Kenya's Mineral Resources Could Pull Millions Out of Poverty
By Joburg Post
"The test of our progress lies in whether we provide enough for those who have little, not whether we add more to the abundance of those who already have much."
These words by former US president Franklin D. Roosevelt speak volumes about the African leadership that fails to take advantage of the opportunity arising from the US/China Trade War.
One of the retaliatory measures that China may consider against the US is banning the export of rare earth Mineral elements to the US.
With more than 37 percent of the World's reserves, China is the largest producer and processor of the elements.
A recent report, Rare Earth Metals Market by Product (Cerium, Lanthanum, Neodymium, Praseodymium, and Others) and by Application (Catalyst, Magnets, Ceramics, Metallurgy, and Others): Global Industry Perspective, Comprehensive Analysis, and Forecast, 2018-2025, by Zion Market Research says that
"the global rare earth metals market was valued at approximately $8.10 billion (Sh810 billion) in 2018 and is expected to generate around $14.43 billion (Sh1.443 trillion) by 2025."
In 2013, a minerals explorer company called Cortec announced the discovery of rare earth deposits worth $62.4 billion (Sh6.24 trillion) in Kwale County.
It was said that the deposits could make Kenya the second-largest producer of the mineral. Six years down the road, no effort has been made to exploit the resource.
Many people continue to languish in poverty, unemployment and hopelessness. If we cared to provide enough for those who have little and stopped adding more to the abundance of those who have, we could certainly make progress beyond where we are at the moment as a country.
Rare earth mineral elements are used in manufacturing many products including electronics, computers, cameras, aircrafts, refining crude oil, televisions, wind turbines and even hybrid cars.
It is possible that a local manufacture of light electronics could thrive if we developed meaningful collaborations with other countries to exploit the resources within the country.
I assume that the recent exemption of duties on locally manufactured motherboards was a long-term strategy to build a sustainable computing industry in the country. If so, then we must exploit local resources.
Even before the trade war, the US had raised concern that Chinese companies control close to 90 percent of the total market thus presenting a security supply risk to the US.
An international media outlet recently reported that the,
"U.S. Defense Department is seeking new federal funds to bolster domestic production of rare earth minerals and reduce dependence on China, the Pentagon has said, amid mounting concern in Washington about Beijing's role as a supplier."
In 2014, Japan started in earnest to access at least 60 percent of its rare earth needs from other parts of the world outside of China as a strategy to free herself from dependence on the World's largest producer of elements necessary to keep their electronic industry going.
The next alternative source of rare earth is North Korea, which signed a joint venture deal with a British Virgin Islands Company, Pacific Century Rare Earth Mineral Limited, in 2013 to exploit more than 216 million tons of rare-earth-oxides.
In the case of North Korea, however, politics will limit the market reach.
Further, even though China has the largest rare earth mineral resources as well as the largest exporter, it is also the largest importer of the mineral.
China consumes more of the resource than US, Japan and Europe combined. It is a big market but we must do research to know which elements can be produced in Kenya.
That too presents an opportunity for Kenya but first we must learn from other countries on transparent deal making that benefits the people.
Just last month, Australia's Lynas Corp announced that it will form a joint venture with an American rare earth company in Texas to build a processing plant in Texas to take advantage of a market gap in the US supply chain for raw materials that feeds the electronics and energy industry.
With these opportunities on the horizon, there is no logic in sitting on such a resource, with natural and labour resources, we can create jobs for several young people now wallowing in unemployment.
Lynas was perhaps using their mining experience and technology to negotiate with providers of the mineral resources. In Malaysia, the company ships ore from Australia for processing several miles away.
Such opportunities are, however, accompanied by several risks. Processing rare earth ores has the risk of low-level radioactive waste produced during production. Like anything else, we need to build enough capacity to minimise such risk. As they say, "there is no good that goes unpunished."
If we want to succeed, we must never fear failure, for failure is the critical component of success.
Sitting on a resource like rare earth at a time of uncertainty in geo-political climate is indeed wasting an opportunity.
The writer is an associate professor at University of Nairobi's School of Business.@bantigito.