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The East African : Aug 22nd 2015
34 The EastAfrican BUSINESS AUGUST 22-28,2015 MININ G & E N E RGY Kenya’s new northern transport corridor promises region $2.6b Hyd≥oca≥bons, mining, ag≥icultu≥e and ≥etail secto≥ top indust≥ies to benefit By KENNEDY SENELWA Special Correspondent from Kenya’s northern transport corridor, new sea ports and other mega infrastructure facilities upon completion, global consulting firm Frost & Sullivan has said. The firm said oil and gas finds E will become catalysts for investment in trade logistics facilities. Industries that will benefit from infrastructure developments include hydrocarbons, mining, agriculture and retail sector. The Lamu Port Southern Sudan-Ethiopia Transport (Lapsset) corridor, comprising a crude oil export pipeline, a refined products pipeline, railways and roads linked to Uganda, Ethiopia and South Sudan, will open a new corridor in Kenya that will contribute to reducing the cost of transport. The Lamu and Bagamoyo ports are being built to expand the region’s capacity to handle goods. Bagamoyo port alone will have the capacity to handle 20 million twenty-foot equivalent unit (teu) per year. “Global and local logistics service providers will need to develop flexible end-to-end solutions to service construction and exploration work prompted by new discoveries,” Frost & Sullivan’s research analyst Siphesihle Hlela said. The public sector is investing heavily in major projects such as ast Africa stands to make about $2.6 billion annually cent of export value and up to 75 per cent for landlocked countries. Delays add additional costs of $400 to $500 per trip for freight forwarders crossing borders. Bureaucracy impedes logistics with non-tariff barriers (NTBs) such as Customs clearance, multiple weighbridges and checks along main routes like the MombasaKampala-Kigali highway, leading to unexpected delays. The Single Customs Territory regime introduced in 2014 has reduced the cost of doing business as it now takes three days to move cargo between Mombasa and Kampala, down from 18 days. Goods moving between Mombasa and Kigali take six days, from 18 days previously. Hub of trade Frost and Sullivan senior eco- nomic consultant Craig Parker said Kenya is ideally placed as the hub for trade and business interests with sufficient infrastructure development driving intra-regional trade in East Africa. “Kenya is set to become the fast- Transport costs can rise to as high as 75 per cent of export value of goods for landlocked countries of East Africa. Picture: File the $3.8 billion Mombasa-Nairobi standard gauge railway (SGR), which aims to connect Kenya, Uganda, Rwanda and South Sudan. The SGR is expected to raise There is a race among global logistics providers to secure market share either through green investments or partnerships with local companies Kenya’s gross domestic product by 1.5 per cent while enabling landlocked countries to export coffee, tea, agricultural goods and minerals. SGR will also handle imports. Mr Hlela said there is a race among global logistics providers to secure market share either through green investments or partnerships with local companies. “These projects indicate a unique opportunity for global and local firms to partner and participate as a way to close the gaps in supply chain,’’ he said. Transport costs in East Africa can account for up to 30 to 50 per est growing hub for regional trade. The level of development in the country is evident in all urban areas. The country will secure significant foreign direct investment in the next five years,” he said. The route between Mombasa and Nairobi has received particular attention in upgrades. This has led to the average cost of transporting a 40-foot container from Mombasa to Nairobi falling from $1,200 in 2012 to $1,050 in 2014. An estimated $55.6 billion in investment in infrastructure development for Kenya is planned as of 2015, the majority of which will focus on telecommunications and power generation infrastructure. Major road projects that are currently under way will alleviate the severe bottlenecks and traffic congestion. An estimated $5.14 billion has been dedicated to road projects in Kenya. Coal mining fi≥m in feasibility study of facilities By KENNEDY SENELWA Special Correspondent FENXI MUI Mining Corporation is studying infrastructure facilities required for mining of coal in exploration blocks C and D in Kitui County in Kenya. The firm is undertaking an external infrastructure feasibility study of water pipelines, roads, power lines and rail that will support coal exploration with mining activities in the two blocks in the expansive Mui basin in eastern Kenya. Fenxi Mui Mining Corporation’s director Dr George Karithii said a strategic environmental assessment (SEA) of the two coal blocks is being carried out for approval by the National Environment Management Authority. At the same time, Fenxi Mui Mining is preparing a comprehensive resettlement action plan for compensation of people who will be affected by the project in the two blocks. The outcome of the study will determine the confirmatory exploration work in block C and detailed exploration of block D. The Ministry of Energy estimates the two blocks have 400 million metric tonnes of coal. Coal has been identified as a core component of Kenya’s plan to inject 5,000 MW of cheap electricity into the national grid by 2017. In September, Kenya will start building the $2 million 1,000-Megawatt Lamu power plant, which will initially run on coal imported from South Africa. The plant is the result of a partnership between Kenya’s Centum Investment, Gulf Energy and China Huadian Corporation Power Operation Company, the Sichuan No. 3 Power Construction Company, and the Sichuan Electric Power Design and Consulting Company. Fenxi Mui is expected to invest at least $500 million in production facilities. The Ministry of Energy awarded the company a licence in 2011 after it agreed to a $3.5 million concession fees. The concession provides for Fenxi Mui to give Kenya’s government 11.6 per cent participating interest. Kenya is entitled to a gross revenue share of 23.3 per cent from block C and 22.1 per cent from acreage D. Few small-scale miners see the financial benefit for their hard work. Pic: File Fai≥t≥ade b≥ings gold standa≥ds to EA mine≥s By PAUL REDFERN Special Correspondent THOUSANDS OF small-scale gold miners across East Africa could have their lives improved dramatically over the next three years after a UK-based organisation said it is targeting including them in its fair-trade campaign. Fairtrade’s gold project was launched in South Africa in 2012 after a successful initial operation in South America. It is now moving into Tanzania. Much of that gold is produced by artisanal and small-scale mining (ASM) methods, often for little pay, for long hours and in poor and dangerous conditions. Despite gold being a luxury product with demand and prices increasing rapidly on the world market this year, few small-scale miners see much financial benefit for their hard work. “Globally, millions of people depend on artisanal and small-scale mining (ASM) for survival,” Fairtrade says. “The 15 million ASM miners work in harsh and dangerous conditions to produce just 1015 per cent of global gold supplies, but they make up 90 per cent of the global work force in gold extraction. “These miners and their families are caught in a vicious circle of exploitation and illegality, and many lack the skills and resources to move forward.” But Fairtrade says that if managed responsibly, ASM mining can provide a great opportunity for poverty reduction and sustainable development. “This is why we have in consultation with a wide range of stakeholders in the sector, developed the Fairtrade Standards for Precious Metals,” the UKbased group says. Working with Solidaridad and other partners, Fairtrade will set standards to certify small-scale gold miners in Kenya, Uganda and Tanzania. Eight mining organisations across the three countries are currently involved in the project. If everything goes according to plan, the first African mining organisations will become Fairtrade-certified within the next three years. If they are successful, the agreement will be the first of its kind in Africa. One of the areas Fairtrade will concentrate on is around Geita in Tanzania, a town where almost one in four people depend on gold mining to eke out a basic living.
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