Shanta Gold Kenya Limited (SGKL) is set to launch ambitious gold mining projects valued at Sh17.71 billion ($137 million) in the Siaya and Vihiga counties. This strategic move marks a significant step in expanding the company’s footprint in Kenya’s mining sector.
Project Overview
The upcoming projects will utilize open-pit mining techniques across an area of 175 hectares, specifically in Ramula and East Gem in Siaya County, as well as Mwibona in Vihiga County. SGKL has indicated that these ventures will be developed on greenfield sites, which means they will be established in previously undeveloped areas.
“The project entails the use of open-pit mining techniques for the potential development of a gold mine,” SGKL stated in an official disclosure.
Financial Commitments
The financial implications of the projects are substantial. The company anticipates a capital expenditure of $137 million (approximately Sh17.7 billion) for the initial setup. Furthermore, SGKL expects to incur annual operating costs of $45 million (Sh5.8 billion). In addition to these costs, the firm will pay royalties amounting to $2.6 million (Sh335.9 million) per year, along with other government contributions estimated at $1 million (Sh129.2 million) annually for the Mineral Development Levy.
“The payment of royalties and taxes by the proponent will convert into benefits for the community as these funds are filtered into social schemes and infrastructure within Kenya,” SGKL explained.
Community Engagement
In adherence to the Mining (Community Development Agreement) Regulation, SGKL is required to formalize an agreement with communities affected by the project. As part of this agreement, the company will share an additional one percent of the value of gold produced with these communities. This commitment underscores the company’s intention to ensure that local residents benefit from the project.
Moreover, SGKL’s capital and operating expenditures are expected to positively impact Kenyan businesses that provide necessary goods and services for the project’s development and operation.
Regulatory Changes and Industry Landscape
The Kenyan Ministry of Mining has recently adjusted royalty charges for gold miners, aiming to attract larger investments into the burgeoning industry. New regulations indicate that miners will now be required to pay a three percent royalty on the gross value of extracted gold, down from the previous five percent.
These changes come at a critical time when Kenya’s gold mining sector has largely been dominated by artisanal and small-scale operations. Many of these operations operate informally, often under unsafe conditions that involve the use of mercury and, in some cases, child labor.
Economic Context
According to the Economic Survey 2024, Kenya’s earnings from gold mining fell to Sh3.17 billion last year, down from Sh3.38 billion the year before. The report indicates that a total of 410 kilograms of gold were produced during this period, a decline from 563.6 kilograms in 2022.
The Mining Act of 2016, specifically Section 183, stipulates that holders of mineral rights must pay royalties to the State for various mineral classes extracted under the law. These revenues are intended to be distributed among the national government, beneficiary counties, and local communities.
Conclusion
Shanta Gold Kenya Limited’s planned investment of Sh17.71 billion in new gold mining projects highlights a renewed interest in Kenya’s mineral resources. With significant financial commitments and a focus on community benefits, SGKL aims to contribute positively to both the local economy and the broader mining industry. As regulatory changes create a more favorable environment for investment, the future of gold mining in Kenya may see a transformation that brings about both economic growth and improved community welfare.
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