Tiomin Kenya. The firm says it is preparing to hand over operations to Base Iron Limited. Photo/FILE
Australian miner Base Iron Limited has raised Kenya’s hopes of benefiting from Titanium deposits in Kwale after it bought a Canadian company that has been unable to raise money to start the project.
The mining of Titanium deposits looked headed for collapse when Tiomin Resources of Canada, which was awarded a mining license 12 years ago, changed its name to Vaaldiam Resources and said it would focus on operations in Brazil leaving Kenyan operations hanging in limbo.
But Base Iron Limited is finalising a contract that will see the firm splash Sh233 million to acquire Tiomin Kenya, a wholly owned subsidiary of Vaaldiam Resources and in the process rescue the mining fields believed to hold about 3.2 billion tonnes of titanium deposits.
The delay in starting mining raised concerns that Tiomin Resources was all along not keen on developing the Kwale minerals, but to sell the resources to the highest bidder and raise money for its operations in Peru and Brazil.
Some board members of Tiomin Resources differed with company President Robert Jackson when he attempted to sell Tiomin Kenya to China’s Jinchuan Group for Sh1.7 billion last year.
Jinchuan walked out of the deal after following delays in closing the venture, forcing Tiomin Resources to sell the operations at a much lower price of Sh233 million as the government piled pressure on the firm to start mining.
The deal would have given Jinchuan a 70 per cent stake in the Kwale mineral sands site, where the firm had hoped to mine an average of 330,000 tonnes of titanium-bearing ilmenite, 77,000 tonnes of rutile, and 37,000 tonnes of zircon a year. The proposed mine has a lifespan of 11 years.
Tiomin’s explanation that it was unable to get government support to remove settlers from the land for it to start operations were disapproved by failure to raise money to pay off land owners who had agreed to vacate.
Experts say Titanium deposits at the coast represent 14 per cent of the world’s titanium deposits and this could explain reasons behind Tiomin Resources wait for the highest bidder.
Tiomin Kenya said yesterday that it was preparing to hand over control of the firm to Base Iron Limited.
Closing transaction
“We are hoping to get the government approval any time now. We anticipate closing the transaction in May and allowing Base Iron to take control of the mining,” said Joe Schwarz, the general manager for Tiomin Kenya.
Kenya awarded an exploration license to the Canadian firm in 1998 to excavate the silvery-grey metallic element used in the manufacture of jet engines, missiles and paints, but constant boardroom wars and the withdrawal of potential financiers have left the project hanging in limbo.
O Monday, Tiomin Kenya said Base Iron was nearing the completion of a legal and technical due diligence and that the government had assured the two companies that it would approve the agreement to change ownership of the project.
Meeting conditions
“Meeting these conditions is crucial to reaching a settlement with Base, which will pave the way to development of the project. “The government of Kenya, through the office of the Commissioner of Mines & Geology, and various other branches of government have been extremely supportive of the transaction and expectation is that the project will move forward,” said Tiomin Kenya.
Base Iron is a relatively small mining company which recently listed at the Australian bourse through an Initial Public Offering.
It is primarily active in West Australia, the Kwale operations could be its first major project outside Australia.
Its arrival could save Tiomin Kenya, which has suffered several problems including the withdrawal in 2007 from ATW-Venture Corporation of Canada that had indicated interest in injecting Sh10.85 billion in the Kenyan mining project.
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