How Kenyan regulatory developments will impact foreign investors
Kenya is East Africa’s largest economy. Largely as a result of the discovery of petroleum deposits, minerals, coal deposits, iron ore and titanium in various parts of the country, as well as the Kenyan government’s issuance of the first commercial gold mining licence, China has become Kenya’s largest source of foreign direct investment (FDI), with cumulative direct investments of about US$474 million as of June 2013.
In the mining sector, China’s interest can be traced back to the 2007 agreement between Jinchuan, China’s largest producer of nickel, cobalt and platinum, and Tiomin Resources Incorporation, a Canadian mining company. Jinchuan invested US$9.34 million in Tiomin as part of its contribution to the joint venture and the two companies have since financed and expedited the development of the Kwale mineral sands project on the Kenyan coast.
Further Chinese investments in the mining sector include: China National Gold Group Corporation’s acquisition of a stake in London-listed Africa Barrick Gold, which bought out Aviva Mining (Kenya), which has prospecting rights in Western Kenya; the award of rights to China’s Fenxi Mining Group to develop coal blocks in Kitui County, which is expected to lead to the extraction of 400,000 tonnes of coal annually and provide up to 2,400MW of electricity by 2030; and the 2014 memorandum of understanding worth US$71 million between Baringo county and Chuanshan International Company for the mining of diatomite.
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Sonal Sejpal is a director at Anjarwalla & Khanna. She can be contacted on +254 (0) 70 303 2323 or by email at email@example.com