NAIROBI — Kenya’s Ministry of Mining, Blue Economy and Maritime Affairs has published a draft royalty policy that would, for the first time, link the rates paid by mineral producers to a moving reference price and rebalance the distribution of receipts between the national treasury, county governments, and affected communities.
Under the current 2019 schedule, royalties are set as fixed percentages of gross value: 10 per cent for titanium, 8 per cent for gold, 5 per cent for gemstones, and lower rates for industrial minerals. The draft policy, opened for a sixty-day consultation on 20 June, proposes replacing the fixed schedule with a banded system in which rates rise and fall with rolling three-month LME or LBMA reference prices.
For titanium — Kenya’s largest mineral export by value, driven by the Base Titanium operation at Kwale until its 2024 closure and now by a successor operation preparing to restart — the proposal would apply a floor of 8 per cent and a ceiling of 14 per cent, indexed to the ilmenite reference price. Ministry officials argue the banded structure would smooth revenue volatility for producers while capturing a larger share for the state during price booms.
The distribution formula is where the political weight of the draft sits. Under the 2019 framework, 70 per cent of royalties accrue to the national government, 20 per cent to the county, and 10 per cent to the community. The draft would rebalance this to 60/30/10, adding a further requirement that the county share be ring-fenced for infrastructure and health spending in mining-affected sub-counties — a category to be defined in an accompanying regulation.
The Council of Governors, in an initial response, welcomed the increased county share but said the ring-fencing requirement risked cutting across the constitutional autonomy of county budgets. The Kenya Chamber of Mines struck a more cautious note, warning that a banded royalty could deter capital commitment in the exploration stage, when producers cannot yet forecast the price band in which they will ultimately operate.
Civil society groups have focused on the community share. In a joint statement, the Africa Centre for Open Governance and the Kwale-based Ukunda Rights Forum argued that the 10 per cent allocation is unchanged in percentage terms and that, without a direct-payment mechanism, historical experience suggests little of it will reach the communities the policy claims to serve.
The consultation closes on 19 August. A revised policy is expected to be tabled in cabinet before the end of the year, with implementing amendments to the Mining Act likely to follow in the first half of 2027.
