Chinese firm takes control of Kwale titanium mines

State-owned Chinese mining conglomerate Jinchuan has acquired a controlling stake in Tiomin Kenya Limited, renewing hope that the Kwale titanium mining project that has been in limbo for more than 10 years will finally start.

Tiomin Resources Inc., the Canadian firm that fully owns Tiomin Kenya Limited, says it has sold a controlling stake in its Kenya subsidiary to the Chinese firm under an investment agreement signed on Monday.

The deal offers Jinchuan a 70 per cent stake in Tiomin Kenya Limited, leaving the Canadian parent with 30 per cent.

Jinchuan is expected to immediately invest $25 million into the mining project to offer it the financial muscle it needs to take-off.

Tiomin Kenya has full rights over titanium deposits in Kwale District but a combination of financial difficulties, boardroom wrangles in the parent company and controversy over relocation of displaced landowners has rendered it unable to exploit the minerals.

The new shareholding arrangement comes a year after Tiomin and Jinchuan signed a Memorandum of Understanding in July last year, paving the way for Jinchuan to invest about Sh2 billion in Tiomin Kenya.

“Tiomin Resources Inc. is pleased to announce that it has taken a significant step forward and signed an Investment Agreement with Jinchuan Group Limited,” a statement from the Canadian firm said.

This latest investment agreement bears the same terms as last year’s and requires Jinchuan to finance, develop and operate Kwale Mineral Sands Project.

“Closing this flagship deal, which has had such a long and painful gestation period, is a key event for Tiomin,” said Robert Jackson, the President and CEO of Tiomin Inc.

The deal must however be approved by the Government to be concluded since the initial five years that Tiomin had to start work on the project have expired.

Leading producers

Titanium is mainly used in the aviation and medical industries.

Jinchuan’s acquisition of a controlling stake in the mining project is expected to bring to a close the long-running uncertainty over what promises to be Kenya’s biggest mining project with the capacity to generate up to Sh3 billion annually.

That should significantly increase the contribution of the mining sector to the Kenyan economy that according to the Economic Survey 2009 hit Sh12.3 billion mark in 2008.

Soda ash and fluorspar, which accounted for 1.5 billion tonnes last year, currently account for nearly 80 per cent of the mining sector’s total output.