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Major minerals register decline casting doubt on viability of the sector

BUSINESS
By Macharia Kamau | May 10th 2020 | 3 min read
By Macharia Kamau | May 10th 2020
BUSINESS

The mining industry last year took a beating with almost all the minerals produced locally registering a decline both in volumes and earnings.

According to data from the Kenya National Bureau of Statistics (KNBS), there was a drop in earnings from minerals such as soda ash that have traditionally been the mainstay of the sector, putting doubt on the sector that has in the past been tipped to hold a lot of potential.

Even recent entrants like titanium ores did not escape the tough times experienced last year.

According to the data, industry earnings reduced 5.5 per cent to Sh29 billion. Among the minerals that registered major drops include soda ash, crushed refined soda and gold.

“There was a notable decline in value for most of the minerals compared to the values recorded in 2018,” said KNBS. “Total earnings from mineral production declined by 5.5 per cent from Sh30.8 billion in 2018 to Sh29.1 billion.”

The report continued: “Most of the major minerals recorded a decline in quantity produced during the review period. Titanium ore minerals of ilmenite and rutile recorded a decline of 24 per cent and 12.6 per cent, respectively. Similarly, production of soda ash dropped from 339,000 tonnes in 2018 to 230, 000 tonnes in 2019, while crushed refined soda which has been the most important mineral in Kenya recorded a three-year decline to stand at 388,500 tonnes in the review period.”

Among the minerals that did not take the declining route was salt, whose production grew 6.3 per cent and cut gemstones, whose production grew 36.5 per cent.

The value of titanium ores produced in Kwale reduced to Sh19.6 billion in 2019 from Sh20.3 billion. The ores have in the recent years grown to be the largest mineral that Kenya exports, accounting for about 66 per cent of the sector earnings.

Base Titanium, which runs the Kwale operation, said the reduction in the quantity of titanium ores produced was affected by the migration from one end of the mine to another following depletion of resources.

Put under care

“Mining volume (was) lower due to the transition to the South Dune ore body following depletion of the Central Dune,” said the company when it published its results for the six-month period to December 2019.

While production levels might recover once the firms settles at the new mine, the dune has a life of less than three years and if the firm does not get approvals to look for titanium ores in other areas, earnings from the minerals could drop to zero in three years’ time.

Gold production was affected when one of the big producers in the country put its mines under care and maintenance as it sought a strategic partner.

Goldplat, which operates the Kilimapesa gold mine in Narok County, stopped production of gold in May last year and commenced the search for a partner who it expects will pump money into the mine and restart production.

While Kenya is not a major producer of gold, earnings from the mineral declined from Sh2 billion in 2018 to Sh1.4 billion in 2019. Soda ash earnings fell after a cut back in production due to a tiff between Tata Chemicals and Kajiado County over land rates. 

Earnings from soda ash dipped to Sh5.1 billion in 2019 from Sh6.9 billion. Kajiado has been demanding Sh17 billion for the 240,000 acres in Magadi where Tata produces the mineral.

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