Titanium miner gets boost with tax cut
Posted Sunday, July 8 2012 at 16:11
Finance minister Njeru Githae has cut the corporate tax of Australia’s Base Resources by half to encourage the company to deepen its planned mining of titanium near Mombasa.
The move will see the Australian firm pay corporate tax of 15 per cent as opposed to the set 30 per cent for a period of 10 years.
“The Minister for Finance directs that the corporate income tax on gains or profits derived by Base Titanium Limited from mining operations will be reduced by 50 per cent from the date of commercial production for a period of 10 years,” said Mr Githae through a special Kenya Gazette notice number 65.
Base Resources Ltd said it expects to start mining titanium in Kenya between June and September next year with the first shipments in 2014. But it has started operations with construction of infrastructure after lengthy delays due to demonstrations by environmental groups, disputes with farmers over land compensation and talks with the government.
Base Resources expects its Kenyan project’s annual production of titanium ores to include 330,000 tonnes of ilmenite, about 10 per cent of the world’s supply, and 80,000 tonnes of rutile, or 14 per cent of global output.
Titanium is an important pigment for industrial, domestic and artistic applications. Titanium is also a choice material for joint replacement, tooth implants and body piercing.
Base also expects to produce 40,000 tonnes of zircon, another type of mineral, mainly used in the ceramics industry.
The titanium mining along with that of gold and nobium is set to put Kenya on the global mining map and lift earnings of the sector that stood at Sh18.3 billion last year up from Sh9.6 billion in 2009.
Kenya awarded its first mining license to UK’s Gold Plat in October and offered Canadian firm Cortec Mining Kenya rights to explore rare earths and niobium minerals in Kwale where Base Resources is stationed.
The Australian firm raised $162.3 million (Sh13.6 billion) through a cash call and debt of $170 million (Sh14.2 billion) for the titanium project.
“With funding in place, Base is well advanced with pre-implementation activities and is working towards project commencement in early October.
A timetable for development will see production commence in the third quarter of 2013,” the company said.