New levy slapped on cement minerals

Cabinet secretary for Mining Najib Balala has directed that cement manufacturers pay Sh140 to the government for every tonne of cement produced beginning this year. PHOTO/FILE 

In Summary

• Through a special gazette notice, Cabinet secretary for Mining Najib Balala has directed that cement manufacturers pay Sh140 to the government for every tonne of cement produced beginning this year.
• Through the regulations, the minister has also revised the royalties for fluorspar products to be backdated to July last year.
• Similar rates will also be applied on products manufactured using Magadi Soda such as soda ash and salt. Soda ash is used to make products such as pharmaceuticals, toothpaste and deodorants. 

 

By SAMUEL KARANJA
More by this Author

A new levy has been introduced on minerals used in cement manufacturing in a move likely to increase the cost of the product.

Through a special gazette notice, Cabinet secretary for Mining Najib Balala has directed that cement manufacturers pay Sh140 to the government for every tonne of cement produced beginning this year.

“The cement producers shall pay a cement minerals levy at a rate of Sh140 per tonne of cement with effect from January 1 2014,” reads the new regulation.

The move is expected to raise concerns within the mining sector. Manufacturers are likely to oppose the new rates that effectively increase the cost of production.

Through the regulations, the minister has also revised the royalties for fluorspar products to be backdated to July last year.

Under the new rules, fluorspar products will be levied at 2 per cent of the gross sales value for the period between July 2013 and June 2015.

Between July 1, 2015 and June 30, 2017, the products will be levied at 3 per cent of their gross sales value.

For two years

A new rate of 4 per cent will be applied on the products for the following two years before being raised to 5 per cent in July 2019.

Fluorspar is used in steel making, iron and steel casting, primary aluminium production, glass manufacturing, welding rod coatings and cement production.

Similar rates will also be applied on products manufactured using Magadi Soda such as soda ash and salt. Soda ash is used to make products such as pharmaceuticals, toothpaste and deodorants.

The new regulations come at a time when mining companies are faced with a new levy under the Mining Bill 2013.


If passed into law, the Bill will see the cement manufacturers pay one per cent of their annual turnover to the government as mining royalties.

The Bill, which is still at the drafting stage, also proposes automatic acquisition of a 10 per cent interest on all mining companies by the government.