Sh8tr in the spot as US, China eye Mrima Hill minerals

President William Ruto and US Secretary of State Marco Rubio met on Monday as the Kenyan government pitched the country’s opportunities to American businesses, projecting Kenya as an investment, technology and finance hub.

And as expected, during the meeting on the sidelines of the United Nations General Assembly (UNGA) in New York, the high-level engagement had the two nations exploring cooperation in critical minerals and nuclear energy – proving the Mrima Hill niobium question, which has been in the public eye for some weeks now.

 “They spoke about how critical minerals opportunities in Kenya can position the country as a key player in the sector while presenting opportunities for US firms to provide value addition,” State Department spokesman Tommy Pigott said in a statement.

The Mrima Hill niobium and rare earth elements project is quickly becoming a contentious issue among key stakeholders. The area has one of the largest deposits of these highly sought after minerals in the world and has already attracted the attention of major global mining firms, but also that of the US and China governments, which are trying to outdo each other in the global race for the critical minerals.

Even as Kenya evaluates the bids closer to selecting a firm that will dig up the minerals in Kwale County that are estimated to be worth over Sh8 trillion, observers say Kenya could have started on the wrong footing with claims of a rigged tender process and allegations that President Ruto is set to give the deal to an American firm disregarding the competitive process that is already underway.

There are also concerns that Kenya may have shortchanged itself in presenting Mrima Hill as an unproven prospect despite having vast amounts of data on the area that show it to be economically viable.

Former Deputy President Rigathi Gachagua is among the critics who have claimed that the process has been rigged and that the government had already settled on a company that would develop the Mrima HIll project.

Gachagua, who spoke at Kansas City in the United States said that Kenya will not allow President William Ruto to sell the deposits from Mrima Hills.

“I’m told, (these minerals) are essential for electric vehicles and advanced technology and are required here in the US, China and Australia. I think the Americans have looked for Ruto first and offered him a better deal,” he told a community engagement meeting.

Gachagua threatened to seek legal redress should the President, who is also seeking to seal several deals in the week long high level engagement UNGA meeting.

“I do not know whether he will seal with them or he will compare notes with China but we will not allow him, we will shout from the rooftop and even if we have to go to court we will do so,” he said.

“After this meeting, I will talk with a few lawyers. We will start preparing the paperwork because we cannot allow this to happen and this is too much money to go to one person when it is supposed to benefit the country.”

Mrima Hill has attracted interest from both the US and China, both countries racing to control critical minerals that are key in production of components used in modern electronics such as smartphone parts, electric vehicle (EV) batteries and magnetic materials used in wind turbines.

Past reports indicate that the US and Chinese officials have made unannounced visits to Mrima Hill.

In mid-September, Frank Garcia, US Assistant Secretary of State for African Affairs, made a high level pitch to Kenya, saying that US would walk with Kenya in its quest to build a strategic mining sector, with specific reference to Mrima Hill.

Speaking at the AmCham Business Summit in Nairobi September 9, Garcia differentiated between the approach that the US would take including local processing against that of its competitors that ship out raw minerals for processing “thousands of miles away”.

“Critical minerals are a top priority for President Trump and Secretary Rubio... We are ready to work with Kenya as it becomes a regional leader in this space,” he said.

“American companies are not here to extract and ship. That is not a partnership. That is extraction... some of our competitors are efficient at one thing: pulling minerals out of the ground, whisking them offshore and capturing all value addition far away from the lands from which the minerals originated and answering to no one.”

He further commended President Ruto, “for your transparent, open, upcoming competitive process in Mrima Hill. We are ready to help you build a mining sector that is transparent and attracts legitimate businesses that respect communities and help secure global supply chains.”

The government launched an international search on March 27 this year to secure a company to develop the Mrima Hill project. The area has huge deposits of niobium and rare earth minerals estimated to be worth over Sh8.1 trillion ($62 billion).

The US has been courting Kenyan and other producers of rare earth in an attempt to break China’s monopoly in processing of the elements. China accounts for about 90 per cent of global rare earth processing.

US firm Critical Metals Corp and Australia’s RareX in July separately announced that they had been shortlisted among the firms proceeding to the final stage of the tender process for the right to develop the Mrima Hill rare earth and niobium project. Reports indicate other firms from Britain, Canada, Chile, China, India and South Korea had also expressed interest.

Kenya’s Mining Principal Secretary Harry Kimtai said at a recent business conference that following the announcement of the tender in March, 13 firms had expressed interest but the list has however thinned to six firms. While he noted that the list of firms represented different geographies and countries, he also said it included two Chinese firms

Despite Kenya appearing to have everything working in its favour, there are concerns that it is fumbling in the process of selecting a developer for the niobium and rare earth project.

Lawyer Mwenda Mbaka noted that when the Mining Ministry launched an international search for a company to develop the Mrima Hill in March this year, it presented the project as an early stage discovery. This is despite decades of exploration that has yielded vast amounts of data held by the Ministry that proves that the area has viable deposits.

The exploration works included Anglo American in the 1950s, Pechiney Saint Gobain’s in the late 1960s and early 1970s and later on by Cortec Mining starting in 2008, provide a technical data package that also proves that Mrima Hill is technically advanced and significantly de-risked.

In the March tender document, the Mining Ministry said the Mrima Hill niobium and rare earth prospects were discovered as far back as the 1930s and also confirmed the extensive exploration in later years. This includes its own geological mapping exercise in 2022, which confirmed the presence of five elements — niobium, yttrium, thorium, strontium, and lanthanum.

It however said “the Government has not prepared an economic viability report for the prospect”.

Mbaka however, contends that Mrima Hill is commercially viable, demonstrated through nearly a century of exploration work and is not in any way a speculative prospect. He argues that the data only needs to be validated and updated as opposed to starting from scratch.

“The Expression of Interest failed adequately or at all to make the complete available Mrima Hill Knowledge Estate the formal baseline for the successful proponent’s residual work, timetable, investment commitments and progression to development,” he said, who has insider knowledge of Mrima Hill having with Cortec Mining at some point, in a recent analysis of the project.

He added that this could affect how the project progresses and came with risks of major project delays that could see Kenya miss out on what could be a major boom should it start exploiting the critical minerals in the short term.

“Unless the Request for Proposals has corrected that grave defect... the course must be corrected before the prospecting licence issues. After the award, Kenya will no longer be dealing with several international proponents competing for access. It will be dealing with one exclusive and statutorily protected incumbent. That is the moment at which Kenya’s competitive leverage sharply contracts.”

The vast amounts of data gives Kenya a competitive leverage, which Mbaka however noted the government appears not keen on using. He noted in taking the route seen in the EOI, Kenya risks giving away exclusive rights without securing an appropriate entry premium, a binding timeline for mine construction or enforceable local processing obligations. This could result in lengthy delays and the forfeiture of domestic value addition.

“Every avoidable year of delay at Mrima Hill carries a human and fiscal cost: lost employment and skills, deferred exports and foreign exchange, postponed royalties and taxes, forgone local procurement and infrastructure, and another year in which a globally strategic asset contributes nothing to industrial and national transformation,” he said.

“Kenya does not have the luxury of discarding readily available accumulated knowledge, surrendering leverage already earned, or spending years and scarce capital rediscovering what is already known and can instead be authenticated, tested and updated. To undersell Mrima Hill in these circumstances would not merely be economically inefficient. It would be profoundly ill-timed and difficult to reconcile with responsible stewardship of national wealth

Mbaka noted that Kenya found itself at an exceptional convergence with Mrima Hill having a huge deposit of critical minerals at a time when there is competing international interest. He noted that Kenya should capitalise on the moment to unlock the value at Mrima Hill.

“That alignment may be temporary,” he said.

“The global window that has so unusually aligned the proverbial stars in Kenya’s favor may not remain open... commodity prices could change, Governments and technologies change. Strategic priorities shift... yet Kenya is needlessly fumbling the opportunity to leverage Mrima Hill’s complete Knowledge Estate to secure both immediate value and the fastest responsible path to a mine and associated processing infrastructure.”

Mbaka also noted how Kenya has failed to walk the local community and even Kenyans through the process, noting that much of the information available is from foreign governments as well as the entities that are competing for the deal to mine rare earth at Mrima Hill.

Following the start of the tender process in March, the government has not issued official updates on the process. Information about the progress has been from the firms that had bid, including RareX and Critical Metals that announced their advance to the final stages in July.

“The constitutional difficulty is that foreign officials and foreign-listed bidders appear able to speak with greater specificity about the disposition of Mrima Hill than the Kenyan public, Parliament or host community—and, in material respects, more specifically than the Kenyan Government has spoken directly to its own citizens,” he said.

“The Government has not published the identities of the proponents that progressed from the EOI to the RFP or final stage. Indeed, the Government did not publicly announce that the process had advanced to an RFP stage at all; that fact first became known through bidder disclosures.”