Kenyan President William Ruto withdrew a century-old concession for Indian behemoth Tata Group to mine soda ash in an area inhabited by Maasai herders near Tanzania, arguing the conglomerate hasn’t built any processing facilities that benefit the nation.
Residents of the villages around Lake Magadi, Africa’s biggest for the trona mineral that’s converted into soda ash, are split on whether Tata should stay on or leave.
Tata’s local contributions
The company’s chemicals unit bankrolls four schools in the poverty-stricken county of Kajiado, staffs a hospital and supplies fresh water used in Magadi town. Its private railway replenishes cattle-watering points along a 145-kilometer (90-mile) line for free and it also operates a train service charging people from the community a mere $0.30 for long distances.
For Ruto, this isn’t enough: he told the Mumbai-based firm “to pack and go” because it has been exporting soda ash made from minerals extracted from the lake instead of processing it locally to make glass, cleaning products and batteries for electric vehicles.
The president’s tiff with Tata — whose 32 companies generated combined revenue of about $185 billion in the year through March and make everything from salt to steel and cars — highlights the tensions between communities, governments and investors over exploiting natural wealth while avoiding a phenomenon economists call “the resource curse,” or the failure to translate that bounty into better living standards.
Kenya seeks local processing
By shipping the soda ash to India — the world’s fastest-growing major economy and where Tata provides the mineral for one in every five beverage bottles — Kenya is missing out on the economic benefits of that trade, government officials argue.
That amounts to “exporting potential factories, potential jobs, technology and opportunities for our engineers, chemists, technicians, transporters, entrepreneurs and young people,” Principal Secretary for Industrialization Juma Mukhwana said. “No strategic raw material should leave Africa without first asking whether we can competitively transform it here.”
Tata Chemicals Magadi Ltd. has responded to the matters raised by the Kenyan government including providing information on its compliance with regulatory requirements and is awaiting the mines ministry’s review and further direction, it said in response to questions.
Even in India and the US, where Tata Chemicals Ltd. has soda-ash manufacturing plants, it doesn’t have downstream manufacturing facilities such as glass, it said.
Tata should be given an opportunity to continue operations, said Rose Saroni, a community mobilizer in Magadi.
“Let’s sit down and talk about the community grievances and how they can be addressed,” she said, adding that access to clean water will be compromised if Tata leaves.
Dispute over Tata’s operations
Other leaders support the president’s move.
“We are entitled by law to get benefits” such as a share of royalties, said Isaac Keses Kiresian, a local-government lawmaker representing the ward where Tata’s mines are located. “Unfortunately, it has been push and pull with the company.”
The opposition Democracy for the Citizens Party sees the move as a decoy to push Tata out of a region with “huge deposits” of lithium and oil, it said in a statement.
Lake Magadi falls within Block 14T, an onshore oil-exploration area belonging to state-owned National Oil Corp.
But the shallow, pink-tinted lake isn’t a money spinner.
Last year, Tata’s operation exported about $57 million of soda ash. It’s the sole domestic producer of the chemical used by water utilities including the firm that serves Nairobi, the capital, to regulate the acidity and alkalinity of drinking water.
Kenya is the fourth-ranked producer of natural soda ash, accounting for 1% of global production.
Tata is also embroiled in a dispute with Kajiado county’s government, which is demanding 12.2 billion shillings ($94 million) in historical unpaid land rates.
The case is at the Supreme Court and Tata sees the dispute as “an external risk,” according to its latest annual report.
Kenya’s government in July ordered Tata to suspend operations, citing its failure to make royalty payments and meet other regulatory requirements.
Tata said it had provided a comprehensive response to the matters raised by Kenya’s mining ministry, including information regarding its compliance with applicable regulatory requirements.
“We await the ministry’s review of our submissions and its further direction.”
Ruto pushes for value addition
Ruto on Tuesday said he’d ordered his mining minister to ensure Kenya isn’t exporting raw materials as the nation only gets 5% of the value with the remainder “created elsewhere.”
“We export our jobs, we export value, and what do we import? Inflation,” Ruto said in the capital, Nairobi.
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