Kwale-based miner Base Titanium’s sales in the quarter ending December 2023 fell by 22.3 percent to Sh8.04 billion against the corresponding period in 2022, weighed down by lower global titanium prices and reduced export volumes as the operation nears its planned close end of the year.
The company’s Australian parent, Base Resources, said in a quarterly activity report that exported volumes of titanium minerals ilmenite, rutile and zircon from Kenya declined to 84,600 tonnes during the quarter compared to 98,500 tonnes in the quarter to December 2022.
The average price per tonne for these minerals fell to $589 (Sh95,065) in the quarter, from $651 (Sh105.071) in 2022, on account of reduced demand for exports from the Chinese and European markets.
“Market conditions remained challenging through the quarter due to the ongoing economic uncertainty and sluggish property sectors across key markets. Sales volumes were in line with plan for the quarter but, as expected, there was modest price erosion across all products,” said Base Resources in the report.
“Ilmenite supply in China, mostly from domestic mines and imported ilmenite concentrates, increased at a faster rate than demand through calendar year 2023 which has moved the market into a slight over-supply and put pressure on ilmenite prices in recent months.”
The reduced export quantities coupled with lower prices in the global market will erode the royalties, corporate taxes and withholding taxes that the government will earn from the Kwale operation.
In the year ending June 2023, the company paid the government $43.71 million (Sh7 billion) in royalties and taxes, down from $64.8 million (Sh10.4 billion) in the prior year.
The 2023 financial year payout comprised $19.1 million in corporate income tax, $14.8 million in mineral royalties, and $2.5 million in withholding taxes on non-government royalties and services.
The company also paid $18.7 million in utilities and other service charges to government corporations and county governments.
Base Resources took over the Kwale operation from Canada’s Tiomin Resources in 2010 for $3 million (Sh481 million at current exchange rates) and has been paying royalties and taxes since 2014 when shipment of ilmenite, rutile and zircon started.
The venture has also been profitable for the Australian multinational, which has earned billions of shillings in dividends, including an $84 million (Sh13.5 billion) payout in the year ended June 2023.
Job loss
The multinational will, however, shut the Kwale operation at the end of this year, saying there are not enough titanium resources in new areas it has been exploring to sustain the operations beyond December.
The company will instead turn its focus to Madagascar where it is working to start mining while maintaining exploration activities in Kenya and Tanzania.
The depletion of the economically viable ore deposit in the Kwale operation will bring a loss of jobs for the company’s 1,746 employees and contractors.
Other stakeholders that will lose out include suppliers who earned $66.2 million (Sh10.6 billion) in revenues from their dealings with the miner in the year to June 2023.
