Kenya’s ambition of being a major player in the gold market is fading after earnings from the precious metal sank to new lows.
Kenya produced 200 kilogrammes of gold worth Sh652.5 million last year, a tiny amount for a commodity the country hoped would drive mineral earnings and cut dependence on agriculture.
Weaker gold prices and push for foreignowned firms to cede stake of their mining operations to Kenyans have hurt earnings from gold, which raked in Sh13.9 billion in 2012 when Kenya put the first bar of the precious metal in the international market.
In 2012, Africa-focused gold producer Goldplat generated the first bar of gold from its Kilimapesa mine in Narok, marking the beginning of production of Kenya’s first gold project.
London-listed Goldplat had just been issued with Kenya’s first commercial gold mining licence.
Kenya Revenue Authority is also probing the UK firm for under declaring earnings from gold, adding a new dimension to the metal’s depressed earnings.
The mining ministry had in 2012 forecast that Kenya would export at least two tonnes of gold a month or 24 tonnes a year currently worth nearly Sh100.3 billion
Had this come to pass, gold would have joined the top club of export earners that includes horticulture and tea, which both earned Kenya more than Sh100 billion last year. Horticulture earned Sh110 billion and tea Sh124.4 billion.
The Sh100.3 billion gold exports was based on rising prices and Goldplat production.
Then gold prices were on the up as investors sought refuge from stock market turmoil and sovereign debt crises in the wake of 2008 financial crisis.
Gold prices breached $1,800 an ounce in late 2011, having almost tripled from 2008 lows of $680.
Gold is currently trading at $1,269 and they had been forecast to dip below the $1,000 mark.
Goldplat has had a challenging run since it acquired a license in 2011 with its local business remaining in loses.
In 2013, it suspended Kenya operations due to low gold prices and uncertainty over the new local ownership law.