State gets Sh400m from mineral sales

Workers at Base Titanium's mineral sand mines in Kwale County. Mineral sand prices are on the rise in the international market. [File, Standard]

The Government has pocketed over Sh400 million over the 12 months to June in royalties from the sale of mineral sands extracted in Kwale County.

Base Titanium, which has been extracting and exporting minerals in the coastal region, said it had paid $4 million (Sh416 million) over the past one year, but was yet to get close to Sh2 billion owed to it in tax refunds.

The firm remits 2.5 per cent of its revenues from the sale of mineral sands such as zircon, rutile and ilmenite to Government as royalties.

China demand

The mineral sands are the primary sources of titanium oxide and are used as a base pigment in paint and manufacture of ceramics as well as production of titanium.

Base Titanium General Manager External Affairs and Development Joe Schwarz said yesterday there were expectations that prices of the mineral sands would go up in the coming months, which would push up the amount paid to Government. Growth in prices is expected to be driven by demand from China.

“The amount of royalties that goes to the Government will go up with increase in prices,” said Mr Schwarz during a quarterly briefing on the firm’s activities in Kwale.

“There are increasing signs of an emerging supply deficit and there is an expectation that mainstream contracted rutile prices will experience upward momentum through the second half of 2017. Spot prices of rutile increased sharply through the quarter (to June), with prices in China increasing by over 30 per cent.”

He added that prices of the other mineral sands ilmenite and zircon were also expected to go up in the half to December. There have been proposals to increase the royalties remitted to Government, from the current 2.5 per cent to between five and 10 per cent.

Despite the upsurge in royalties paid to the Government, the firm said Kenya Revenue Authority was holding close to Sh2 billion owed to Base Titanium in unpaid tax refunds.

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