How State blunders cost Kwale decade-long titanium boom

The titanium mines in Kwale County, which were depleted in 2024 and are now in the process of being rehabilitated, are coming up again in national discussions on mining.

Following blunders by the government during the decade-long mining operations, the minerals appear to have done little for the local community.

This is despite the billions the government received in taxes and royalties, some of which were supposed to be cascaded to the community but were not, due to a lack of an enabling legal framework.

Base Titanium made billions of shillings in revenue and also paid billions to the Kenyan government in royalties and taxes.

Observers warn that a similar scenario could unfold at Mrima Hill, which has one of the largest deposits of niobium and rare earth elements in the world, and has the US and China fighting for control.

It is not just titanium; Kenya is littered with numerous cases where there is a growing feeling that extraction of minerals has left communities worse off, with both the government and the latter increasingly asking for more from the companies operating in the country.

Base Titanium started extraction of the titanium ores in 2013, and it grew to dominate the local mining sector, accounting for 80 per cent of the industry’s earnings at its peak in 2022.

At the time, titanium earnings stood at Sh28.5 billion and accounted for 80.9 per cent of the Sh35.2 billion that the industry earned during the year.

Over the decade to 2024, when the company announced it had depleted the mines, the mines had generated over Sh211.5 billion.

The company paid Sh36 billion to the government in taxes over the years.

It also paid some Sh17 billion in royalties, paid at a rate of 2.5 per cent of the gross export value over the initial years but raised to five per cent. The royalties were supposed to be split three ways, with the national government getting 70 per cent, county government (20 per cent) and the community (10 per cent).

The money was, however, not remitted to the community due to lack of an enabling legal framework. The regulations that enable this distribution were only gazetted in January this year.

Other than the community being unable to access what was rightfully their share over the years, the government has in recent years expressed concerns that there should be a more rigorous framework requiring the miner to invest in value addition rather than ship out raw ores.

The three titanium-bearing minerals mined at Kwale, rutile, ilmenite and zircon, are used in the manufacture of paints, plastic, ceramic tiles and welding rods.

President William Ruto in July this year noted that the titanium ores were extracted and shipped out for value addition in other markets, leaving the community empty, which must also grapple with questions from future generations as to what happened to the resource.

“Kenya has learnt this lesson through experience. For many years, Kenya extracted titanium from the mineral sands of Kwale. It was one of the largest mining investments in our country’s history,” said the President when he signed the Sovereign Wealth Fund into law.

“The mineral was extracted and shipped abroad. Those deposits can never be mined again. What answer shall we one day give the children of Kenya? We have chosen to learn from history rather than repeat it. That is why this legislation is so important.”

Lawyer Mwenda Mbaka argues that Kenya could already be making mistakes that risk turning Mrima Hill into another case of how not to develop the local mining industry.

He argued that by tendering Mrima Hill as a greenfield project without considering the work that has been done over the years that shows the area is economically viable, Kenya will have surrendered its power.

“Base Titanium’s mine closed in December 2024 after more than a decade of production and over Sh36 billion paid to the State, while the regulations required to release county and community royalty shares were not gazetted until January 2026,” said Mbaka, adding that the deeper failure identified by the President was not delayed distribution of royalties but that the depletion had not been converted into enduring national and intergenerational wealth.

In the case of Mrima Hill, Mbaka noted that when the Mining Ministry launched an international search for a company to develop the project in March this year, it presented the project as an early-stage discovery.

This is despite decades of exploration that have yielded vast amounts of data held by the Ministry that prove that the area has viable deposits.

The exploration works included Anglo American in the 1950s, Pechiney Saint-Gobain in the late 1960s and early 1970s and later on by Cortec Mining starting in 2008, provide a technical data package that also proves that Mrima Hill is technically advanced and significantly de-risked.

“Mrima Hill presents that same danger (as the titanium mine) in advance, but on a much greater scale. By offering a substantially explored, technically developed and strategically important resource on an ordinary greenfield baseline, the State risks surrendering at entry the premium, leverage, speed, domestic industry and lasting value that must remain after the mineral itself is gone,” he said in analysing recent developments that are expected to lead to a tender award for the development of the niobium and rare earth elements in the area.

“Mrima Hill must not become Base Titanium’s cautionary tale repeated upon a larger, rarer and more consequential strategic resource in the same county.”

Mbaka also noted the difficulties that other major mining projects in the country have faced, including the Kitui coal mining project as well as the gold mining project in Kakamega, largely on account of pushback from the community over failure to consult them.

“Kenya has also seen what prolonged uncertainty and defective community engagement can become. Kitui’s Mui Basin coal concession, awarded in 2013, produced no mine for more than a decade; residents eventually marched to the county headquarters asking that the project be issued what they called a ‘death certificate’,” he said.

“At Ikolomani, the pursuit of a major gold development amid contested consultation, land and displacement concerns culminated in fatal confrontations and an unresolved Senate inquiry.”

He noted that while neither history is identical to Mrima Hill, “both nevertheless establish the same practical warning – participation, community benefits, land arrangements and development timelines must be settled within the project architecture before commercial rights harden—not improvised after expectations have collapsed and trust has broken down".

The President has taken this value addition crusade to Magadi, where he ordered Tata Chemicals Magadi to up and leave, following a century of extracting soda ash from Lake Magadi without value addition, as well as failure to pay royalties and local land rates. The government has since agreed to talks between the Mining Ministry and Tata Chemicals.

Ruto also noted that as Kenya embarks on oil production in Turkana County, it should be responsible enough to manage the proceeds wisely in a manner that “every barrel extracted should become an asset that never runs dry”.

The President said the Sovereign Wealth Fund would generate prosperity “on a scale that previous generations could scarcely have imagined” but cautioned that this would have only happened if the Fund is managed wisely.

“We choose to build the institution before the temptation arises, we choose discipline before abundance, and we choose stewardship over expediency.

The  SWF Act creates three components within the Fund – stabilisation, strategic infrastructure and future generations components. The Stabilisation component will use returns from investments to cushion the economy from unforeseen shocks, while the strategic infrastructure investment component will provide funding for national infrastructure projects.

The most critical arm will be the future generations component (Urithi Fund), which is aimed at building a savings base for future generations.

“Through the Future Generations—Urithi Fund—a portion of our petroleum and mineral revenues will be professionally invested so that the wealth from our finite natural resources becomes a permanent national inheritance,” said Ruto.

The Act prescribes where the different components will invest money, largely in high-quality foreign assets and denominated in major currencies such as the US dollar.