CS orders staff audit at Australian firm as fluorspar miner is investigated

Mining Cabinet Secretary Najib Balala (right) with the newly appointed task force. They are (from left) Samantha Kodhek, Alice Kaudia and Chairman Paul Nyamodi. The task force is to review concerns by residents of Elgeyo Marakwet county in relation to Fluorspar mining. [PHOTO: JENIPHER WACHIE/STANDARD]

The Government will carry out a staff audit on Australian mining firm Base Titanium to determine the nationalities of the immigrant workers, in the newest turn of a long-drawn-out tussle with the State.

Mining Cabinet Secretary Najib Balala says such an audit would enable the Government to evaluate the gains for Kenyans from titanium mining. This comes amid a stand-off over how much in royalties the company should pay.

Mr Balala said the company was not genuine on its Sh2 billion tax refund claim, yet it has paid only Sh100 million as royalties. “We are going to find out who are the foreigners working in those mines because they could be earning more than the 800 people working there,” Mr Balala said in a media briefing on Monday afternoon. “I am not saying (wages) is the exact situation but we will find out.”

The CS was speaking after commissioning a task force to investigate the activities of the fluorspar mining firm in Elgeyo Marakwet County. Kenya Fluorspar Company is accused of dodging royalties, where the State only received Sh1.5 million while fluorspar worth Sh3 billion was produced and shipped out.

That translates to 5.2 per cent against the requisite 10 per cent. Members drawn from the local community told The Standard the affected households have never been compensated for the nearly 10,000 acres of land where the mining is ongoing.

The report is expected in 90 days, after which the State will take action, including punitive measures. Balala’s sentiments come amid fears that some multinational mining companies pay less than their fair share of royalties, prescribed in the laws at 10 per cent.

Conscious issue

Base Titanium is paying royalties at a negotiated rate of 2.5 per cent, which Balala says is too low. “This is a conscious issue. How do you demand Sh2.5 billion and you only want to pay Sh100 million?”

Base Titanium was entitled to a $20 million (Sh2 billion) tax refund on its investment in the mining plant, according to the contract entered by the State over a decade ago.

The firm negotiated a lower royalty rate that Mr Balala now terms as “lop-sided against the State”. He noted that though the agreement may be in the contract, it was morally unacceptable. Among the grounds that the company was granted the low royalty rate was the distance to the port and developing road infrastructure.

“In Australia, Base Titanium’s home country, royalties on minerals are charged at five per cent while the nearest port is more than 700km away,” Balala said while dismissing the company’s claims presented during the initial negotiations.

Balala projects the State could realise Sh2 billion this financial year, adding that nearly Sh900 million had been collected by January.

The CS also announced he had withdrawn the prospecting licence of gold company Mid Migori, which he says has been holding the permit for nearly 30 years without producing the mineral.

This was among 65 firms whose licences were revoked last week, according to the Kenya Gazette.