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Gold earnings add shine to mining sector

Earnings from the mining sector grew by 30 per cent last year aided by increased inflows from export of gold, adding lustre to the new ministry in charge of minerals.

Official data indicate earnings from minerals stood at Sh27.5 billion last year up from Sh18.3 billion in 2011.

This was driven by the more than doubling of gold proceeds to Sh13.9 billion from Sh5.6 billion, changing tide against non-metal minerals such as soda ash and fluorspar that have dominated the sector.

This is set to be good news to Najib Balala who was appointed the Cabinet Secretary for Mining, now an independent docket after being hived off from Environment.

This was done to better exploit the sector and wean Kenya from its high dependence on Agriculture, which accounted for more than a quarter of the country’s wealth last year.

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“Production of gold more than doubled due to increased production in gold mining areas,” noted the Economic Survey 2013.  Production of gold grew to 3.6 tonnes from 1.6 in 2011 and the increased proceeds also got a lift from rising prices on the international market.

Kenya awarded its first ever gold-mining licence in late 2011 to UK firm Goldplat Plc, and a number of multinationals have also intensified exploration in western Kenya.

Gold has risen in the past five years to be the sub-sector’s major earner, accounting for 50.5 per cent compared to five per cent in 2008.

It last year overtook soda ash that brought in Sh9.3 billion, up from Sh5.6 billion in 2011. Fluorspar earned Kenya Sh2.9 billion, down from 3.9 billion a year earlier.

The high gold price has spurred increased interest in mining the precious metal in the country especially Migori and Transmara.

More than 10 international mining firms have intensified their operations in western Kenya. Some of the firms include Canadian resource exploratory firm Africa Queens Mines, UK-based Africa Barrick Gold, London-listed Goldplat Plc and Aviva Corporation.

Mining has been identified as one of the key income earners for the new government amid huge budgetary pressures.

Last week Mr Balala laid out the priorities of the new Mining Ministry, saying setting up a metal exchange, identifying the minerals in the country by doing geo-mapping and making laws to guide the sector will be priorities.

He identified the need for a strong and effective legal framework as crucial to guide the sector as it grows and new investments are put.

“We want it (mining) to be done properly and in a professional way, not to exploit the country and local communities,” Mr Balala said.

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