Jobs on the line as firm set to shut down over slump in mineral prices

Fluorspar mining at Kerio Valley. Kenya Fluorspar Company plans to leave the market on April 30, 2016. FILE PHOTO | NATION MEDIA GROUP

What you need to know:

  • The exit of Kenya Fluorspar Company leaves South Africa and Morocco as the remaining African countries active in the mining of the mineral.
  • South Africa produces 300,000 tonnes annually, Morocco 100,000 tonnes while Kenya produces an average of 120,000 tonnes.
  • The firm is the lifeblood of the semi-arid Kerio Valley region. About 700 people are directly and indirectly dependent on the company.
  • It is used in the manufacture of steel, air conditioning systems, electronics, glass fibre, aluminium and refrigeration gases.

A Kerio Valley-based mining company is set to lay off its workers as it begins winding up its operations due to a global slump in fluorspar prices and stiff competition in the sector.

The exit of Kenya Fluorspar Company leaves South Africa and Morocco as the remaining African countries active in the mining of the mineral.

South Africa produces 300,000 tonnes annually, Morocco 100,000 tonnes while Kenya produces an average of 120,000 tonnes, but the depressed market has impacted negatively on the once lucrative mineral sector.

Fluorspar Managing Director Nico Spangenberg said the firm has been holding negotiations with the workers’ union on the payment of terminal dues ahead of the mass layoff.

“The payment will be made in accordance with the collective bargaining agreement to enable the workers to continue with life even after they lose employment,” Mr Spangenberg told the Nation at the mine last Thursday.

He said the company will, however, give other benefits to the workers.

“The suspension of the operations will impact negatively on the livelihoods of the majority of Kerio Valley residents,” said the managing director.

The firm is the lifeblood of the semi-arid Kerio Valley region. About 700 people are directly and indirectly dependent on the company.

“A collapse in market conditions in the last six months has led to a dramatic reduction in fluorspar prices and demand. As a result, the company’s operations have become unsustainable,” said Mr Spangenberg.

He said the entry of new players dealing in fluorspar from the eastern bloc has led to the nose-diving of the mineral’s prices globally.

“The eastern bloc, which has emerged as the main producer, has flooded the market with over 200,000 extra tonnes of fluorspar at low prices, making it uneconomical to remain afloat,” explained Mr Spangenberg.

BIG BLOW

He said fluorspar mined in Kerio Valley has a high concentration of phosphate impurities, making its demand in the world market low.

“Some of the new entrants in the market produce fluorspar as a by-product of minerals such as copper, and, thus sell it at low prices,” said Mr Spangenberg.

Fluorspar mined in Kerio Valley is wholly exported.

It is transported by road to Flax Trading Centre, where it is loaded onto wagons and taken by train to Mombasa.

It is used in the manufacture of steel, air conditioning systems, electronics, glass fibre, aluminium and refrigeration gases.

Kenya Fluorspar Company has recorded losses in the past three years and the suspension of operations by April 30 will deal a big blow to transporters and small-scale traders at the Kimwarer trading centre.

“We are likely to lose some of our assets, including lorries that we have acquired through loans from the company,” said Mr Musa Wendot, who has been in transportation for the past 30 years.

More than 70 lorries are involved in the transportation of fluorspar ore from the mining field, and 70 others ferry the processed mineral to the Flax market for export.

Over 200 people in the transport sector, including drivers and turnboys will be rendered redundant once the company suspends operations.

“The company has also been involved in the maintenance of the Kimwarer-Nyaru road, which will be rendered impassable once the company closes shop,” said Mr Daniel Kosgei, the chairman of the transporters’ association.

Some of the markets that are expected to be affected by the closure of the company include Muskut, Kimwarer, Turesia, Kabokbok and Kowochii, as well as several trading centres in the entire Soy Division.

“Only three out of 13 shops survived when the company suspended its operations in 2009/2010 but the current move will seriously affect us,” said Ms Leah Jepkurui, a hotelier at Kimwarer market.

GLOOMY FUTURE
Some micro-finance enterprises and hotels had set base at Kimwarer, banking on employees of the mining company.

“We have no option but to move to other areas due to lack of business since the employees who are being laid off were our main clients,” said Mr Joseph Kwambai, who owns an M-Pesa shop at the Muskut market.

The firm closed for 16 months in 2009 and laid off 190 workers, but retained 195 others with special skills.

“We are uncertain of when we will resume operations. This will depend on the market forces of demand and supply of fluorspar,” said Mr Spangenberg.

He termed the closure a blow to the national and county governments in terms of revenue.

The company pays an average of Sh20 million monthly for electricity alone.

Mr Spangenberg said there was little the government could do to salvage the company from the losses it is incurring as a result of the depressed market prices.