Kenya moves to revamp mining sector as gold prices rise in 2017

Industry stakeholders within Kenya’s mining sector are working fast to revamp the sector and cash in on new opportunities just as the price of gold is expected to jump in the coming months.

Acacia Mining, a mineral exploration company, is in early talks about a possible merger with Canadian gold miner Endeavour Mining Corp.

READ ALSO: Tanzania-based gold mining company moves to deepen operations in Kenya

Acacia, which operates mines and exploration projects in Kenya, Tanzania, Burkina Faso and Mali, noted that there was no certainty of a deal but did not deny the possibility of an agreement between the two firms.

Endeavour also confirmed preliminary discussions had taken place with Acacia.

Acacia had a market value of 1.72 billion pounds (Sh215.1 billion) as of Jan. 12, while Endeavour had a market value of C$ 2.18 billion (Sh172.5 billion).

Miners look on as they take rest after coming out of a mine at a mining site in Osiri, Migori county, western Kenya, 01 March 2016. The recent explorations conducted by the government and private companies are said to have revealed large gold deposits in western Kenya, which could lead to the large-scale commercial mining that could put Kenya on the map of the top gold producers in Africa. EPA/DAI KUROKAWA

Miners look on as they take rest after coming out of a mine at a mining site in Osiri, Migori county, western Kenya, 01 March 2016. The recent explorations conducted by the government and private companies are said to have revealed large gold deposits in western Kenya, which could lead to the large-scale commercial mining that could put Kenya on the map of the top gold producers in Africa. EPA/DAI KUROKAWA

Endeavour bought True Gold Mining Inc for about C$240 million (Sh19 billion) in March, giving it access to a low-cost gold mine in Burkina Faso.

Gold prices are expected to rise in 2017 as geopolitics, deflationary pressure, more quantitative easing, negative interest rates, and the UK’s exit from the European Union (Brexit) drive demand for the precious metal.

The announcement comes just as a gold refinery centre in Nairobi is expected to begin operations in April 2017 with the aim of boosting exploitation of small-scale trading. The Sh5 billion factory along Mombasa Road is expected to smelt and refine gold, silver and platinum metals.

The plant will be the first hub in the East African region to fully refine gold to the international purity standards. The Ministry of Mining states that Kenya has vast opportunities for exploration of gold with only 4 percent of the gold belt in Kenya currently under exploration. Industry data indicate artisanal mining accounts for more than 60 percent of annual gemstone production in Kenya.

Kenya plans to incorporate small-scale miners in the mineral production and exports, as it seeks to grow the mineral earning tenfold by 2030.

The Government plans to create county licensing committees to help small-scale miners get licences more easily said his Ministry has embarked on a four-month exercise to issue artisanal miners with permits in accordance with the new Mining Act.

“We want to help them have elected representatives to sit in those committees and address their needs. This will ensure that millions of Kenyans who have been blocked from mining are assisted using a fast tracked exercise,” said Mr Kazungu at a press briefing in Nairobi early last week.

Analysts say Kenya is expected to tap gold reserves in East African countries and the DRC which take raw gold to South Africa for refining, costing them more compared to refining regionally in Nairobi.

Africa’s mineral industry the largest in the world. Africa is the world’s second biggest continent, with 30 million square kilometers of land, implying large quantities of resources.

For many African countries, mineral exploration and production constitute significant parts of their economies and remain keys to economic growth. Africa is richly endowed with mineral reserves and ranks first or second in quantity of world reserves of bauxite, cobalt, industrial diamond, phosphate rock, platinum-group metals (PGM), vermiculite, and zirconium. Reports indicate that gold mining is Africa’s main mining resource.

 

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