Kenya’s Trillions of Buried Wealth

Posted: April 18, 2012 in Uncategorized
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Kenya is blessed with a vast array of buried wealth whose proper exploitation would greatly transform the economy. Most parts of the country are represented in the precious resources map, with far-flung and largely under-developed areas like Turkana and Garissa possessing proven deposits of mineral resources. Oil and natural gas, though not classified as minerals, are believed to be present in several parts of Kenya owing to proven hydrocarbon-rich belts. Sources at the Ministry of Energy intimate that the ‘discovery’ of oil and natural gas in Isiolo, Kwale and Lamu is imminent. Here are the main areas where trillions worth of wealth lie buried, waiting for the right policies and investments for their exploitation
GOLD

Most Counties to the west of the Rift Valley fall under an expansive Gold Belt that stretches from Turkana to Kuria. In most of these areas, medieval mining methods, especially along river beds, have been going on for decades.

Most of these efforts are, however, exploited by middlemen who snap up the gold at throwaway prices and end up making super profits in the international market.

The global decline of stock markets has pushed the price of gold to record levels as investors turn to the precious stone to hedge their wealth.

An ounce of gold is presently retailing at $1,586 (about Sh134,000) up from $972 (Sh82,000) in 2009.

Financial analyst Aly Khan Satchu says the price of gold has been on an 11-year rally, turning the commodity into an international currency.

And with neighbouring Tanzania continuing to rake in billions of shillings by commercialising its gold resources, Nandi, Siaya, Kakamega, Vihiga, Migori, Trans-Mara, Turkana, Kuria and Bondo are among the areas that await a major economic transformation when the government moves to create a framework for such activity to thrive locally.

COAL

Only a few years ago, a 500 square kilometre region cutting through Kitui and Mutito called the Mui Basin was declared one of Africa’s most coal-rich areas.

Coal is a key component for the smelting of other minerals and is also used for generating power in most countries. Already, the Chinese have set base in Kitui, ready to extract the mineral whose quality has been passed as excellent.

As coal is a mass mineral, logistical arrangements are being sought to transport the product either to local ports or to areas where it can be used either in the mining of other minerals or for local power production.

While concerns have been raised over its environmental impact, coal remains a relatively very cheap power generation option, with countries like South Africa and China still heavily reliant on it.

Billions of tonnes lie buried in Eastern province, waiting to transform a largely laid back region into a vibrant economic zone.

IRON ORE

Iron ore is used in the manufacture of steel products and significant deposits have been discovered in Taita Taveta, Kitui, Meru, Kilifi and Samia.

In Taita Taveta District, extraction of the mineral has already commenced, while a local industrialist has declared intention to mine in the Mutomo area of Kitui.

With Kenya spending hundreds of billions of shillings every year to import steel for manufacturing, domestic as well as construction industries, exploitation of this local wealth would hugely boost the economy.

Conveniently, the discovery of coal, a major input in the mining of iron ore, in Kitui means a major industry is in the offing, with investors circling with intent.

SODA ASH

Kenya exports close to one million tonnes of soda ash, mined predominantly in the Lake Magadi area of Kajiado. But the potential to multiply that, according to the government, is massive.

The Magadi Soda Company is a perfect example of how minerals can be used as a major economic driver. The company employs about 500 people directly and is a major consumer of local production in the Lake Magadi area.

The company also drives development in the area with the awarding of scholarships and provision of water and other services to the local community.

Soda ash is used in the manufacture of glass, salt, preservatives, and dyes, among many other applications. The sad thing, however, is that most of the mined soda ash is exported raw, denying this country value added benefits.

Sad, also, is the fact that most of Kenya’s glassware is imported from countries like China that import their soda ash from Kenya.

FLOURSPAR

Found in abundance in the Kerio Valley, this is one mineral whose immense value has never been capitalised.

Fluorspar, or fluorite, is an industrial mineral largely used in the manufacture of lenses for microscopes and telescopes, fluorescent bulbs and for smelting.

The mineral also has aesthetic uses as ornaments are carved out of it. With average prices of pure fluorite at a minimum of $1.2 a gramme (about Sh150), Kenya could be sitting on at least a trillion shillings of this very valuable rock.

LIMESTONE

This is perhaps the one mineral that Kenya is synonymous with. Virtually every corner of the country has limestone whose uses touch every day life.

From the manufacture of portland cement, chalk, paper and glass to medicines, floorings and farm conditioners, this is one mineral that can earn this country a lot of foreign exchange if the capacity of its exploitation is greatly enhanced.

Demand for cement, for instance, has over the last few years of a burgeoning construction boom exposed the lack of capacity at cement manufacturing plants.

Kenya only produces below 5 million tonnes of cement compared to the between 66 to 150 million tonnes done by China, India, the United States and Turkey — by that order the four leading cement producers.

Most countries are net importers of cement, led by China, India and the United States. Evans Osano, an industry analyst, says Middle Eastern countries are leading consumers of cement, as are some African countries like Rwanda, Djibouti, Burundi, Gabon, Congo and Botswana. Osano says cement has the potential to become a leading foreign exchange earner for Kenya.

TITANIUM

In 2011, Tiomin finally set base to start extracting titanium from mines in Kwale. The mineral is widely used as a base compound. Aircrafts, space ships and missiles’ bodies are built with alloys that include titanium for corrosion resistance and tensile strength at low weight.

Most of titanium extracts, though, are used in the production of titanium oxide, which is used in the manufacture of cement, toothpaste, paper and plastics, among many other products.

Surgical equipment and body piercings are made with titanium as it is rust proof, while hip joints, ball joints and other human body internal bone interventions are done with titanium, which needs no replacement for 20 years.

Dental implants are also done with titanium, as are guns. If your laptop has a shiny top, or your phone, or car centre console, that is titanium as well. There are significant deposits of titanium in Malindi and Lamu as well.

OIL AND GAS

Several months ago, Energy minister Kiraitu Murungi confidently claimed that oil would be struck in Isiolo in no time.

But later, miners hit a high-potential hydo-carbon belt, a drawback that nonetheless further confirmed the presence of oil in the area.

Energy specialist Eng Patrick Obath says all the ingredients for a major oil find are present in Kenya, adding that the presence of oil in western India shows that oil is available in plenty in Lamu, going by the similarity of the regions’ tectonic plates.

The southern coastal area most likely has natural gas, and with Tanzania making one big discovery after another in its coastal regions, Obath is convinced Kenya is most likely sitting on immense oil and gas wealth.

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