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Kenya joins mineral exporters as first titanium cargo leaves port

By Jackson Okoth and Philip Mwakio
Updated Fri, February 14th 2014 at 00:00 GMT +3

By Jackson Okoth and Philip Mwakio

Mombasa, Kenya: Kenya has joined the league of mineral exporters with the first shipment of 25,000 tonnes of Titanium to China.

Thursday, Najib Balala, cabinet secretary for Mining flagged off the first consignment of minerals from Kwale Mineral Sands Project, owned by Base Titanium. 

The firm, the Kenyan subsidiary of the Australian company Base Resources was on Wednesday granted an export licence, giving it the green light to ship its mineral products to overseas markets.

“It has taken us long before exporting Titanium minerals to the international market,” said Balala.

Rough estimates

Base Titanium made its first shipment of 25,000 tonnes of ilmenite — one of the major components found in the Titanium mineral ore — to China, via Mv Africa Eagle at the Base Titanium Likoni Ship Loading Facility.

Rough estimates show that 250,000 tonnes of Titanium is found in Kwale while some 3.2 billion tonnes of the same mineral deposits can be found in Kilifi area. The Kwale Sands is the first large mining development in Kenya since 1911.

Base Titanium is expected to export over 450,000 tonnes this year, earning between Sh15 and Sh20 billion. So far, investors and lenders have pumped in Sh35 billion into the Base Titanium project.         

Base Titanium Executive Director Collin Bwye said the first export symbolised transition from a developer to a mining company developing a world-class mining venture in Kenya.  He said since Base Titanium acquired Kwale Mineral Sands, they have pumped in Sh35 billion to develop support infrastructure.

“At the peak of construction, the firm employed about 3,000 people with a further Sh700 million in community projects around the mine site,’’ Mr Bwye said.

“We are shipping a load of 25,000 tonnes of Ilmenite to China — an ingredient used in the manufacture of paints, plastics and paper, ending anxiety over delays by the Ministry of Mining to issue this permit,” said Simon Wall, External Affairs and Development manager, Base Titanium.

This is the first time the $310 million Base Titanium plant is hitting the export market after its initial attempts to export another 100 tonnes failed to take off.

The Kenya Chamber of Mines (KCM) Chairman, Adiel Gitari said, “This large-scale mining operation and shipment is a clear signal to the rest of the world that Kenya is open for business in all sectors, mining included.”

Adjust royalties

 While it took the intervention of Treasury officials and Office of the President for Base Titanium to get an export permit, outstanding issues remain.

On the list is a decision by Mr Balala in August 2013 to adjust upwards royalties paid by mining companies from 2.5 per cent of total turnover to 10 per cent.

Officials at Base Titanium consider this rate too high and go against the investment agreement, which supersedes all other regulations issued thereafter.

An investment agreement signed between the Government of Kenya and Base Titanium locks royalties at 2.5 per cent for five years after which the rate can be reviewed.

This rate is higher than 1.5 per cent in India and 5 per cent in other more advanced mining jurisdictions such as South Africa or Australia.

The Kwale mining project, designed to last for some 13 years, has an annual turnover of $4 million (Sh340 billion).

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