Economy

Base Titanium, Balala seek to end row

base

Workers at the multi- billion Base Titanium factory under construction at Maumba in Kwale. The firm is locked in an exports licence dispute with Mining ministry. FILE

A stalemate between Kenya and Base Titanium over sharing of revenues from mineral exports could be headed for a resolution during the Indaba Mining Conference, which starts in Cape Town, South Africa on Monday.

Mining secretary Najib Balala said on Friday he will hold the final round of discussions with top executives of the Australian company, hoping to unlock the dispute that has blocked the exports since last year.

“We are meeting the company executives at Indaba. These are solvable issues that we plan to finalise in South Africa but the final agreement will be signed here in Nairobi,” said Mr Balala.

If the talks are successful, the export licence could be issued as early as next week setting Kenya up for its first rutile export of 100 tonnes.

Mr Balala provoked the standoff in August last year when he doubled the royalties for mineral sands from five to 10 per cent. The company had during the Kibaki administration negotiated royalties of 2.5 per cent in the first five years of operation. This would have risen to five per cent for the rest of the mine’s life.

READ: Kenya targets more royalties from mining firms

Last week, Mr Balala said he would also be seeking fresh mineral production audits and a transparent method of calculating revenue in the talks before the ministry grants the firm an export licence.

The minister is already in South Africa for the Indaba Mining Conference, a forum which brings together mining investors, fund managers and financiers from around the world. The conference ends on Thursday.

Base Titanium said besides the shipment of rutile from its Likoni jetty in Mombasa, the export of ilmenite and zircon would start later this year.

“The shipment will mark Kenya’s emergence as a globally significant supplier of titanium and zircon minerals,” said Base Titanium’s external affairs and development general manager Joe Schwarz shortly after the firm applied for an export licence.

At full capacity, the Kwale-based miner expects to produce 330,000 tonnes of ilmenite, 80,000 tonnes of rutile and 25,000 tonnes of zircon annually. It estimates the site has a reserve of 146 million tonnes of ore even though independent analysts have raised the figure to three billion.

In past interviews, the firm said that it needed rebates in the first five years to recover Sh26 billion in capital investments on setting up a processing plant, an eight-kilometre paved road, a power transmission line and the port loading jetty.

The business plan promises Sh18.7 billion in taxes and royalties, jobs, technology and skills transfer and millions of shillings in community projects over a 13-year life.

Last week, the Cabinet approved a new mining Bill that seeks to reduce licences to two – prospecting and mining – saying the many permits had created loopholes for corruption. This suggests that mining firms would no longer have to apply for export licences.