Fluoride Action Network

Kenya: Hundreds Jobless As Fluorspar Firm Shuts Down

Source: Business Daily (Nairobi) | July 7th, 2009 | By Barnabas Bii
Location: Kenya

A multi-billion shilling mining company has been forced to suspend production and lay off hundreds of employees.

Kenya Fluorspar Company, with assets valued at over Sh5 billion, becomes the second company after Webuye- based Pan African Paper Mills to halt operations due to a financial crisis.

Company managing director, Nico Spangenberg, attributed the closure to lack of market for its products, which has led to laying off more than 500 employees.

The move to temporarily stop mining and production of fluorspar has spelt doom for more than 20,000 residents of Kerio Valley who depend on the plant as a source of their livelihood.

The minerals are used in the manufacture of fluoride utilised mainly by cooling industries worldwide.

By the time the company put on hold its operations, demand for raw material had dropped from 106,000 tonnes to 30,000 tonnes prompting the lay off.

“Our company depends entirely on the export market for its survival. We exported a total of 106,000 tonnes and this year we expect to sell 30,000 tonnes due to lack of orders. We have built up an excess stock of over 15,000 tonnes at our plant,” said Mr Spangenberg.

The company is the only one in east and central Africa involved in the mining and export of fluoride to markets in Europe and the Far East. South Africa is another African country that mines fluorspar.

“The company has been a major economic player in the region and its closure is a blow to the local community,” said Mr Victor Sertoi, a civic leader.

Remitting moneyThe company has been remitting Sh18 million annually to Keiyo County Council in terms of royalties, apart from over Sh2 million it pays monthly for electricity bills.

Meanwhile, community members have petitioned the government to save the company from collapse by assisting it to cut down on the cost of production.

“We have not totally closed down. It is our intention to restart operations as soon as conditions allow,” said Mr Spangenberg.

He admitted that the company had been hit hard by the escalating cost of production coupled with the calling down of operations by companies that use their products.

“The company has suffered a collapse in sale volumes as well as falling prices. Manufacturers of products such as hydrofluoric acid are also scaling down operations as demand has decreased by over 40 per cent,” said Mr Spangenberg.

More than 500 truck drivers involved in transporting raw materials risk losing employment.

“The closure is a major blow to our employment opportunities. The transport companies are unlikely to hire drivers due to lack of business,” said driver Joseph Kiptoo.

The move has, however, reopened a dispute between the company and some community members who have been demanding compensation following displacement from their farms.

The community has taken the matter to court. But the company maintains that it leases the land from the government under the Mining Act.

“Kenya Fluorspar does not own the land where it operates. We were not involved in the acquisition of the land 30 years ago and we have no mandate or legal authority over it,” Mr Spangenberg said.