Mineral prices move in cycles, and a deposit that is profitable at one price can be unmineable at another. Kenyan law addresses this problem with the retention licence, a mineral right that allows a holder who has identified a deposit to keep tenure while the economics change. This article explains what the licence is intended to do, how an application is processed, the obligations that continue and the due diligence an investor should complete.
Quick answer: a retention licence under the Mining Act 2016 is a holding right for a mineral deposit that has been identified through prospecting but cannot be worked economically for the time being. It is applied for through the mining cadastre, reviewed by the Mineral Rights Board and decided by the Cabinet Secretary. It preserves tenure; it does not suspend the holder’s obligations, and it is not a substitute for a mining licence once the project is viable.
What a retention licence is for
The Mining Act 2016 provides for retention licences as part of the framework of mineral rights. The purpose is to deal with a specific commercial problem: a holder has done the prospecting work, has identified a deposit, but cannot justify the cost of development at current prices, technology or infrastructure. A retention licence allows the holder to keep the right in place while those conditions change, rather than surrendering the ground and losing the value of the exploration work.
It is a deliberate holding position, not a way of avoiding work obligations altogether. The holder remains subject to conditions, reporting requirements and fees, and the licence is expected to rest on credible evidence that the deposit exists and that the economics, rather than the holder’s indecision, are the reason for the pause.
Why tenure matters to investors
Tenure is the asset that lenders and buyers price. A deposit inside a granted, registered right is a different proposition from a deposit that depends on an application that may be refused or competed for. A retention licence keeps the project in a defined legal position, supports financing discussions and preserves the option to develop when the market turns.
The corollary is that the licence must be verifiable. A buyer or lender will check the cadastre, the licence conditions and the compliance record, and will ask why the deposit is being held rather than mined. A positive answer, supported by market analysis and a dated plan for re-assessment, is part of the value of the asset.
How an application is processed
Applications are made through the online mining cadastre. The State Department for Mining explains that users must first register on the cadastre so that they can log in, make applications and upload the required documents. The licensing division confirms that an application is complete before it is forwarded to the Mineral Rights Board, which reviews the application and prepares an advisory for the Cabinet Secretary’s decision to approve or reject it. The licence document is then prepared and registered, and registration is the last step in the process.
The cadastre stage is practical rather than formal. An application that is incomplete, inconsistent or missing a required document is likely to be returned, and time spent on a complete file at the start is usually less than the time spent correcting it later. The same system is used for applications, transfers and other dealings, and some documents become valid only once they are registered.
Documents and evidence to prepare
| Material | Why it is needed |
|---|---|
| Prospecting record and licence history | Shows how the deposit was identified and the holder’s position |
| Geological and technical reports | Evidence the deposit exists and its scale |
| Market and feasibility analysis | Explains why the deposit cannot be worked economically now |
| Work programme and budget | Shows what the holder proposes during the retention period |
| Environmental and land access documents | Shows the obligations and access position are addressed |
| Corporate and identification documents | Confirms the applicant and its authority |
| Fee payment evidence | Confirms the prescribed fees have been paid |
Keep the application file and every submission in one place. Where the holder is a company, the board should record the decision to apply and the person authorised to deal with the cadastre, because administrative authority is checked in the same way as the technical case.
Obligations that continue during retention
- Pay the prescribed fees and charges on time.
- Comply with each condition attached to the licence.
- Report through the mining cadastre as required.
- Maintain environmental obligations and any approved plans.
- Record and report any continued work on the ground.
- Keep abandoned workings and the site safe and secure.
- Notify the authorities of changes in control or corporate details.
Failure to comply can put the licence at risk of suspension or cancellation, and it weakens the holder’s position in any future application, transfer or financing. The compliance file should be reviewed on a calendar rather than only when a deadline is close.
Transfers, charges and due diligence
A retention licence can be a valuable asset, and dealings with it are subject to the Act and to registration. An assignment or transfer must be approved and registered before it is effective, which means a buyer should not complete on the strength of a signed agreement alone. Where the licence is offered as security, the lender will check that the dealing can be registered and what consents are needed.
Due diligence should confirm the identity of the registered holder, the licence’s status and conditions, the cadastre record and any pending applications, plus the environmental and community position. It should also test the technical case: the buyer should see the evidence for the deposit and for the claim that it cannot be worked economically, not just the title.
Timing, cost and when to get advice
Timing depends on the completeness of the application, the cadastre and the review process, and there is no single timetable that can be promised. Cost includes the prescribed fees, the technical work needed to support the application and the cost of maintaining compliance during the retention period. Amounts are set by the framework and should be confirmed with the State Department for Mining rather than estimated from secondary sources.
Advice is worth taking where the deposit’s economics are uncertain, the application is contested, the licence is being transferred or charged, or the holder is negotiating with a financier or a joint venture partner. The firm’s mining law practice in Nairobi advises on retention strategy alongside how to get a mining licence in Kenya and the differences between reconnaissance, prospecting and mining licences in Kenya.
Primary sources
- Mining Act 2016, Kenya Law.
- State Department for Mining: licensing.
- Mining Cadastre Portal, for applications and the public register.
This article is general information, not legal advice.
