Coast firm exports Sh320m titanium

The first shipment of titanium Thursday left Kenya’s shore at the Mombasa port.

After more than four years of exploration and extraction at the Kwale mine in the South Coast, and 18 years of waiting, Base Titanium firm finally loaded 25,000 tonnes of Ilmenite extract of titanium for export to China.

This is part of the estimated 330,000 tonnes to be shipped out each year.

“We are going to be doing bulk shipments like this more or less every three to four weeks,” Mr Joe Swartz, the company’s general manager told Nation.

He and other company officials declined to comment on whether there were any adjustments in royalty fees that the company was to pay the government.

A dispute over the fee had led to the delay in the award of an export licence. Mining Cabinet secretary Najib Balala only said that the firm and the government were still discussing the issue.

“Calculations of royalties will only be done after shipments have been dispatched,” he said. Before yesterday’s shipment, Base Titanium had been seeking an export licence for almost three months.

The permit was eventually issued on Wednesday after a meeting in Nairobi to resolve the stalemate. The delay was caused by tough conditions that the government wanted the company to meet before it could export the mineral.  

Mr Simon Wall, the firm’s external affairs manager, said the government needed to know what was being exported, the quantity and the price at which it was being sold.

At the current price of about Sh12,825 ($150) a tonne, the 25,000 tonnes could fetch about Sh320.6 million ($3.78 million).

One of the contentious issues has been the government’s demand that Base Titanium, an Australian firm, should pay 10 per cent of gross revenues as royalties. At the signing of the investment agreement, the royalty had been set at 2.5 per cent of exports.  

Some countries like South Africa and Australia, which have some of the most advanced mining industries in the world, charge five per cent, which is regarded the highest according to the Base Titanium officials.

They had argued that the 10 per cent Kenya was seeking was double the highest in the world. They also argued that for Kenya, which has no mining history, 2.5 per cent as earlier agreed was fair but could be increased with subsequent exports.

Corporate tax was also reduced from 30 to 15 per cent as an incentive for 10 years.

Ilmenite and rutile are used to make pigment for colouring. Zircon is used in the ceramics industry to enable colouring of the ceramics. They are in high demand in China, US, Japan and the Middle East.

Demand for the minerals is driven by products related to urbanisation, with demand for cars, houses and many products that require colour pushing up demand globally.