Base Resources titanium plant at Nguluku Maumba. PHOTO | FILE
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.
edokoth@ke.nationmedia.com
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