Kenya to create sovereign wealth fund of mining companies

By IVCPOST Staff Reporter

Jul 11, 2013 05:01 AM EDT

Kenya announced it will form a state-owned holdings firm that will hold shares in the mining industry. The new firm will establish a sovereign wealth fund to take care of revenue from the mining sector, Mining Secretary Najib Balala said in his announcement.

Balala said that they were just waiting for the new bill to be approved by Kenyan cabinet and its parliament.

The announcement follows a previous action of the the government that intends to amend a law that required companies at least 35% domestic ownership. The amendment will reduce the requirement to 10% and that will be held by the government, Balala said in an interview Wednesday. The new legislation will also create the National Mining Corp. and is expected to be enacted by November, Balala added.

According to the African Development Bank, Kenya deposits of rare earth metals such as rubies, sapphires, and gold but that sector only comprises around 1% of its gross domestic product. Kenya is, however, the world's third-largest producer of soda ash and one of the largest-producers of flourspar globally, according to the U.S. Geological Survey. Soda ash can be used in the production of glass while fluorspar can be used to make steel.

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