Kenyas mining industry still weighed down by weak regulations

Kenya’s mining industry has not had been negatively impacted by effects of the COVID-19 pandemic but it is still weighed down by weak regulations.

According to Stephen Kuria, Chairman of the Mineral Rights Board, revenue from gold is a tip of the iceberg as most of the minerals are smuggled out of the country.

“Kenya can borrow a leaf from countries like Tanzania, South Africa, Ghana and Australia which have created unique law enforcers who concentrate on illegal smuggling of gold and gemstones,” he said during a webinar on Kenya’s extractive industry on Thursday.

Mr. Kuria said illegal gold trade is abetted by Chinese and Sri-Lankan merchants who offer miners more value for their products.

He also lamented that though small scale miners provide primary employment for an estimated 140,000 people, their activities have not been made official.

“Small scale gold miners contribute an estimated $30 million (Ksh. 3.2billion) into the Kenyan economy,” he said.

Mr. Kuria noted that Kenya has a potential of earning $6.6 billion (Ksh. 724.6billion) — equivalent to 12 per cent of the GDP — from the minerals sector.

On his part, Energy PS Andrew Kamau said an aerial mapping to determine the country’s mineral wealth is half complete, with completion of the exercise scheduled for June this year.

PS Kamau said only 4 per cent of the country is mapped yet data from the aerial survey is crucial in encouraging investments into the sector.

The sector’s contribution to GDP is reported to have slid from 2.5 per cent in 2014 to 0.8 per cent in 2018, equivalent to Ksh. 89billion.

This has been attributed to the fact that only two companies — Base Titanium (Kwale) and Tata Chemicals (Magadi) — shoulder 77 per cent of the sector’s economic burden.

Base Titanium and Tata Chemical control 88.7 per cent and 48.9 per cent of the market shares respectively.

In 2018, the Government said it plans to set up a gold refinery to help small scale miners in the west of the country. The Petroleum and Mining Ministry said it was seeking consultants to advise on the construction of the refinery.

Kenya has proven deposits of titanium, gold and coal but its mining sector is a relatively small contributor to national output. However, revenues are expected to grow as new mines start production.

The new refiner will provide services to help vulnerable, artisanal and small scale miners and other local producers meet international standards, the ministry said in a statement.

“The aim of the project is to improve the livelihoods of the beneficiary community, regional economy and that of Kenya as a whole,” the ministry said, adding that the refinery will also create new jobs.

While Kenya is a small gold producer, it has attracted investors like London-listed Goldplat Plc, which operates a mine in south western Kenya.

Kenya’s most successful mining operation has been Base Titanium, whose $305 million project shipped its first mineral consignment in 2014.