China rout hits Base Resources ilmenite sales

Base Resources recorded a 21 per cent decline in sales of ilmenite during the quarter to December last year, dealing a blow to the company’s revenue.

The Australian company is licensed to mine titanium in Kwale. Sales of ilmenite, one of the minerals processed from the titanium ore, reduced to 103,035 tonnes during the period under review from 130,608 tonnes sold in the quarter to September.

However, sales of other minerals- rutile and zircon- increased to 23,896 and 7,723 tonnes respectively.

The mining company attributed the drop in sales to the slowdown in China’s economic growth which was also experienced in parts of Europe which it says eroded demand for the ilmenite mineral.

“The economic uncertainty China and Europe experienced in the prior quarter continued to weigh on customer confidence through this quarter. This combined with the usual seasonal slowdown in demand has resulted in ongoing cautious buying behaviour from customers,” the company said in a statement.

A warehouse in China

Base Resources operates a warehouse in China as part of its strategy to secure market share in the Asian country by offering product for immediate delivery in small volumes than could be justified for a direct shipment from Kenya.

This also allows the company to tap into smaller scale customers that are not able to commit to purchase of large shipment volumes.

Last week, Base Resources announced that it was expecting a decline in revenue following a notice to delay purchase of up to 100,000 tonnes of ilmenite by an undisclosed buyer who had entered into a sales agreement with the mining firm.

According to Base Resources, the buyer suffered a delay in commissioning its factory, consequently impacting on its intake of ilmenite for an unspecified period.

It was due to buy the mineral at a price of $116 per tonne by the end of June this year with the sales agreement applying for another further three years.