Tiomin contract is manipulative, argues Reform Group

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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

By Jennifer Wanjiru

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

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