1,100 bobs at risk as Tata Chemicals Magadi shutdown bites

The Tata Chemicals Magadi Limited (TCML) has warned that more than 1,100 livelihoods are in jeopardy following the suspension of its mining operations, raising fears of widespread job losses and a setback to a Sh3.62 billion expansion project.

The soda ash producer says the prolonged shutdown could cripple its operations, leave it unable to meet contractual obligations and expose the company to potentially irreparable financial losses.

In court papers opposing an application by the Kajiado County government to join ongoing judicial review proceedings, the company said it directly employs more than 500 workers and engages another 600 people through contractors.

“The applicant directly employs over 500 employees and has outsourced the service by contractors of another 600 people and the continued suspension places over 1,100 livelihoods in immediate jeopardy,” the company states.

Tata Chemicals warned that if the suspension persists, it could be forced to declare about 500 direct employees redundant, threatening livelihoods and disrupting economic activity linked to its operations.

The company said the shutdown was endangering a business built over nearly a century, arguing that the uncertainty surrounding the resumption of operations was compounding its financial exposure.

“The applicant will continue to be unable to meet its contractual obligations, thereby exposing it to significant and potentially irreparable losses,” the court papers state.

The dispute stems from a decision by the Ministry of Mining, Blue Economy and Maritime Affairs to suspend the company’s operations over alleged regulatory breaches.

Tata Chemicals has challenged the decision, arguing that it was imposed without adequate notice and in violation of fair administrative procedures.

“The suspension was imposed for an indefinite period without prescribing objective timelines, measurable compliance criteria or any transparent mechanisms for lifting the suspension, thereby leaving the applicant’s operations entirely at the discretion of the respondent,” the company argues.

It maintains that keeping the shutdown in force while the court proceedings are delayed would leave the business uncertain about when it could resume operations, worsening the threat to jobs and its planned investment.

The company has also warned that the suspension could derail its Sh3.62 billion expansion project, further undermining its business prospects and the economic benefits expected from the investment.

County’s Sh11.4billion claims

The legal battle has widened following Kajiado County’s attempt to participate in the judicial review proceedings, with the devolved government arguing that the outcome could affect its financial interests, environmental responsibilities and the welfare of communities around the mining operations.

The county says it has been pursuing outstanding land rates amounting to Sh11.4 billion as of February 2023 and previously attempted to enforce payment by withholding various business and trading licences.

The dispute over the rates prompted Tata Chemicals to seek court intervention, while separate proceedings concerning the land rates remain pending before the Court of Appeal.

Tata Chemicals opposes the county’s application, arguing that disputes involving the expiry of its lease, land tenure, royalties and other financial claims are separate from the central question before the court: whether the Ministry of Mining acted lawfully in suspending its operations.

The company wants the judicial review proceedings confined to examining the legality of the suspension rather than allowing them to become a forum for resolving unrelated financial and land disputes.

Kajiado County, however, maintains that its interest goes beyond revenue collection, citing environmental protection and the economic interests of residents affected by the company’s activities.

Ministry defends shutdown

Meanwhile, the Ministry of Mining maintains that the suspension was necessary to compel compliance with statutory requirements.

In court documents, Secretary of Mines Thomas Mutwiwa argues that the company had repeatedly been notified of alleged violations, including unpaid royalties and accumulated arrears.

The competing positions leave the future of the company’s operations, its planned expansion and the jobs linked to its activities hanging in the balance as the legal dispute unfolds.