Kenya's main fluorspar producer will suspend its mining and processing operations from April 30, due to depressed commodity prices occasioned by weak global demand.

The decision by Kenya Fluorspar Company has been influenced by increased operating costs and declining market prices of fluorspar since 2012, leading to net losses being recorded in three consecutive years.

The private mining firm based in Kerio Valley near Eldoret town in western Kenya has been hit hard by reduced demand, leaving global fluorspar producers facing falling prices and mounting inventories.

Fluorspar’s traditional benchmark price for freight on board of $440 per tonne dropped in mid 2012, averaging of $300 to $280 from 2013 to mid 2015 as global demand softened, finally falling to less than $260 in January.

Kenya Fluorspar’s managing director Nico Spangenberg said operations have become unsustainable in the current environment and suspension of operations in April this year will lead to loss of jobs across all cadres.

“A collapse in market conditions in the past six months has led to a dramatic reduction in prices and demand,” he said. China accounts for about 60 per cent of global output of fluorspar, which is used in making steel, aluminium and refrigerant gases.

Hope for improvement

However, London-based consulting firm Roskill Information Services expects fluorspar prices to improve in the first half of 2017, though Kenya Fluorspar remains uncertain about the exact timing of the recovery.

Halting operations will affect transporters and other service providers contracted by the company. The attendant effect of loss of revenue will also affect the country’s national and county governments.

READ: Fluorspar company in Kenya halts operations, lays off workers

Mining consulting firm Standard and Mutual, who are based in Nairobi, said the predicament facing Kenya Fluorspar is the first illustration of the problems facing extractive industry players globally.

“The firm made a strategic decision based on an assessment of the situation. Unfortunately, there is no government intervention through a review of taxes,” said Standard’s director of mining and metals Cliff Otega.

In June 2015, the company suspended operations for two months and laid off 75 workers. The move also affected about 120 transporters.