Fluorspar company in Kenya halts operations, lays off workers

The Kenya Fluorspar Company has suspended its processing operations due to the weak global demand for fluorspar and the commodity’s depressed prices.

The private mining firm based in Kerio Valley near Eldoret town in western Kenya has laid off 75 workers as it tries to sell stock of 30,000 tonnes of fluorspar.
Fluorspar is used in making steel, aluminium and refrigerant gases.

The scaling down of operations will affect about 120 transporters at the company as well. From 2013 to 2014, traditional benchmark prices for freight on board averaged $280 to $300 per tonne.

Worldwide production

China accounted for 64.2 per cent of global fluorspar production in 2013, followed by Mexico at 18.5 per cent, Mongolia at 5.2 per cent, South Africa at 2.7 per cent, Spain at 1.6 per cent, and the rest of the world 7.8 per cent.

Kenya Fluorspar’s managing director Nico Spangenberg said the company’s revenue base is under pressure because of the fall in global demand and competition from new producers.

“It is going to be a difficult year, probably resulting in another loss, but we are determined to sustain our position in the world market,” Mr Spangenberg said.
Over the past two years, the company has exported 60,000-70,000 tonnes of fluorspar annually.

The firm has an installed capacity of 120,000-125,000 tonnes per annum.

Between July 2013 and the end of December 2014, KFC paid a total of $635,000 to the Ministry of Mining as royalties for fluorspar. The company recorded net losses in the two years.

On May 11, Mining Cabinet Secretary Najib Balala appointed a task force chaired by Paul Nyamodi to review concerns by residents of Elgeyo Marakwet county in relation to fluorspar mining.

“We view establishment of a task force as a welcome step in an ongoing process to help resolve both historical land compensation issues between the government and Kerio Valley residents that predate our operations,”’ said the company.

The report from the task force, expected in 90 days, will among other things cover the issue of members of the local community not being compensated for the nearly 10,000 acres of land where the mining of fluorspar ore is ongoing.

Discovery

Fluorspar deposits in Kerio Valley were first discovered in 1967. The Fluorspar Company of Kenya (FCK) was established in 1971 by the Kenyan government to exploit the large-scale deposits.

Technical, financial and market-related problems led to FCK going into receivership in 1979. Kenya Fluorspar, a wholly government-owned company, bought the assets and continued the operations.

This led to an improvement in fluorspar production and long-term customer contracts. In 1996, the company was privatised under the terms of government reform policy, and entered into a 20-year lease with the government for 3,664 hectares.