Mining firm revenue drops as China's slowed growth continues

A machine separates soil from minerals at a titanium mining base in Kwale on September 17, 2014. A titanium mining firm, Base Resources, has recorded a drop in revenues owing to the slow-paced economic growth in China. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP 

In Summary

• The firm attributed the drop to the slow-down in China’s economic growth, which was also experienced in parts of Europe.
• Sales of ilmenite, one of the minerals processed from titanium ore, reduced to 103,035 tonnes during the period under review from 130,608 tonnes sold in the quarter to September.

By IMMACULATE KARAMBU
More by this Author

Base Resources recorded a 21 per cent decline in sales of ilmenite during the quarter to December last year, dealing a blow to the company’s revenue.

The firm attributed the drop to the slow-down in China’s economic growth, which was also experienced in parts of Europe.

The Australian company is licensed to mine titanium in Kwale.

Sales of ilmenite, one of the minerals processed from titanium ore, reduced to 103,035 tonnes during the period under review from 130,608 tonnes sold in the quarter to September.

However, sales of other minerals — rutile and zircon — increased to 23,896 and 7,723 tonnes respectively.

“The economic uncertainty in China and Europe experienced in the prior quarter continued to weigh on customer confidence through this quarter. This, combined with the usual seasonal slowdown in demand, has resulted in ongoing cautious buying behaviour from customers,” the company said in a statement Thursday.

Base Resources operates a warehouse in China as part of its strategy to secure market share in the Asian country by offering products for immediate delivery in small volumes than could be justified for a direct shipment from Kenya.

This also allows the company to tap into smaller scale customers that are not able to commit to purchase of large shipments.

Last week, Base Resources announced that it was expecting a decline in revenue following a notice to delay purchase of up to 100,000 tonnes of ilmenite by an undisclosed buyer who had entered into a sales agreement with the miner.

According to the firm, the buyer suffered a delay in commissioning its factory, consequently impacting on its intake of the mineral.

It was due to buy the mineral at a price of $116 per tonne by the end of June this year with the sales agreement applying for another three years.