Firms’ revival good news

Reports that rising commodity prices in the global market and China’s decision to restrict export of raw materials have given Kenyan firms that export non metallic minerals a welcome boost are very encouraging.

Local companies like Kenya Fluorspar Company and Magadi Soda Company had scaled down their operations as the effects of the global financial crisis began to be felt in the country.

However, that has since changed as demand for minerals like soda ash, fluorspar and diatomite begin to firm up.

China’s decision to impose quotas on mineral exports has also reduced supply in the global market and helped push up the prices.

For example, fluorspar prices have recovered from a low of $170 a tonne in late 2009 to $270 per tonne this year.

Analysts are optimistic that the prices will soon reach the $420 per tonne level that prevailed before the onset of the global recession.

Prices of soda ash have also increased from $160 per tonne late last year to between $260 and $315 last month.

China has been a dominant soda ash supplier, accounting for 17 million tonnes annually or 35 percent of global supply.

The price recovery is expected to boost the Kenya’s mining industry whose earnings dropped to Sh9.3 billion last year from Sh12.3 billion in 2008.

The Central Bank of Kenya says that production of soda ash in the country increased by 65.5 per cent in the first quarter of 2010 from around 64,000 tonnes in 2009 to 105,977 tonnes this year.

The fluorspar company has reopened its factory after a 15-month lull that saw the company suspend operations early last year.

The revival of the Kenyan firms will be good news for the economy, which is recovering from the effects of the 2008 post-election violence and the global recession.

It is also good news for the workers as their jobs will now be assured as the firms continue to reap from the high demand for their products.