Kenya's mining sector faces litmus test on social welfare as investors get jittery

Base Titanium plant in Kwale County which has since ceased operations. [File, Standard]

A few days ago, Kwale County Deputy Governor Chirema Kombo walked out of a consultative meeting chaired by the Mining Cabinet Secretary Ali Hassan Joho to discuss the prospects of the Mrima Hills project.

The project located in the county has attracted several bidders, a majority of them international conglomerates eyeing deposits of niobium and other highly sought after brare earth minerals whose value is over Sh8.1 trillion.

The community is also eyeing a stake in the same, with the push and pull between the county and national government, taking centre stage of the project, and leaving the affected people in limbo.

“The CS has issued threats in the meeting. I walked out because he is forcing his way,” said Mr Kombo. “We want the minerals to be mined and processed from here so that the community benefits.”

CS Joho argued that no one was bulldozing their way, insisting that the government invited the county to be part of the meeting. “This is a project of national and community importance. The government will not licence any process that will be harmful to the people,” he said.

Such tug of wars are becoming common in the mining sector, which is delaying the offtake of key projects that would have a significant positive effect on the country’s gross domestic product (GDP).

Just days before, a protest erupted in Ikolomani, Kakamega County, during a stakeholder meeting with the community called by the National Environment Management Authority (Nema). Three people died in the scuffle as property worth millions of shillings belonging to a nearby school was damaged.

The meeting revolved around Sh680 billion worth of gold deposits that have caught the eye of a mineral mining and processing firm Shanta Gold. The protests were about the possibility of relocation of residents and the lack of menial jobs once the project is commercialised.

Most of the mining activities are done crudely by the residents with prospects from such projects, despite the amount of deposits of the minerals having little effect on the country’s economy.

“There is no government land here. This land belongs to us. The investor can go his way,” one resident retorted during the protests.

“I was born here, and I will die here. I will not relocate. Let them come and kill us,” vowed another one.

Another, a woman revealed how she had relocated all the way from Migori County to work in the mines. “I am a widow. How else do they expect me to get a living?” she posed.

This is happening as the sector shrinks, even after the government lifted a moratorium, albeit partially, on the issuance of mining licences two years ago, after instituting a ban in 2019 for a cleanup.

In the 2025 Economic Survey Report by the Kenya National Bureau of Statistics (KNBS), the mining and quarrying sector is recorded to have contracted by 9.2 per cent in 2024 and by 6.5 per cent in 2023.

The report attributes the contraction to the drop in titanium, which reduced from 280.7 tonnes in 2023 to 198.5 tonnes in 2024.

Production of gemstones also reduced from 6.9 tonnes to 5.8 tonnes while base metals dropped by 47.3 per cent to 33,300 tonnes in the period.

“Total value for mineral production reduced from Sh33.8 billion in 2023 to Sh25.5 billion in 2024, mainly attributed to reduced earnings from titanium minerals,” the report says.

KNBS Quarterly Gross Domestic Product report for the third quarter of 2025 shows the sector is somehow recovering, having grown by 12.2 per cent in the three months compared to a contraction of 16.6 per cent in the same period in 2024.

For years, Kenya’s mining sector has been supported by exports of titanium ore mined by Base Titanium in Kwale County. Base Titanium shipped its last cargo in February 2025, closing an 11-year chapter after deposits were depleted in the sites.

However, a mining sector that is underperforming is not only a Kenyan problem. A latest report from a United Nations body shows it is a regional issue, as investors are now keen to ensure communities are not shortchanged. 

The extractive sector has been deemed not as lucrative for the Common Market for Eastern and Southern Africa (Comesa) region to attract foreign investment, with the latest figures showing a contraction of 61 per cent in 2024.

The report by the United Nations Trade and Development (UNCTAD), proposes that Kenya and her Comesa counterparts consider manufacturing and supplier development as alternative areas.

Further, intra-Comesa investment, which the report says is low, is also an option. In this role, small and medium enterprises (SMEs) are poised to play a critical role.

One of the reasons why this sector is underperforming has to do with the ‘civil wars’ Kenya is witnessing on its prospective sites. The lack of social consideration, as the report indicates, is making investors – who are conscious of environmental, social and governance (ESG) – unwilling to commit their capital.

This means the more fights among stakeholders, the less capital the sector will get as foreign investment, and the sector will continue shrinking.

“Several industries experienced significant declines. Extractive industries declined by 61 per cent, as investors showed greater caution in committing capital to new mining and oil projects amid market volatility and environmental, social and governance (ESG) considerations,” reads the report titled 2025 Comesa Investment Report; Investment Trends and Policy Insights.

According to the report, the primary sector, where the extractive industry falls, contracted sharply, with investment value falling by more than three-fifths to Sh260 billion ($2 billion).

This is largely due to a decline in extractive industries, as global commodity prices and policy uncertainty reduced investor appetite for new resource-based projects.

“Oil and gas investment plunged 83 per cent to Sh46.02 billion ($354 million), and mining halved to Sh260 billion, reflecting softer commodity prices, high volatility and tighter ESG scrutiny,” the report says.

“Critical minerals proved more resilient: while investment value declined 12 per cent to Sh127.01 billion ($977 million), project numbers rose by one-fifth, underscoring continued demand for transition minerals such as copper and cobalt.”