Written By: Emmanuel Kola , Posted: Tue, Sep 11, 2007

The Coalition for Constitutional Reform (CCR) Kenya wants Canadian Mining Company Tiomin Resources Incorporation to discontinue plans for titanium mining in Kwale, Coast Province.

CCR Kenya and its partners say the contract agreement under which Tiomin Resources has been operating is based on the exploitative free entry system.

The pro-reform body says the system is a dominant means through which mineral rights are usually granted to mining companies in most countries.

It gives the miner's the exclusive right to people-owned mineral substances from the surface to unlimited extension downwards.

Consequently, CCR Kenya is calling on the company to initiate a departure process through which they can be justly compensated any fees they paid to landowners.

The pro-reform body says titanium deposits in Kwale should be left to the Kenyans to help local processing industries and not handed over to a private company for export without processing.

CCR Kenya plans to launch a nationwide campaign on Wednesday against Tiomin's mining activities in Kwale.

Signatures are being collected from members for a petition to the government.

http://www.kbc.co.ke/story.asp?ID=44907

---

Before the 2002 General Elections:

Fate of Titanium Mining Awaits Kenya Polls

NAIROBI, Kenya, December 19, 2002 (ENS) - As Kenya prepares for a crucial general election on December 27, the opposition has warned a Canadian mining company against entering into a contract with the outgoing government of President Daniel arap Moi to mine one of the world's largest deposits of titanium.

This week the Moi government issued Tiomin Resources Inc. of Toronto a permit to mine the titanium sands. The company says there is US$132 million worth of raw material at stake. But the district's outgoing member of Parliament says the mineral deposits are worth US$11 billion.

On Monday, Tiomin announced that the Kenyan Mining and Prospecting Licensing Committee had approved its application for a Special Mining Lease on its Kwale mineral sands project. The 16 year long Mining Lease is renewable for a further 10 years. Under the terms of the lease, Tiomin shall have "full, irrevocable, sole and exclusive right to mine and process the heavy mineral sands at Kwale."

But Mwai Kibaki, a leading presidential contender of the National Rainbow Coalition (NARC) who is enjoying massive public support, threatens, "We will not honor any titanium mining agreements entered between Tiomin Resources of Canada and the Kenya government."

His statement has cast doubt on whether the mining of the extensive titanium deposits on the Indian Ocean coast of northern Kenya will continue if the opposition party, NARC, wins the election. Kibaki, an economist who has served as vice president and finance minister, founded the Democratic Party in 1991. He placed second in the 1997 presidential race won by Moi.

The Kenya deposits represent 10 percent of the world's known titanium, and politicians in this east African nation argue that the licensing should not have been rushed before crucial issues are discussed in public.

Kibaki says the titanium project in Kwale district should have been a partnership between the locals and Canadian firm. "We are asking Kwale residents not to sell their land to the Canadian firm until they are given shares in the project," he said.

The titanium drama began in 1995, when Tiomin struck what are now recognized to be the biggest unexploited titanium deposits in the world. These include five titanium sites with 650 million tons at Mambrui and 1.2 billion tons at Sokoke. Large quantities have also been discovered in Sabaki, Mombasa, and Kwale on the north coast too.

The completed Kwale feasibility study indicates that during the first six years of production the Kwale deposit can produce over 300,000 metric tons of sulphatable ilmenite, about 38,000 metric tons of high quality zircon, and over 75,000 metric tons of premium rutile per year, with a total mine life of approximately 13 years.

Rutile and ilmenite are both sources of titanium dioxide, primarily used in the production of pigments for paints, plastics and paper, while zircon is used in the fabrication of ceramic and enamel glazing, refractories and electronic equipment.

With the permit issued, at least one in every four of the 500,000 people who live in Kenya's Kwale district could eventually be evicted to pave way for the controversial mining project.

Critics say that the rest could face significant health risks due to the toxic emissions associated with titanium mining.

"If a deposit has uranium, we have to be very careful," warns Dr. Wellington Wamicha, a German trained Kenyan mineralogist who has done an Environmental Impact Assessment study of the Kwale area for Kenyatta University.

"The only reason the Kwale residents are currently not being affected by radiation is because thorium and uranium, the radioactive emitters present in zircon deposits, are in their thermodynamic stable state," Dr. Wamicha explains.

"But mining, through attrition and processing the ore by subjecting it to hot sulphuric acid," he says, "will release the radioactive elements into the environment."

The Kenyatta University study found the mining would result in the removal of vegetation, affecting the reflectivity of solar radiation. "As more solar radiation is reflected back to the sky, the result could be more heating of the cold inward-bound winds, as well as negative impacts on local rainfall," says Dr. Wamicha.

The study also warns that mining would eliminate aquatic biodiversity and pose a serious hazard to ecosystems, communities, species, and genetic material. Mutations due to radiation and toxic chemicals would lead to disruption of gene pools, the report says.

Local critics contend that the compensation for Kwale residents who would be evacuated is too little. Initially, Tiomin offered about $114 per acre, later upping that to $505. But some residents and anti-project lobby groups still argue that the payment is too low, based merely on the value of the soil and existing development, not the rich deposits beneath.

"We shall not allow the mining to go on and we shall not budge in our demands that the sums to be paid out as compensation be renegotiated," says Boniface Mbevi, a prominent local farmer.

The opposition NARC party has made political capital over the manner in which the government has handled the issue of compensation for displaced residents, and threatens not to recognize any agreements if it wins power.

"Tiomin has all along preferred to deal with government officials behind the scenes, ignoring stakeholders in the areas where deposits were found," says Raila Odinga of the NARC party and former minister for energy.

Odinga alleges that senior government officers have a stake in Tiomin Kenya Ltd., although the parent company, Tiomin Resources Inc. has denied the allegations.

The other bone of contention is the value of the deposits. Tiomin says the deposits are valued at about US$132 million. But Suleiman Kamolle, the outgoing Member of Parliament for Matuga constituency in Kwale district, says the true value may be astronomically higher. A former banker, Kamolle says he has obtained some data from French and German geologists and statisticians.

"The US$132 million being put as value of the titanium sand mineral deposits by the Canadian firm is a negligible amount," he says. "We have gathered enough evidence from the earmarked 200 square kilometer area disproving that figure and have found out that the real value of the deposits is a staggering $11 billion."

Kenya still has an archaic Mining Act that was used during the colonial period and stipulates that mining companies pay five percent of the value of minerals to the government.

"If it were in a developed country, Tiomin would be talking about a third of the value of the mineral deposits," says Haroun Ndubi of Kituo cha Sheria, a local nongovernmental organization specialising in litigation.

"The Act works to Tiomin's advantage. Paying the nominal percentage will be a small price compared to the huge profits the company will reap," Ndubi said.

When Kwale residents moved to the high court to stop the project, most plaintiffs pulled out after government officials threatened that they too could be sued.

Environmentalists warn the titanium mining will contaminate ground water bodies, increase competition for water resources, and degrade water quality. They also say that the mining might lead to gaseous emissions of sulphur dioxide from the combustion of heavy oils and use of sulfuric acid.

More damage to the environment is expected due to the open-cast, strip mining, method to be used, which involves clearing all vegetation, stripping and stockpiling the topsoil so as to expose the sands, rich with minerals.

Tiomin has also been at loggerheads with the Kenya Wildlife Service (KWS) over its intention to build a ship loading facility that will include a 200 meter (long jetty and storage facility. The KWS says that will have a negative impact on marine life.

Although the Moi government says that the project will benefit residents of Kwale by creating about 200 direct and 300 indirect jobs, no technology transfer is expected in Kwale, since the final processing will be done in Canada.

Tiomin president Jean-Charles Potvin has said the recent lifting of civil cases against the company by locals is, "a very important step in the future development of this important project for Kenya."

Today in Toronto, Tiomin Resources Inc. announced the issue 20 million shares at 21 Canadian cents each to fund the Kwale titanium sands project and repay a loan.

On a "best-efforts" basis, Harris Partners will attmept to raise up to C$4.2 million (US$2.7 million) of equity capital for Tiomin through private placements.

But the fate of the project now lies in the General Election on December 27. Whether the mining will take place depends on the way Kenyans vote.

http://www.ens-newswire.com/ens/dec2002/2002-12-19-03.asp

---

Why Kulundu Ignored Pleas on Tiomin

by John Mbaria, The East African, Nairobi, Kenya

Monday, June 30, 2003

Prior to announcing the licensing of a Canadian Company, Tiomin Resources Inc, to mine titanium in Kenya's Coast Province last week, The EastAfrican has established that there was intense behind-the-scenes manoevering to end the eight-year titanium-mining controversy.

Apart from disowning a public forum called to discuss the mining proposal, elements in the government had pressurised Minister for Environment, Natural Resources and Wildlife Dr Newton Kulundu to speed up the licensing of Tiomin. The government had also shown unwillingness to comprehensively address controversial issues raised around the proposed mining venture. In a letter written on May 30 by the Head of the Public Service, Francis Muthaura, to Dr Kulundu, the latter was directed "to speed up the licensing of Tiomin (in order) to start mining titanium in Kwale."

Mr Muthaura complained in the letter that the project had "taken unduly long to commence" and asserted that "the mining should start with areas where land issues have been resolved," saying that "the rest will be sorted out as the mining expands."

Apparently, the same sentiments had been expressed by the Minister for Housing, Roads and Public Works, Raila Odinga, when he visited the Coast three weeks ago. Addressing a meeting in Bahari Constituency of Kilifi District, Mr Odinga had urged his environmental counterpart to speed up the process.

The government's rush to license Tiomin appears to have been an attempt to prove to potential investors that it has got its act together. This was confirmed by Dr Kulundu, who said last week that several investors who had expressed interest in mining gold in West Pokot, Turkana and Migori districts and coal in Kitui, Makueni and parts of Taveta have been watching closely how the government handled the titanium issue.

But analysts say the hasty decision could lead to the loss of hundreds of millions of dollars of investment. Although Dr Kulundu said that the government had been talking to two South African companies - Richards Bay Mining Ltd and Group Five Company - with a view to their setting up a processing operation in Kenya that would buy the mined minerals from Tiomin, he conceded that it had not put in place measures that would ensure upgrading of the titanium locally to actually took place.

"The agreement (between the government and Tiomin) has not been worked out," Dr Kulundu said, adding, "All other issues of concern will be addressed through the mining agreement."

It is curious that the government should have approached Richards Bay Mining Ltd. The company refused to host the Kenyan delegation sent to study the processing of titanium in South Africa in March, saying that doing so would not be in its "best business interests."

By licensing Tiomin, Dr Kulundu said that the country would be getting Ksh50 billion ($670 million) would be benefiting from investments, while the government would be earning Ksh460 million ($6.1 million) in taxes and royalties each year for the first five years and Ksh810 million ($10.8 million) in the next 16 years.

But the country may have to forgo hundreds of millions of dollars in investments. In an exclusive interview with The EastAfrican a month ago, Tiomin's Kenya representative Colin Forbes had categorically ruled out engaging in any upgrading of the titanium ores beyond cleaning them for export. "Putting up the (smelting and roasting) plants would be uneconomical," he said, adding that the quantity of titanium in Kwale was "too small to allow for the realisation of costs."

By its own assessment, the Canadian company puts the gross value of the entire Kwale mineral deposit at $922 million when upgrading is not taken into account. But a subsequent study, Alternative Approaches to the Mining of Heavy Minerals, commissioned by the International Fund for Animal Welfare (IFAW) in 2001 - and which actually applied Tiomin's findings in its analysis - says that upgrading of one of the constituent minerals, rutile, would raise this value to about $1.5 billion, besides generating between $2 and $3 billion in multiplier benefits.

A materials engineer with the University of Nairobi, Dr Kamau Gachigi, said, "How this money circulates in the local economy would depend on the structure the government puts in places."

Meanwhile, the government's dissociation from the public forum last week is seen as an about-turn on its earlier pledge to peg its decision on whether to licence Tiomin on the views of stakeholders. Before he dissociated the government from advertisements placed in the Kenyan press last week, Dr Kulundu had earlier said that his ministry would be hosting the forum before the mining lease is issued.

But the forum, which was called to discus the topic: The Titanium Question: Prosperity or Slavery? went on as planned. It was held at the Ufungamano Hall in Nairobi and was sponsored by local NGOs Environmental Liaison International and ActionAid.

Following the government's about-turn, various civil society groups have expressed suspicion that many of the most contentious issues in the long-running saga will be ignored and clamour for the processing of the minerals locally hushed through promises that later prove difficult to implement.

In his May 30 letter to Dr Kulundu, Mr Muthaura had written that "the mining licence should include conditions which will encourage processing of the titanium in the country as soon as conditions are favourable." But a commentator from civil society expressed disappointment, saying that merely "encouraging" the processing does not make it "mandatory" for Tiomin to upgrade the minerals.

The government's action deals a blow to a long-running campaign by civil society groups to have Tiomin commit itself to environmentally-sound mining. By sending a delegation to South Africa, the government seemed to have agreed with the civil society argument on these issues.

Although Dr Kulundu did not reveal the actual nature of the government's negotiation with the two South African companies, Mr Muthaura's letter had said, "The license should provide that both the company and the government encourage, welcome, (and) co-operate with an investor interested in processing the ore in the country."

Analysts believe that it will prove difficult to bring in an investor once Tiomin embarks on the mining. "Now that Tiomin has received the lease, it will definitely go ahead and make supply agreements with overseas companies ... agreements that it will find difficult to break away from in order to start supplying a Kenyan-based processing company," said an economist in the Ministry of Finance.

Last week's issuance of the lease calls into question the government's commitment to bringing about meaningful changes in the management of the economy.

Even with claims of likely environmental consequences dominating debate on the mining proposal, the government had not done its own environmental impact assessment, neither had the geology department made an independent analysis of the titanium ores to ascertain their actual quantity and composition.

"Like its predecessor, the current government does not want to soil its hands and do an independent analysis even though the country has the necessary equipment," said an official with IFAW, adding that before issuing the permit, the government should have ascertained whether the ores contained as much iron ore and radioactive elements as had been claimed in an environmental impact assessment by experts from Kenyatta University.

http://www.minesandcommunities.org/article.php?a=1582

---

Canadian firm gets nod to mine titanium

By Nation Reporter

A Canadian mining firm has won an eight-year battle for a licence to excavate titanium.

Tiomin Resources Inc. was given the authority by the government yesterday to start the Sh50 billion project in Kwale.

Its licensing had been opposed by residents and organisations citing social, environmental and economic reasons.

Environment minister Newton Kulundu said the government had consulted widely and investigated the concerns.

He assured Kenyans that the ore would be processed locally before exportation and that the country would gain immensely.

A final agreement will be thrashed out between Tiomin and an inter-ministerial committee in a month.

Mining is however not expected to begin until after two years as the company prepares ground, moves in machinery and workers to the site.

The project will provide direct employment to 1,000 people and another 1,000 indirectly. It is expected to inject more than Sh400 million into the economy annually for the next five years.

The land owners would be compensated with Sh80,000 per acre and the mining will cover 2,010 acres occupied by 420 families.

Dr Kulundu said that the government had in its negotiations ensured that Kenyans were not short-changed in either the returns accruing from the project or the impact on the excavations. Geologists would be on site during mining to ensure any other minerals dug out were noted.

"For the government, this single project is likely to increase its revenue base by about 0.3 to 0.5 per cent of the current Government revenue. Its is also likely to increase the country's overall gross domestic product by about 1 per cent," said the minister.

http://www.minesandcommunities.org/article.php?a=1582

---

Related News:

Tiomin: The untold story

http://www.ccr-kenya.com/Resources/126.html

Why Kulundu Ignored Pleas on Tiomin

http://www.ccr-kenya.com/Action-Centre/44.html

Canadian firm gets nod to mine titanium

http://www.ccr-kenya.com/Action-Centre/44.html

Kenya: Titanium Mining in Doubt As Workers Are Sacked

http://www.ccr-kenya.com/Resources/98.html

Tiomin unveils $25m Kenya titanium project with China

http://www.ccr-kenya.com/Resources/117.html