The Kenyan mining industry is on the rise. Historically, the country focused on agriculture, tourism, services and manufacturing as its main economic pillars, but in recent years, that focus has begun to shift towards extractives – both oil and mining.
“In the past mining was not seen as a significant sector of the economy – that is until Base Titanium’s Kwale Mine entered into production in early 2014,” says Joe Schwarz, General Manager – External Affairs and Development, Base Titanium. “The industry is now contributing around 1% to the GDP, but with increased interest in extractives and a friendly investment climate that will increase.”
Flying the flag for Kenya
In 2013 the Government of Kenya created, for the first time, the stand-alone Ministry of Mining in recognition of the emergence of the mining sector, led by Base Titanium, as an increasingly important sector of the economy with real growth potential.
“Establishing the Ministry of Mining has really given the mining sector in Kenya a new focus and impetus,” Schwarz says. “With the Ministry and Base Titanium working collaboratively to promote further investor interest in the sector, we stand as a benchmark for others to emulate.”
This relationship with the Ministry of Mining is crucial, not only for Base Titanium, but for any future mining projects in Kenya that will contribute to the achievement of country’s Vision 2030 objectives of establishing Kenya as a middle-income country by 2030.
For Schwarz, that relationship with the Ministry is crucial in jointly driving the mining agenda by attracting serious investment into exploration and development in a mutually beneficial manner.
Collaboration is key and this has also allowed Base Titanium, through the Kenya Chamber of Mines, to work closely with the Ministry of Mining on formulating the Mining Regulations after the Mining Act 2016 took effect in May last year.
“We provided significant input to the public review process. With this positive relationship we are able to exchange views in a positive manner to achieve a balanced outcome,” Schwarz says.
“As Kenya’ leading mining company, working with the Ministry, we have also had opportunities to jointly promote Kenya as an investment destination.” “Being the preeminent mining company in the country, we shall again be playing a leading role in supporting the November 2017 edition of the Kenya Mining Forum as its main sponsor,” Schwarz adds.
“We fully support Mining Cabinet Secretary Dan Kazungu’s philosophy of making Kenya a predictable, stable and attractive investment destination and work with the government to showcase the country at events such as this.” This forum is the premium annual mining investment event, showcasing Kenya’s potential and ‘open for business’ stance.
Leading from the front
Construction of the Kwale Mine was completed in 2013 and the first shipment of ilmenite left its port facility in February 2014. Since then a number of process optimisations have been successfully completed to improve efficiencies and debottleneck the plant. Hydraulic mining has been successfully introduced and will ultimately replace dozer mining and the wet concentrator will soon be uprated to fully utilise the minerals separation plant capacity as mining moves to lower grade areas.
In the fourth year of its 11-year mine life, 2017 proved to be a highly successful year for the project. Over 10 million tonnes of ore were mined leading to a combined 671,000 tonnes of ilmenite rutile and zircon being exported as the market for all three products showed signs of significant improvement.
The importance of Kwale to the Kenyan mining sector is amply illustrated by the fact that now contributes close to 60% of the total value of Kenya’s minerals output.
Regional exploration to extend the life of the mine is one of the company’s key future growth strategies. The initial phase has been successfully completed and plans are in hand for further exploration in the coming year.
But for Schwarz, the success of the Kwale Mine and Base Titanium extends well beyond its core mining operations. He also measures the success of the company in its role in building the mining economy and giving back to its host communities by improving their livelihoods in a sustainable manner.
“The cornerstone of our philosophy is the flow of mutual benefits,” he says. “It has to be a win-win for everyone, all the stakeholders must share in the benefits – Government, investors and the local communities.”
During the construction phase of the project Base Titanium spent one third of the $320mn capital cost with Kenyan suppliers and contractors.
The commitment to maximising local content didn’t end there.
In operation, the company continually aims to maximise local procurement, spending $37 mn annually (or 84% of the total) on spares, consumables and services purchased from local suppliers. In all, Base Titanium expects to contribute close to $1bn to Kenya’s GDP through the period of 2015-2025.
“Viewing direct revenues from a mining operation of this scale in isolation is to see only a quarter of the picture” he says. “The indirect and induced economic stimulus generated beyond this through wider employment creation, the supply chain, consumer spending and taxation is enormous in comparison.”
Enhancing a community
For any mining operation, the role of the local community can never be underestimated. Base Titanium has proven that it is a key contributor to the Kenyan economy, but how is the local community benefitting?
To date, the company has invested $10mn in four pillars of community development; social infrastructure, livelihood enhancement, health programmes and education.
“It’s absolutely vital that we play our part, we are guests in the community and must obtain a social license to ensure a harmonious and mutually beneficial operating environment,” Schwarz says. “Such benefits need to be tangible and sustainable.”
Base Titanium has built a number of schools and health facilities, sunk community boreholes and supports various medical campaigns such as immunisations and training community health workers. Provision of secondary and tertiary scholarships has so far benefitted close to 1,000 students from needy families.
“The centre piece of our community programmes right now is creating and supporting opportunities for sustainable livelihood enhancement,” Schwarz says.
This has seen the company work on multiple agricultural programmes, taking farmers, groups and communities from just subsistence towards sustainable commercial agriculture in cotton, potato and sorghum production. Base Titanium is working with governmental and non-governmental organisations, including international partners, to enhance these programmes and to connect the farmers with markets for their products.
These, Schwarz says, are examples of those real and tangible benefits.
Earlier this year, a report from the Zambia Chamber of Mines revealed that the global mining industry is facing its most significant skills shortage in decades, and Base Titanium is all too aware of the importance of providing employment and training opportunities.
“One of our key programmes is training and skills development,” he says. “This includes internal training programmes to address competency gaps and enhance skill levels of our existing employees; also, a range of external programmes are run, including apprenticeships, student attachments, a graduate training scheme and imparting artisan skills to neighbouring community members.”
Currently 970 people, including outsourced service contractors, are employed at the Kwale Mine. Reflecting the company’s commitment to prioritise job opportunities for locals, 65% of these employees are drawn from Kwale County. A clear barometer as to the effectiveness of its training programmes is the reduction by 50% of its expatriate complement over the last 3½ years.
“All this feeds into our succession planning. By empowering people with the right skills and experience, Kenyans are progressively taking over most technical and management roles from expats,” Schwarz says. “It’s a clear illustration of the success of our investment in training to empower the local community and Kenyans in general.”
Mining needs to be at the forefront of economic growth if Kenya is to achieve its Vision 2030 goal of becoming a middle-income country in the next 13 years. Schwarz says. “We fully support the endeavours of the government to transform the mining sector into an increasingly significant contributor to employment, exports and the socio-economic growth of the country.”