By EDWIN OKOTH, edokoth@ke.nationmedia.com
In Summary
Kenya is set to reap higher royalties from the export
of titanium following a doubling of the price of the mineral in the
past seven months.
Base Resources Limited, which mines the titanium ore in
Kwale, said yesterday the improved price signals better prospects for
the country in terms of royalty fees.
In 2015, the firm paid royalties amounting to Sh260.7 million and this is expected to rise as operations increase in 2017.
“Royalties are paid based on sales and the improved
market conditions for ilmenite will be good news for Kenya as it means
there will be more royalties from the revenues we make from the sales,”
said Base Titanium external affairs manager Simon Wall.
The Australian mining firm in an operational update
said it had hit a new production high of three million tonnes between
September and December 2016.
The Kwale-based miner exports ilmenite, which is an
ore of titanium (titanium-iron oxide) that is used in the manufacture
of paints, plastics, paper, sunscreen, cosmetics and fabric
pigmentation.
The firm projects increased demand for the product
with further rise in prices as it continues to secure forward sales
currently stretching to next month.
The mineral which was trading at a low of Sh6,000
per tonne ($60) in June now retails at about Sh14,000 per tonne ($140),
an more than 130 per cent growth. Kenya exports most of its ilmenite to
China.
Base, which produced 117,000 metric tonnes of the
product in the last quarter of the year has an annual average of about
450,000 metric tonnes.
The increase in total production was attributed to
the recent commissioning of a new 400 metric tonnes per hour hydraulic
mining unit.
The firm is, however, yet to get a long-standing
Sh1.8 billion value added tax (VAT) refund claim from the Kenya Revenue
Authority (KRA).
The Australian mining firm said talks were underway
with the Treasury and the KRA to speed up the refund which had been
pending since January 2015.
Base managing director Tim Carstens said the
backlog needed to be cleared faster to save the firm from cash flow
challenges as it gears up for expansion.
“Refund backlog is not unusual in the African
environment but the focus is now to have the backlog cleared and ensure
that it does not impact negatively on our cash flow. It is quite
unpredictable though,” he said.
“The VAT claims are proceeding through the Kenya
Revenue Authority process, with a number of operational period claims,
totalling about $1.5 million, settled during the quarter.”
The refunds claims relate to the construction of the Kwale project and the period since operations commenced to December 2016.
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