Base Resources eyes Sh2.3bn tax refund in Treasury payout

Australian miner Base Resources expects a Sh2.3 billion tax refund from the Kenya Revenue Authority (KRA) in the next three months.

The cash, according to the miner, is mostly from the value added tax (VAT) paid for the construction of the Sh26.4 billion Kwale Mineral Sands Project that began in December 2011.

Base Resources is pegging prompt payment on Treasury secretary Henry Rotich’s pledge that the government would pay all its VAT refund dues in this quarter.

“This claim is currently proceeding through the Kenya Revenue Authority process. The Kenyan Cabinet secretary to the Treasury has recently announced the Government of Kenya’s intention to settle all outstanding VAT claims by April 2015,” said the firm in a statement.

Last October, Mr Rotich said the government would begin clearing the VAT refunds backlog beginning this month.

“I expect the first batch of claims amounting to Sh10 billion to be paid in the month of January 2015, with the balance being cleared within the same quarter,” said Mr Rotich.

READ: Treasury to pay tax refunds in January

Spared export levy

Base Resources chief executive Tim Carstens said that the miner has been spared a proposed export levy by Kwale county after Attorney-General Githu Muigai reportedly advised both the national and county governments the proposed tax is unconstitutional.

The county government had proposed a Sh5,000 levy for every tonne of ilmenite and rutile exported from the Kwale Mineral Sands Project.

Base Resources Quarterly Activities Report released Tuesday shows 53,345 dry metric tonnes (dmt) of ilmenite and 23,328 dmt of rutile were exported in the last quarter, which implies the shipments should have earned Kwale around Sh384 million.

Base also exported 5,883 dmt of zircon in the period.

Mr Carstens said the listed Australian miner expects to make $150 million (Sh13.7 billion) in the financial year ended June 30, 2015 but should prices of minerals improve the firm would post stronger revenues.

“We are expecting some price improvements which could improve this to $160 million.”

The first shipment from the Kwale mines was made in February 2014 and in the last financial year, Base Resources made $29.2 million in sales.

READ: Base Resources Kwale mine set for more exports

The project is expected to earn Base Resources Sh64 billion over the mine’s 13-year life and the government Sh20 billion in royalties and other taxes.

A study by the Institute of Economic Affairs estimates the mining industry as a whole expects to generate Sh255 billion per year for the next 24 years.