Kwale miner Base Titanium’s sales revenue fell by 72 percent in the quarter to March 2024 compared to the corresponding period in 2023 as export volumes declined due to the depletion of ore in the mining area.
The company’s sales declined to $20.21 million (Sh2.65 billion) from $72.44 million (Sh9.62 billion) a year earlier, signalling lower royalties and tax revenue for the government from the operation this year.
The Kwale operation is set to be shut down at the end of this year upon depletion of titanium ore, with the volume and grade of the product being produced declining progressively as the mines reach the end of their useful life.
The company’s Australian parent firm Base Resources said in a quarterly activities report that export volumes of titanium minerals ilmenite, rutile and zircon fell to 29,500 tonnes in the period from 114,100 tonnes in quarter one of 2023.
The company said ore in its south dune was depleted early in the quarter, cutting production in half to 48,500 from 98,700 metric tonnes in the first quarter of 2023. Production remains ongoing in the north dune and an area known as Bumamani.
The hit on revenue was, however, softened by a 7.5 percent increase in the average price per tonne of titanium ores to $685 per metric tonne, compared to $637 per metric tonne in the quarter to March 2023.
“Following the depletion of South Dune ore reserves, mining operations were successfully relocated to the Bumamani deposit over two weeks, resulting in reduced tonnage in the quarter,” said Base Resources in the update.
“After challenging conditions over the past few quarters, the market stabilised as demand improved and some downstream re-stocking supported flat pricing across all products.”
Base Resources took over the Kwale operation from Canada’s Tiomin Resources in 2010 for $3 million— Sh399.8 million at current exchange rates— and has been paying royalties and taxes since 2014 when shipment of the titanium ore started.
In the year ending June 2023, the company paid the government $43.71 million (Sh5.83 billion) in royalties and taxes, down from $64.8 million (Sh8.64 billion) in the preceding year.
The venture has also been profitable for the Australian multinational, which has earned billions of shillings in dividends, including an $84 million (Sh11.2 billion) payout in the year ended June 2023.
Base Resources is currently the subject of a takeover bid by US mineral resources firm Energy Fuels in a Sh32.6 billion (375 million Australian dollars) cash and stock deal.
