Inside US, China battle for control of Sh8tr Mrima Hill minerals

 US-China competition over Kenya’s Mrima Hills. [File, Standard]

The United States (US) has made a strong pitch to Kenya to onboard American companies in its mining sector, promising to help the country develop a thriving critical minerals processing industry as it seeks to upstage China.

Senior US government officials and corporate executives made the pitch with an eye on Mrima Hills, which has huge deposits of niobium and various rare earth minerals. The Americans are fighting it out for the rights to extract the minerals at Mrima Hills with the Chinese.

The two major economic powers are engaged in a fight for the control of rare earth minerals globally.

Rare earths are essential for the production of components used in modern electronics such as smartphone parts, electric vehicle (EV) batteries and magnetic materials used in wind turbines.

This is even as Kenya, which finds itself in a perhaps enviable position of having two superpowers fight it out for its mineral resources, said it would no longer allow the export of raw minerals and would require mining firms to set up processing facilities in the country and only export complete or semi-finished products.

US Assistant Secretary of State for African Affairs Frank Garcia said the country would walk with Kenya in its quest to build a strategic mining sector.

“Critical minerals are a top priority for President Donald Trump and Secretary Rubio... We are ready to work with Kenya as it becomes a regional leader in this space,” he said.

“American companies are not here to extract and ship. That is not a partnership. That is extraction.”

Garcia, who spoke last Wednesday at the American Chamber of Commerce, Kenya (AmCham) business in Nairobi, said what the US aimed to build would be different and would include investing in communities as well as skills and technology transfer. This is unlike US competitors, who he noted, extract and leave host regions poorer.

“Some of our competitors are efficient at one thing: pulling minerals out of the ground, whisking them offshore and capturing all value addition far away from the lands from which the minerals originated and answering to no one,” he said.

“We reject that model. We want processing done right here, on the ground, in Kenya, not thousands of miles away. Processed locally, you keep the value here, you create Kenyan jobs, you build a true regional processing hub.”

He lauded President William Ruto “for your transparent, open, upcoming competitive process in Mrima Hill. We are ready to help you build a mining sector that is transparent and attracts legitimate businesses that respect communities and help secure global supply chains.”

The government launched an international search on March 27 this year to secure a company to develop the Mrima Hill project. The area has huge deposits of niobium and rare earth minerals estimated to be worth over Sh8.1 trillion ($62 billion).

Different firms angling for the job have in the recent past made announcements on the tender process as well as their preparedness. This has, however, resulted in speculation that the tender had been awarded.

US firm Critical Metals Corp in July announced that it had “been shortlisted as one of only three finalist bidders to proceed to the final stage of the Government of Kenya’s competitive tender process for the right to develop the Mrima Hill rare earth and niobium project”.

Kenya’s Principal Secretary for Mining Harry Kimtai explained that the process is still underway.

He noted that following the announcement of the tender, 13 firms had expressed interest, but the list has, however, thinned to six firms.

“We had about 13 companies that expressed interest, and we remained with seven. And when we asked the seven to give a confirmation, one dropped out. So, we are left with six,” he said.

“And among the six, I think two are Chinese companies. Others are from other geographies or other countries. So, it is not a deal that has been closed. We are in the process of getting the best for our Mrima Hills.”

A joint venture between Australian firms RareX and Iluka Resources had earlier before the start of the tender, said it had applied for a prospecting licence for Mrima Hill.

Reports indicate other firms from Britain, Canada, Chile, China, India and South Korea had also expressed interest.

In courting Kenya, the US is trying to break China’s monopoly in the processing of rare earths. The Asian dragon accounts for about 90 per cent of global rare earth processing.

It has recently imposed export restrictions on rare earths and related processing equipment as it fights back against Western trade tariffs and advanced semiconductor sanctions.

Other than Kenya, the US has been courting other rare earth producers and has committed billions of dollars in investment into the project.

Even as it considers the advances by the US, Kenya still has to contend with China holding significant leverage over the country. China is Kenya’s largest bilateral creditor at Sh628.7 billion or about 12 per cent of Kenya’s total foreign debt.

China also has control of critical infrastructure, including the Standard Gauge Railway and the Nairobi Expressway, while Chinese contractors are also undertaking key infrastructure projects, including the extension of the Standard Gauge Railway (SGR) to Kisumu and Malaba and the expansion of the Rironi – Mau Summit road, all pointing to the delicate balancing act that Kenya has to do.

China is also securing alternative rare earth supply chains across East Africa, including acquiring controlling stakes in Tanzania’s Ngualla project through firms like Shenghe Resources.

Mrima Hill has in the past been associated with Cortec Mining Kenya, owned by Canadian Pacific Wildcat and whose local partner was the late Jacob Juma, who was assassinated in May 2016 in circumstances that remain unresolved.

The company had been given prospecting rights and, in March 2013, got a mining licence. The licences were, however, cancelled in August 2013 by the then Mining Cabinet Secretary Najid Balala.

The government at the time argued the licences had been irregularly issued. It argued the case that Cortec lodged at an international tribunal.

Last week, Kimtai said other than securing the best deal for Mrima Hills, the government is implementing a new policy that will require miners to do value addition locally in its bid to increase earnings from minerals.

“We are not selling raw materials like before. Now we are saying you must process in the country. It is a way to create employment within the community where the minerals will be extracted,” he said, further noting the opportune time that Kenya is increasingly looking at the mining industry as a key economic sector at a time when the world is seeking the same minerals it has.

“We have mineral resources, and among them are the critical minerals. Kenya is starting to explore its minerals at a critical stage when there is demand for some of these modern minerals.”

“It is also going to play a key role in helping our economy grow in terms of earning foreign exchange because we are selling our minerals as finished or semi-finished materials. We are not selling raw materials as before.

Kimtai said Kenya is prepared to cash in on the growing demand for critical minerals, having the required human capital and a new policy direction.

“This country has built itself the best human capital that you can ever have. Maybe globally. In terms of policy, the legal framework that we have, the Mining Act 2016 and accompanying regulations, is very progressive because it looks at the incentives that we give to those who want to invest,” he said

The policy directive on value addition is partly what was cited by President Ruto when he ordered Tata Chemicals Magadi to shut down its operations in Kajiado to pave the way for a new investor. The President noted that in its over 100 years of operation, the company had been exporting raw natural resources without building local processing capabilities, accusing it of being extractive and leaving the country worse off.

The government has since agreed with executives of Tata Chemicals Magadi to set up a joint technical committee to resolve compliance issues that led to the suspension of the company's operations earlier on July 28 and a subsequent directive by the President.

Troy Fitrell, the chief executive officer of Sagint, a fintech company specialising in mineral traceability and transparency, said value addition for African countries is possible, citing new technologies that have simplified the processes.

“There are some astonishing new technologies out there. You do not need yesterday's technology tomorrow. You can do this (processing of minerals) in a way that's efficient, fast and done on site. Instead of yesterday's technology, tomorrow you need to do tomorrow's technology today. It's doable, and it is available,” he said.

“(Arguments) that they cannot do this processing here, on-site or here in the country is a cheap excuse. I do not  diminish that there is a lot of infrastructure involved, but you also need to have (enabling) policies and the infrastructure in place for an economy... that's a government's role.”

He cited the case of Guinea, which in the recent past had been pushing for value addition of raw bauxite. The country has issued directives to foreign mining firms to set up plants to refine bauxite ore to alumina, the raw material for aluminium metal.

Fitrell noted that following the directive,  the mining firms that had “always said it was impossible” to refine locally are changing tune as the “current government (directed the miners to do it or leave) and suddenly all those mining companies discovered that it was possible”.

“You just need to be able to do it. You just cannot take no for an answer,” he said.

Prospecting and mining within the 157-hectare Mrima Hill has in the past experienced difficulties, with the local community resisting the development, noting that the area is deeply revered by the local Mijikenda community. It hosts six of the 50 most sacred Kayas.

Records show that in addition to Cortec’s failed attempt in 2013,  at least five global mining firms have tried to dig up the hill since the 1950s, only to be repelled by locals.

Additionally, the forest is also an ecological gem, home to 47 bird species, some of which are rare and threatened.

Environmentalists have also raised the alarm that rare earth mining requires the use of highly toxic chemicals, posing risks to soil, air and water.