnaissance permit, prospecting permit and mining permit: available to Kenyan citizens and to companies with at least 60 percent Kenyan ownership, covering small areas and shorter terms.
• Artisanal mining permit: for traditional and customary mining, administered through county offices.

Each licence type has its own eligibility, area and term rules, and the exact numbers should be confirmed against the Act and regulations. The Mining (Licence and Permit) Regulations, 2017 set out application procedures, forms and the role of the online cadastre.

Applications and the Online Cadastre

Applications for mineral rights are submitted online through the Mining Cadastre portal, which acts as the official register. Only rights recorded in the cadastre are legally recognised. Applicants must meet eligibility requirements, provide evidence of technical and financial capacity, submit a work programme and environmental information, and pay prescribed fees. Accepted applications are published in the Kenya Gazette.

Because licence areas are defined in cadastral blocks, applicants must be careful with coordinates and maps. Errors can lead to overlaps, delays or rejection.

Obligations of Licence Holders

Rights under the Act come with continuing duties. Holders must start work within the periods set in their licences, keep records and submit regular reports, notify the authorities of discoveries, pay rents and fees, comply with environmental and safety laws, and obtain approval before transferring rights. A licence holder who fails to carry out the approved work programme, or does not pay required charges, risks sanctions or revocation.

In addition, the holder of a prospecting licence who has found a deposit and wishes to mine must apply for a mining licence, supported by feasibility information, an environmental impact assessment and a social and heritage assessment where required.

Royalties and the Fiscal Framework

The Act provides that holders of mineral rights pay royalties on minerals sold, calculated by reference to the gross value of sales at rates set by regulation. Royalty payments are filed through the cadastre system, and failure to pay within the prescribed period is a ground for revocation.

The Act sets out how royalties are shared among levels of government and communities. As summarised in training material on the Act, the split is 70 percent to the national government, 20 percent to the county government and 10 percent to the community where mining takes place. A Mining (Amendment) Bill, 2025 before the Senate proposes changes to how royalties are transferred and monitored, including community-led committees to oversee projects funded by royalties. Explorers should track this bill because it could affect project economics and community relations.

Mining companies are also subject to general taxes, including corporate income tax, under Kenya’s tax laws.

State Participation

The Act contains provisions on government participation in mining licences. These are commonly summarised as giving the state a free carried interest of 10 percent in new large-scale mining projects, together with the right to acquire additional interests on commercial terms. For investors, this affects ownership structures, financing and returns, so it should be modelled from the earliest stage of project evaluation.

The Act also provides for mineral agreements where the proposed investment exceeds a high threshold, set in the Act at five hundred million United States dollars. Such agreements cover matters such as minimum work and expenditure, processing in Kenya, environmental obligations, dispute resolution, community development plans and fiscal terms, and they must be submitted to Parliament for ratification.

Local Content and Community Development

The Act requires mineral right holders to give preference, to the maximum extent possible, to Kenyan materials, products, services and workforce. Applicants must submit programmes for the recruitment and training of Kenyans, and approval of these programmes is a condition for grant of rights.

Large-scale mining operations must also conclude community development agreements with host communities, setting out benefits such as employment preferences, infrastructure and social investment. Community development agreement regulations issued in 2017 govern the process. Explorers who begin consultation during the exploration phase are generally better prepared for these obligations later.

Environmental, Social and Safety Requirements

Mining operations must comply with the Environmental Management and Co-ordination Act, water laws and the Occupational Safety and Health Act. Before a mining licence is granted, the applicant is expected to have an approved environmental impact assessment and management plan. Exploration activities that disturb land, such as trenching or drilling, also need environmental approvals appropriate to their scale.

Dealing in Minerals and Exports

Buying, selling, processing and exporting minerals are regulated. Mineral dealers need licences, and exports require permits, which are applied for through the cadastre system and approved by the Cabinet Secretary after verification and payment of fees. Explorers who plan to sell bulk samples or concentrates must make sure they hold the right authorisations first.

Dispute Resolution

The Act allows disputes relating to mineral rights to be resolved by mediation or arbitration, as the parties agree, or through the courts. Mineral agreements can provide for international arbitration. Clear records of applications, correspondence and payments are the best protection in any dispute.

Reform and Developments to Watch

The Mining Act is under active review. Earlier proposals included a Mining (Amendment) Bill, 2023 that would establish an independent regulatory authority and adjust aspects of licensing, such as reconnaissance and consent requirements. The 2025 Senate bill focuses on royalties. At the same time, new licence applications published in recent months show that the licensing system is operating and attracting commercial interest. Industry voices have argued that implementation, particularly consistent separation between prospecting and mining licences, matters as much as legislative change.

Because details can change quickly, explorers should monitor the Kenya Gazette, Parliament’s website and Ministry announcements.

Practical Takeaways for Explorers

Confirm that your target ground is available on the cadastre and that your company is eligible. Build a technically credible work programme and budget. Engage landowners, communities and counties from the start. Model royalties, state participation and local content requirements in your project economics. Keep meticulous records and meet every reporting and payment deadline. Finally, seek qualified legal advice for contracts, applications and transactions, because the Act and regulations are detailed, and a small error can have large consequences.