Kenya Fluorspar fully compliant with government tax obligations

By IM Staff
Published: Monday, 18 May 2015

Despite press reports that the company was at odds with the Kenyan government over its tax payments, Kenya Fluorspar has stressed that it has fulfilled state demands for increased royalties on production from its Kimwarer project and is not required to compensate landowners for use of its mining lease area.*

Kenya Fluorspar Co. Ltd has hit back at what it called "inaccurate and misleading" reports that the company had fallen foul of revised royalty obligations set by the Kenyan Ministry of Mines.

The privately held miner, which owns the Kimwarer fluorspar project in western Kenya, released a statement late last week strongly denying rumours of a legal rift with the government. It had been alleged that the company had failed to pay required royalties and to compensate local landowners for appropriating the property on which it operates.

"There is no dispute between the Ministry of Mining and Kenya Fluorspar Co. on payments, levies, taxes or failure to pay monies owed on our mining operations," the company statement said.

"The Cabinet Secretary of Mining, Hon. Najib Balala, in a Nation TV interview on 13 May, confirmed this, when he said 'Kenya Fluorspar has been working. They are paying their royalties. We are in agreement. They have increased their royalties, as per the government’s requirements’," the statement continued.

"Kenya Fluorspar has always paid the royalties prescribed by the Kenya government. The government gazetted royalty is 2% for fluorspar (not 10% as alleged by some of the media), based on its gross sales, and since 1 July 2013 to the end of December 2014, Kenya Fluorspar has paid this royalty totalling [Kenyan shilling] Ksh 57.699m ($635,000**) to the Ministry of Mining," Kenya Fluorspar said.

Regarding press accusations that the company had failed to compensate landowners for the 9,070 acres (36.7km2) it leases for mining, Kenya Fluorspar said that no payments were owed as the land belonged to the Kenyan government, which acquired the property from the Kerio Valley Community in the early 1970s.

"We lease our mining area from the government under a special mining lease that commenced in 1997," Kenya Fluorspar outlined.

 "We view the establishment of a task force by Honourable Najib Balala as a welcome next step in an ongoing process to help resolve both historical land compensation issues between the government and Kerio Valley residents that predate our operations, and issues that arise between sections of the community and us."

The company added that it has a "good relationship" with Kenya’s Ministry of Mines.

Kenya Fluorspar

One of the few large mining companies in Kenya, Kenya Fluorspar was established in 1971 and is one of the country’s leading mineral exporters.

The fluorite deposits it exploits are located in the Kerio Valley, a relatively remote part of western Kenya, where Kenya Fluorspar operates seven active mining sites.

Recent inaccurate reports have claimed that the company’s yearly revenue had reached Ksh 4bn ($41.75m) between 2011 and 2014, but Kenya Fluorspar has confirmed that average annual sales of Ksh 2.35bn ($24.53m) were recorded between 2011 and 2014.

The company has a production capacity of 100,000-120,000 tpa fluorspar. It sells its output mainly for use in the fluorochemicals market.

Originally a government-owned business, the company was privatised in 1997 as part of a government reform policy, which saw the company granted a 21-year lease for a 36.7km2 area.

*This article was published following the retraction of an earlier article on erroneously stating that Kenya Fluorspar was under investigation by the Kenyan government for an alleged failure to pay increased royalty rates and compensate landowners for the use of its mining sites.

**Conversions made May 2015 by Kenya Fluorspar

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