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600 Kenyans lose jobs as miner suspends operations

NEWS
By Patrick Alushula and Silah Koskei | Feb 19th 2016 | 3 min read
Kenya Fluorspar Company MD Nico Spangenberg. [PHOTO: KEVIN TUNOI/STANDARD]

Hundreds of workers at Kenya Fluorspar are staring at job losses after the company announced plans to suspend operations indefinitely.

The mining firm based in Kerio Valley cited that a sustained slump in prices and falling demand for the mineral in the global markets had resulted in massive losses. Mining operations will be suspended on April 30, according to the firm’s Managing Director Nico Spangenberg.

“A collapse in market conditions in the last six months has led to a dramatic reduction in fluorspar prices and demand and thus the company’s operations have become unsustainable in the current market,” Mr Spangenberg said in a statement.

The company reported that demand for the mineral and prices have been depressed since 2012, leading to losses in the last three years. As such, the company says it was unsustainable to keep the plant running.

The suspension means that about 620 permanent and contract workers currently will be rendered jobless, a move that has caused uproar from residents. Elgeyo Marakwet County residents led by Joseph Kipkosgei said the move by the company would affect locals who have been depending on the plant for years.

“The announcement came suddenly. What will happen to those who have been offering their services at the company? There are also a number of students who have been benefiting from scholarships whose fate is unknown,” he explained.

Soy Chief Charles Kigen said the suspension will negatively affect services in the region. “They have constantly engaged in corporate social responsibility (CSR) and their presence has always been appreciated, we wonder what next,” he asserted.

Mr Kigen called on the Government to revoke the company’s mining lease because contrary to the firm’s explanation for the shutdown, fluorite is still considered as the most sought after commodity in the world. “We are aware that the ownership lease is coming to an end in 2018 and it is upon the Government to source for a new investor to run the company,” he added.

It will be the second time in less than 12 months that the firm is interrupting mining operations. In June last year, the company closed for about two months on grounds of weak global demand and depressed market prices but resumed in August 2015. Even though the company has stated that it intends to reopen once conditions improve, it added that it is difficult to predict the timing of recovery in global markets.

“This announcement will unfortunately result in the termination of employment of employees across all levels of staff. All agreements will be respected and wages and dues paid in full,” stated the CEO.

Granted priority

Spangenberg was optimistic that the mining operations would resume once the prices and demand recover, and that the current staff would be granted priority in re-employment. The company has so far cut its annual production by 19 per cent to 77,000 metric tonnes, down from an earlier estimate of 95,000 tons.

Fluorspar is used in making steel, aluminium and refrigerant gases. The market has been through turbulent times as fluoro-chemical markets continue to cut their demand.

In May last year, the company was accused of presenting a falsified financial position. The then Mining Cabinet Secretary Najib Balala told the Senate Committee on Lands and Natural Resources that the firm was making Sh4 billion yearly, but only declared Sh300,000 to the Government. The company however, refuted the claim.

The firm is also grappling with claims that it took over about 10,000 acres of land for mining without compensation.

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