Kenya's government is facing criticism from the opposition over a tender for a vast rare earth deposit, with concerns that the process is proceeding without a thorough economic viability study. The Mrima Hill deposit, located on the coast, is a highly sought-after site with significant reserves of rare earths and niobium, a metal used in aerospace manufacturing. Six firms, including companies from the US, China, and Australia, are competing for the mining rights.
The tender, which was opened in March, has sparked controversy over the lack of transparency and economic analysis. Opposition Wiper Patriotic Front spokesperson Ndegwa Njiru questioned the tender, citing the absence of an economic viability report or bankable feasibility study for the $62 billion project. While the tender document acknowledges that no economic viability report has been prepared, it notes that the initial invitation for expressions of interest does not constitute a mining contract.
The $62 billion figure cited for the project is based on a 2013 estimate by former license holder Cortec Mining Kenya, which was majority-owned by Canada's Pacific Wildcat Resources. However, Kenya revoked Cortec's license that year, citing irregularities in the issuance of the license. The company later lost an international arbitration case challenging the decision. The Kenyan government has not published an estimated cost for developing the mine and processing plant.
Kenyan Mining Minister Hassan Ali Joho has confirmed that six companies, including US-based Critical Metals Corp, are competing for the license. The government requires the successful bidder to process minerals locally, as part of an effort to retain more of the value from the deposit. Applicants must demonstrate that they can build an on-site processing plant. Joho also revealed that talks with the US on building refineries and processing plants in Kenya are at a "very advanced" stage.
The US is seeking to support Kenya's mineral processing industry, with US Assistant Secretary of State for African Affairs Frank Garcia pledging support earlier this month. Kenyan President William Ruto and US Secretary of State Marco Rubio discussed opportunities for American firms in the African country's critical minerals sector during talks in New York last week. The US has made similar efforts in DR Congo, the world's largest cobalt producer.
Despite these efforts, China still dominates rare earth supply chains, accounting for more than 90% of global refining of the rare earths used in permanent magnets, according to the International Energy Agency. The agency's report highlights the challenges facing countries seeking to develop their rare earth resources. Kenya's experience with Cortec Mining Kenya also underscores the complexities and risks involved in mining projects.
The outcome of the tender is expected to have significant implications for Kenya's mining sector and its relationships with international partners. The government's decision to require local processing of minerals is seen as a key aspect of its strategy to maximize the benefits from its natural resources. The successful bidder is expected to play a major role in shaping the country's mining industry in the years to come.
Key points
- Kenya's opposition criticizes government tender for Mrima Hill rare earth deposit without economic viability study
- Six firms, including US and Chinese companies, compete for mining rights
- US seeks to support Kenya's mineral processing industry as part of efforts to develop African critical minerals sector
