State suspends century-old Tata Chemicals Magadi, putting jobs at risk

The President William Ruto government has ordered the immediate suspension of all mining operations by Tata Chemicals Magadi Limited, Africa's largest soda ash producer, in a dramatic escalation of a long-running regulatory dispute that threatens 600 direct jobs and hundreds of contractors who depend on the century-old trona mining operation at Lake Magadi.

The suspension has thrown into uncertainty the future of thousands of families in Kajiado County who rely on the company's operations. The news spread rapidly among employees and the local community, triggering anxiety and panic over livelihoods.

Tata Chemicals Magadi, a subsidiary of India's $180 billion Tata Group, had not responded to The Standard's requests for comment by the time of publication. The company's website and social media channels remained silent as the crisis unfolded.

Mining Cabinet Secretary Hassan Ali Joho said in a statement the suspension would remain in force until the company fully complies with the Mining Act, its regulations and other applicable laws, according to a ministry statement.

The decision, the CS said follows "years of sustained engagement" between the State Department for Mining and Tata Chemicals Magadi over statutory obligations under the Mining Act Cap. 306, the Mining (Licence and Permit) Regulations 2017, and the Mining (Royalty Collection and Management) Regulations 2024, the statement said.

Despite prolonged consultations, the Joho-led ministry said several critical issues remained unresolved. They include, according to the CS lack of a clear mineral beneficiation and value-addition strategy, outstanding royalty reconciliation and payment obligations, insufficient export reporting and reconciliation, poor implementation of Community Development Agreements (CDAs), inadequate employment and skills transfer plans for Kenyan citizens, weak procurement of local goods and services, and environmental compliance shortfalls.

The company has been directed to submit comprehensive documentation demonstrating full compliance and to address all outstanding liabilities before operations can resume.

CS Joho said the government was committed to ensuring Kenya's mineral resources are exploited "responsibly, sustainably, and in a manner that delivers maximum economic value to the country while safeguarding the environment and protecting the interests of host communities."

Tata Chemicals Magadi has operated at Lake Magadi since 1911, mining trona which it processes into soda ash used in glass, detergents and other industrial products.

More than 95 per cent of production is exported to Southeast Asia, the Indian subcontinent, Africa and the Middle East. The company became part of India's Tata Group in 2005.

The suspension casts a shadow over the livelihoods of direct employees and hundreds of contractors who depend on the operation.

Tata Chemicals Magadi contributes between $6 million and $8 million (Sh777 million to Sh1.04 billion) to the Kenyan economy monthly, managing director Subodh Srivastav said in January 2024, warning that potential closure would impact GDP and vital foreign exchange earnings.

The suspension comes against the backdrop of a bitter, long-running legal battle between Tata Chemicals Magadi and the Kajiado County Government over land rates and royalties.

In 2018, the county demanded a colossal Sh17.4 billion ($134 million) in purported land rates and royalties for the period 2013 to 2018.

The dispute, which originated from a 1928 lease agreement under which the government allowed the company to extract Magadi deposits across more than 220,000 acres, has wound its way through the courts for years.

In October 2025, the Court of Appeal quashed the county's claim, but the Supreme Court has since allowed Kajiado to pursue a further appeal, leaving the matter unresolved. Kajiado Governor Joseph Lenku had previously threatened to shut down the company's operations over the unpaid dues.

Despite the disputes, Tata Chemicals has been pursuing significant expansion in Kenya. The company's Financial Year 2025 annual report, released in May, showed the Kenya subsidiary's revenue fell 4 per cent to ₹612 crore (Sh9.87 billion) in its Financial Year 2025, with Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) down 33 per cent to ₹142 crore (Sh2.29 billion), reflecting pricing pressures.

The report also noted the commissioning of the electric calciner and solar plant in Kenya, alongside plans to "establish a strong footprint in the domestic East African market" and "maximise overall price realisation through a strategic market mix."

In October 2024, the company announced plans to upgrade its trona-crushing plant to produce 1 million metric tonnes of soda ash annually, up from 300,000 tonnes. In 2025, it sought new mining rights over 127 square kilometres in Kajiado County to extend the life of its operations.

The immediate suspension threatens not only the company's employees but also the wider Magadi community. The company supports a 55-bed Level 4 hospital providing subsidised healthcare, educates over 500 pupils at Magadi Primary School, and provides bursaries to needy students. It also supplies water to the community and the Kenya Police College in Magadi.

The company's employment policy says it prioritises locals. It proclaims 75 per cent of casual workers at the soda ash plant and 100 per cent at the salt plant must be from the local community.

Tata Chemicals Limited, the Mumbai-headquartered parent, has been repositioning its portfolio away from the cyclical soda ash business toward more stable, non-cyclical segments under its "LIFE" (Living, Industrial, Farm Essentials) strategy.

In its Q1 FY27 results announced on Monday, the company reported consolidated revenue from operations of ₹4,255 crore (Sh68.6 billion), up 14 per cent year-on-year, but EBITDA fell to ₹555 crore (Sh8.95 billion) from ₹649 crore a year earlier, reflecting lower realisations in overseas subsidiaries, particularly US exports to Southeast Asia, it said.

Profit after tax plunged to ₹60 crore (Sh967 million) from ₹316 crore.

Managing Director and CEO R. Mukundan acknowledged the challenging external environment, noting that "exports from USA to Southeast Asia remained under pressure due to persistent unremunerative soda ash pricing."

The ministry has given no timeline for resolving the compliance issues, leaving the company and its employees in limbo. Tata Chemicals Magadi must now submit comprehensive documentation demonstrating compliance with all statutory obligations and address outstanding liabilities before operations can resume.

The suspension, coming amid a broader global soda ash market downturn and with the parent company already under financial pressure, could not come at a worse time for the Kenyan subsidiary and its Indian parent owner.