Inside Politics

Gold miners inject Sh3.2b into economy

Friday, April 30th, 2021 00:00 |
Gold miners.

Small-scale gold miners in the country inject an estimated $30 million (Sh3.2 billion) annually into the national economy, a webinar on Kenya’s extractive industry has been told.

However, Stephen Kuria, chairman of the Mineral Rights Board of Kenya said the revenue from gold “is a tip of the iceberg, as we believe most of the minerals are smuggled out of the country, especially gold and gemstones from Kenya to Tanzania.”

In addition to Tanzania, Kuria, said the illegal gold trade was abetted by Chinese and Sri-lankan merchants offering the miners high prices.

“Our agencies are looking at it, but I don’t think we have the capacity and are well equipped to do so,” he said.

Kuria said Kenya could learn from countries like Tanzania, South Africa, Ghana and Australia which have created specific police who concentrate on illegal smuggling of Gold and Gemstones.

“If you go to Tanzania, you believe that everything is being watched with a very keen eye about smuggling. So we are looking at those areas to ensure that those loopholes are closed,” Kuria added.

Small-scale miners provide primary livelihoods to employment for an estimated 140,000 people, though their activities have not been formalised.

Kenya has a potential of earning $6.6 billion (Sh724.6 billion) equivalent to 12 per cent of gross domestic product (GDP) from the extractives sector, but has been bogged down by a weak regulatory environment.

Aerial mapping

During the webinar, Energy Principal Secretary Andrew Kamau said that an aerial mapping to determine the country’s mineral wealth was 50 per cent complete, with the exercise expected to be wound by June this year.

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

The sector’s contribution to GDP has slid from 2.5 per cent in 2014 to 0.8 per cent in 2018, equivalent to Sh89 billion.

The low earnings have been attributed to the fact that only two companies – Kwale-based, Base Titanium and Magadi’s Tata Chemicals which combined, 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.

However, Kuria said for the sector to contribute 12 per cent to the country’s GDP, the  it needs at least four major mining companies to unlock the potential.

Investments knocking

“We are already on the way, as we have allowed Shanta Gold which is commencing to mine around Western Kenya, there is also the re-opening of Kilimapesa and Kilembe Mining Gold which should come to fruition.

At the moment we have investments knocking on the door for Kenya once we have opened our cadaster system,” he said .

In February last year, Guernsey-incorporated Shanta Gold said it will invest $24 million (Sh2.4 billion) in staffing and gold exploration costs in Kenya, after buying seven mining licences covering the Western part of the country from Toronto-based Barrick Gold Corporation.Shanta has successfully operated in East Africa for nearly 20 years.

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