Wednesday, August 20, 2008

Tiomin Kwale saga

Thanks MM - the Canadian $ is almost on par as the US $

Looking at the accounts of Tiomin and 2008 AGM notes paints an interesting picture of the company for foreign investment deals at a time when Rift Valley Railways is deal is unraveling and Econet continues its four year incubation as the mobile phone passes them by at a growth rate of almost 20% a year

Tiomin, which claims to have invested $86 million directly and indirectly since 1995, secured financing in 2006 but the project was unable to take off and funding was canceled in 2007 on a venture in which the company was to invest $150 million and pay the Kenya government 2.5% gross annual revenue.

The Company had a target to conclude (divest part or all of) Kwale and slashed costs from $450,000 to $70,000 per month (most staff were given notice in March 2008) until divestment which happened in July when the Jinchuan takeover was announced - with the Chinses firm purchasing 70% of teh venture for just $25 million.

What can Jinchuan do going forward to improve on wher Tiomin got stuck?
- Get some local shareholders (they are now shepherding RVR back on track)
- Have a clear communications strategy with locals; go beyond issuing vague press releases.
- Spread the wealth; do more value addition processes here, work with local banks/financiers to raise funds locally, engage in some CSR, and join the Kenya association of manufacturers (KAM)
- Work better with stakeholders; in this case it is local land owners (farmers), the taxman, and employees.
- And don’t blame the ‘government’ on tax matters. The Tiomin AGM notes state that ‘Jinchuan were key’, and were able to ‘facilitate government relations’ which mean the project could resume soon.


Rafiki said...

Are these companies to be trusted? Have a look at the evolution of Tiomin's share price:
Jinchuan is yet to go for IPO in China, which could be anytime soon. Will it follow Tiomin's example?

arachesostufo said...

peace and freedom, saluti da scorzè

coldtusker said...

rafiki: No more than kenyan politicians... or the chinese...


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