The government is on the verge of sealing a Sh5.8 billion mining investment deal for establishment of Kenya’s first modern gold refinery at Lidambitsa in Ikolomani, Kakamega county.
The refinery will provide a reliable market for thousands of artisanal miners of Migori, Kakamega, Narok, Kisumu, Nandi, West Pokot and Isiolo. Other counties with substantial gold deposits that will benefit include Turkana, Siaya and Marsabit.
Mining Cabinet Secretary Salim Mvurya says the Kakamega gold refinery will be a game changer by accelerating growth and introducing innovation in the mining sector as part of promoting social-economic development for artisanal gold miners across Kenya.
The CS further disclosed that the government was seeking more strategic investors to undertake capital-intensive investment ventures in the mining sector that prioritises value-addition and enrichment for minerals including copper, clinker, diatomite and manganese.
“The establishment of this gold refinery is in tandem with the vision and commitment that we hold dear on creating value addition centres to increase the value and prices for our minerals,” the CS said.
Already, significant strides have been made towards operationalisation of the multibillion-shilling plant. The state has already acquired a 14-acre parcel and processed land ownership documents for the facility’s site.
Additional approvals by National Environmental Management Authority on environmental compliance and a no-objection letter by the Kakamega government have been granted. The local community has been brought on board as key stakeholders in the process.
The penultimate step before the investor moves to site will be key negotiations with the government over the state’s stake in this lucrative investment. According to the Mining Act 2016, the state is mandated to acquire a 10 per cent Free Carried Interest stake for large-scale mineral operations.
The Principal Secretary State Department for Mining Elijah Mwangi says the relentless drive for establishment of mineral value addition centres in Kenya is at the heart of the envisaged reforms in the mining sector.
He states that the artisanal miners who occupy the lowest echelons in the mining ecosystem must get their rightful dues through enhanced profits from dealing in processed gold. He predicts that the refinery will not only create job opportunities for thousands but will also attract more development in the region.
“Our firm resolve has been to have artisanal miners get proper value for their products. This will be possible through promoting investments that will process minerals leading to better prices for their minerals and creation of jobs. This is the positive ripple effect of value addition facilities in the mineral sector,” he says.
The Kakamega gold refinery becomes another major mining investment deal by the government after the February signing of the Sh4.8 billion contract by Soy-Fujax Limited for the revival of fluorspar mining at Kimwarer area in Elgeyo Marakwet county.
According to the 2022 Economic Survey, Kenya's annual average gold production from 2017 to 2021 was 360kg. The bulk of this production was by the artisanal miners whose number is estimated to be in excess of two hundred thousand. However, absence of good market and perpetual exploitation by unscrupulous brokers has confined the artisanal miners to a life of penury. It is this cycle that the government wants to break and introduce profitability in their trade.
The joint investment by the investor, China’s Heng Nuo Rongchang Trading Company and H. Nuo Kenya Company Trading Limited, will see the construction of a smelter and a mineral laboratory at the site. To promote operational sustainability, the investor plans to enter into partnerships with gold miners’ marketing cooperatives to extend technical support for equipment for increase in daily productivity.
During a meeting with the investors at his office, Kakamega’s County Executive Committee Member (CECM) for Finance and Planning Livingstone Imbayi said the gold refinery project is a major boost for efforts by the county to spur development and create employment opportunities for youth in the region.
He further noted the county, aware of the transformational impact such a project would have, had committed to working with all stakeholders to have the facility operational.
“We are looking forward to commencement of this project because of the potential positive impact it will have for this region and beyond. With a ready market and jobs for our youth, we need this project,” he said.
With the aim of transforming it into an internationally standardised gold refinery, the Lidabitsa facility will have an extra-mineral recovery component to isolate and recover secondary minerals that naturally occur alongside gold ore including zinc, copper, silver and some base metals. This will maximise returns for artisanal miners and the investor. To enhance sustainability, the refinery is expected to also process gold from artisanals from the East African Community bloc and beyond.
With a proposal to process raw ore with 80 percent gold, geologists and mining engineers opine that a hybrid processing facility will push for plant optimization and offer the investor multiple benefits by processing other minerals like copper that exist in abundance in the region.
Gold artisanal miners are optimistic that this refinery will address the long-standing challenges of poor market, smuggling and exploitation.
Patrick Ligami, the chair of Kakamega County Artisanal Mining Committee, said the refinery is a welcome investment for gold miners in Kenya. He adds that ensuring operational continuity and sustainability required empowering the artisanal miners to boost their daily production.
Ligami adds that additional regulations to empower the artisanal cooperatives to manage and operate gold leaching plants might be required. Such a move would see all gold mined in areas under the cooperatives channeled towards the refinery.
“This is a positive win for the artisanals who should be at the heart of gold processing and operations. Once empowered to bolster their daily production, they will earn more and help the refinery to operate optimally,” he said.