Untold story of Kenyatta-era fluorspar cartels, sabotage of Marakwet factory

This is a story of deceit.

Last week, a Kenya Gazette notice sounded the demise of the 50-year-old Kenya Fluorspar Company, which closed its gates in 2016.

By dissolving the company, the registrar also seemed to bury the history of our misdeeds as a nation.

Also extinguished were the lessons we ought to have learned from fluorspar mining.

Fluorspar mining in Kenya is a shameful story. Some people, sitting in Nairobi, agreed to sell our mineral resources for a song.

That exploitation explains why there is nothing to show at the sleepy village of Kimwarer in Kipchumba Murkomen's Elgeyo Marakwet County for the billions of shillings worth of fluorspar extracted there.

Mr Murkomen is worth mentioning because he has promised, once confirmed as Roads and Transport Cabinet secretary, to disclose the Standard Gauge Railway contract and expose details of the deal Kenyan bureaucrats agreed with the Chinese.

The story of fluorspar is a lesson we ought to have learned. But the problem with scandals in Kenya is that they only embolden the players and make tenderpreneurs better thieves – and as a result, public coffers are no longer sacred sites but spaces of impunity.

Read: Fresh dispute over pay stalls bid to revive fluorspar mining

Prospector swindled

The story of fluorspar started in the late 1960s, when an independent local mineral prospector, M Al-Amin, discovered rich fluorspar deposits in the Kerio Valley.

How he was swindled and pushed out is the untold story of fluorspar mining, and it explains how Kenya failed to build a local industry based on one man's dreams.

When Al-Amin stumbled upon his find, he took the mineral (he thought it was a gemstone) to the Department of Geology for analysis. It was the only place with the mandate to examine and certify a mineral find.

But the department had also become crafty in dismissing potential discoveries and having unscrupulous officials allocate the same to politically-correct companies and individuals. The Mining department told Al-Amin that the ore he had taken was a worthless rock!

Unsatisfied, Al-Amin decided to engage some European laboratories which examined his find. They confirmed that he had discovered rich deposits of fluorspar – which were estimated to hold some 10 million tonnes of mineral.

It was Kenya's greatest discovery, and people thought it would change the fortunes of Kimwarer village — and the entire basin. By then, the global price of fluorspar per tonne was $20 (It today sells at $291 per tonne).

By making a claim on the deposits, Al-Amin was entitled to its exploitation, according to the Mining Act, as long as he paid the relevant royalties to the government.

He then started approaching international companies interested in the exploitation of fluorspar. The first was a consortium of Dutch-Canadian-German firms, including AKZO and Alcan.

According to his projection, the managerial control of the company would be left to Kenyans and would have included an investment in a chemical plant in Kenya using fluorspar as an input.

AKZO, a large Dutch chemical firm, had told Al-Amin that a consortium of multinational corporations was prepared to give him financial and technical support and to build a chemical manufacturing plant later to make kryolith or aluminum fluoride from the fluorspar.

Read: Closure of fluorspar mining firm spells doom for local community

Al-Amin was to choose whether this would be a loan or equity participation. Rather than export the raw material, Al-Amin wanted the minerals processed locally.

Political interests

Al-Amin had made a similar proposal to the American mining multinational Continental Ore, which rejected the deal.

As Al-Amin started his negotiations with various companies, political interests started to mushroom around fluorspar mining.

From his financial resources, Al-Amin started to develop the mine as he negotiated with a Hungarian state corporation to provide the equipment as he prepared for large-scale exploitation. Al-Amin employed a mining engineer, hired a geologist, and invested in lorries to carry the fluorspar from the valley. More so, he started building roads to the site.

By 1970, he had employed various locals in the hand-crushing mining method and was selling the fluorspar to a cement manufacturer in Mombasa as he bargained with investors. Still, he refused to let politicos – the powerful cartels of the Jomo Kenyatta presidency have a stake in his mines.

That was mistake number one. By then, he was producing 470 tonnes of fluorspar a month.

Unable to get a deal from Al-Amin, it is now known that various interests converged around the American multinational Continental Ore – which had rejected Al-Amin's deal.

They now sought to work with some other interests within the Industrial & Commercial Development Corporation (ICDC), which was headed by Matu Wamae, with the connivance of the Minister for Natural Resources, Stanley Oloitiptip. Continental Ore had asked for a 50:50 deal which Al-Amin rejected.

Read: Flourspar mining set to be the real big earner

Al-Amin also approached some Japanese companies, with Ataka and Co Ltd insisting on exclusive rights to export all the fluorspar produced. This was the best deal on the table, for he was to get all the equipment and would only pay the cost of the investigations.

Soon Tiny Rowland's Lonrho got wind of the fluorspar and started using its connections within the Kenyatta government to get a stake. Lonrho was then headed by Udi Gecaga, President Jomo Kenyatta's son-in-law.

Within no time, in 1971, the Kenyatta bureaucrats registered the Kenya Fluorspar Company, which purported to carry out a geological survey in the same place.

The minister, Oloitiptip, then stripped Al-Amin of his mining interests, and ICDC got 51 per cent of the new company's shareholding. Shareholding of 24.5 per cent was given to the British company Associated Portland, while Continental Ore received the rest.

Oloitiptip justified Al-Amin's ouster, saying he was unable to exploit the resource. However, the pressure from the international companies and the local cartels had reached new heights. Al-Amin was supposed to be compensated, but it was claimed that the arbitrators did not visit Kimwarer village to see what he had invested there.

Overall, a chance to have a significant factory that added value to fluorspar was lost. Here, the Marakwet residents were being swindled first and the entire country next. Finally, Continental Ore, with the backing of powerful ICDC insiders, managed to craft a deal that cannot stand up to scrutiny today.

Even though it had not contributed any loan capital, the US company was brought in as "the agent" for Kenya Fluorspar Company, and it had been guaranteed a yearly return of K£20,000 (the Kenyan pound was worth Sh20) on a total investment of less than K£80,000. It was also appointed the exclusive marketing agent of the fluorspar exported each year to the US at a fee of 5 per cent of the selling price. This was besides its 24.5 per cent stake.

According to Steven Langdon, a researcher who once scrutinised the fluorspar documents, "this agreement was questioned by Treasury representatives in the New Projects Committee when it was submitted for approval; but the objections were overridden by the politically powerful allies of Continental Ore in the ICDC."

As Prof Langdon aptly put it: "Continental Ore had clearly won itself a favourable position in Kenya."

By 1979, the company went into receivership and its struggles started.

Today, the government is left with a relic it denied a local investor a chance to develop in 1970 due to the greed of cartels. And with no industrial investments, the Marakwet region is a cattle rustlers’ paradise. 

The other multi-billion-shilling project that was to benefit Kimwarer village ended before it even started.

[email protected] @Johnkamau1