Kenya has reduced mining royalties for diatomite, but the levy government charges on the mineral will increase annually from July 1.

The Ministry of Mining has revoked diatomite’s royalty rate of 5 per cent of the value of gross sales that had been set by Mining (Prescription of Royalties on Minerals) Regulations published in Legal Notice No. 187 of August 2013.

Legal Notice No 40 of this year reduced to 2 per cent the levy payable from July 1, 2013 until June 30, this year for diatomite, a mineral used in the manufacture of products such as toothpaste, paints, plastics and absorbents.

Nairobi-based Chuanshan International Mining Company Ltd plans to excavate and process the mineral at Kositei in Baringo County of Kenya’s Rift Valley.

In 2003, Kenya took its cue from Ghana, Mali, Zambia and Cote d’Ivoire which are among countries that have imposed higher taxes on the extractives sector in recent years as a way of boosting government revenue.

Mining Cabinet Secretary Najib Balala said the new Mining (Prescription of Royalty Rates for Diatomite) Regulations levy applicable from July 1, 2015 to June 30, 2016 will be 3 per cent of gross sales value.

“Legal Notice No. 187 of 2013, shall not apply to the diatomite products,” he said. The levy will increase to 4 per cent from July, 1 2017 to June 30, 2019. The threshold of 5 per cent will be applicable after July 1, 2019.

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Chuanshan is a Chinese-owned company and has a Kenyan director, Symon Kitambaa. The firm was registered in Kenya in 2012 to focus on mineral resources management by integrating exploration, mining and trade.

Environmental impact assessment expert Convine Nyamweya said development of Chuanshan’s project in East Pokot of Baringo County is intended to contribute to supply of quality diatomite to the local and international market.

“The objective of the development proposal is to diversify investment portfolio thereby taking advantage of rapidly growing diatomite demand,” he said in the environmental impact assessment report submitted to the National Environment Management Authority on behalf of the firm.

Money matters

The firm will spend Ksh27.5 million ($30,555.56) on prospecting, licences and county fees; Ksh72.5 million ($805,555.56) has been budgeted for running costs; while hire and purchase of mining equipment will take up Ksh100 million ($1.1 million).

Benefits associated with the project include Chuanshan making a return on investment with the exchequer earning revenue in form of rents and taxes in addition to provision of raw materials for local use and export.

Chuanshan has rights to 202 square kilometres of diatomite and non-metallic gem mineral resources in Baringo area. It is endowed with minerals such as gemstones, ruby, gold and vast deposits of construction material.

The diatomite ore’s silica content of Baringo is as high as 93 per cent, the whiteness is as high as 90 per cent, and the quality is much higher than domestic diatomite resources produced in the Jilin Changbai regions of China.

Chuanshan plans to put two diatomite plants in Baringo in future, which are expected to process 200,000 tonnes of the commodity annually and create 300 direct jobs among other opportunities.

“The area has been found to have some substantial diatomite mineral deposits, which has not yet been quantified. At present, prospecting and mining of other minerals is done using artesian or open-cast method,” said Mr Nyamweya.