MPs move to ban export of local iron ore

Workers at an Iron Ore mining quarry in Jaribuni, Kilifi County [Maureen Ongala, Standard]

The export of iron ore could be banned if Parliament approves a proposed law that will include the mineral in the list of goods that cannot be exported.

The Excise Duty (Amendment) Bill, 2021 seeks to include iron ore on the list of goods that are “prohibited and restricted exports.”

This is as Kenya seeks to protect local firms that rely on the ore for the production processes from competing with export markets for the lucrative mineral.

The Bill also wants to match the local laws with those of other East African Community (EAC) partner states that have already banned the exportation of iron ore.

“The principal object of the Bill is to amend the Excise Duty Act to align the Act with the EAC Customs Management Act, 2004 and the policy decisions of the other partner states to ban export of iron ore,” read the Bill in part

Iron ore is a key ingredient in steel-making and its pricing, which has been subjected to supply shocks over the last decade, had exposed the local construction industry to volatile prices.

While Kenya has confirmed deposits of iron ore, there has been no meaningful exploitation of the mineral.

This means the country is not cushioned from pricing shocks in the international markets.

“In line with President Uhuru Kenyatta’s Big Four Agenda which includes manufacturing, I propose a Bill seeking to ban the export of iron ore mined in Kenya. The mineral is required in Kenya for manufacturing to enhance job creation,” said Lugari Constituency MP Ayub Savula, who will be sponsoring the Bill in a letter to the speaker of the National Assembly.

“Other East African countries including Uganda and Tanzania have banned the export of this mineral to improve manufacturing in their countries.”

While Kenyan mines are yet to emerge as great producers of iron ore, iron and steel are one of the largest exports of the county.

In addition to the locally mined iron ore, also available are recycled metals that are exported either in form of scrap or at times in a more refined form.

There are also re-exports whereby importers from neighbouring countries use Kenya as an import route.

According to the Kenya National Bureau of Statistics (KNBS), the export value of iron and steel increased to stand at Sh15.7 billion in 2019.

“Horticulture, tea, articles of apparel and clothing accessories, coffee and iron and steel, remained the leading export earners, collectively accounting for 59 percent of the total value of domestic exports,” said KNBS in the Economic Survey 2020.

Iron and steel were also listed as some of the largest imports into the country.

According to the KNBS data, it is the third-largest import after petroleum products and industrial machines in 2019. During the year, iron and steel imports were valued at Sh104 billion.

 

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