A sign post leading to the Base Titanium mining site within Kwale County. High Court has frozen cancellation of the firm’s licences by the Environment and Mineral Resources Minister Chirau Ali Mwakwere. Photo/AFP
What you need to know:
Mr Mwakwere cancelled three of four licences held by Base Resources on December 28 for what he termed as “non-performance.”
Base Titanium has contested the claims and told Justice Weldon Korir that Mr Mwakwere had no powers to cancel its licenses.
Base Resources, the Australian firm mining titanium in Kwale County, Wednesday received a temporary reprieve after the High Court froze the cancellation of the miner’s licences by Environment minister Chirau Ali Mwakwere.
Mr Mwakwere cancelled three of four licences held by Base Resources that cover an area of 113 square kilometres in Ganze, Kilifi County, on December 28 for what he termed as “non-performance.”
Base Titanium has contested the claims and told Justice Weldon Korir that Mr Mwakwere had no powers to cancel its licenses.
“The said statute does not confer powers or authority on the Minister for Environment and Natural Resources to revoke the said licences,” Mr Joe Schwartz, the Base Titanium general manager told the High Court.
“The decision made that the first applicant (the miner) has failed to submit detailed progress reports on prospecting and exploration under the said licences is unreasonable and unsustainable.”
Justice Korir gave orders suspending the minister’s decision until February 4, when the dispute will be mentioned in court.
Base Titanium said it was planning to start commercial operations on the three sites after starting production on its Sh25.5 billion Kwale Mineral Sand Project, the only site with a licence, in October.
The cancellation came amid opposition to Mr Mwakwere’s recent directive that foreign mining companies cede at least 35 per cent of their shareholding to Kenyan investors.
Base Resources lobbied the Treasury to rescind or suspend the rule.
“They were given a licence close to 15 years ago and they have nothing to show for it to date,” said Mr Mwakwere in an earlier interview with the Business Daily, adding that the cancellation was not targeted at Base Titanium because 16 other firms were also affected.
The firm got the licences in 2010 after acquiring Tiomin Resources, which was originally granted the licences in 1998.
However, its projects were delayed by a series of setbacks including demonstrations by environmental groups, disputes with local farmers over compensation for land, and drawn out talks with the government.
Cancellation of the licences has thrown Base Titanium into panic since the firm was planning to start commercial operations on the three blocks and had sought for fresh licences on land adjacent to the affected blocks.
In October, the Australian firm had applied to the Commissioner of Mines for three additional blocks in Kilifi to consolidate its grip on Kenya’s mining sector.
Mr Schwartz said that the three Kilifi blocks contained about 950 million tonnes of mineral sands such as rutile, zircon, and ilmenite estimated at Sh420 billion. The Kwale project, whose production will start in October, will have an initial 11-year mine life that could possibly be extended.
It is expected to produce 330,000 tonnes of ilmenite a year, about 10 per cent of the world’s supply, another 80,000 tonnes of rutile per year (about 14 per cent of global output), and a further 40,000 tonnes of zircon.
Base Resources acquired Tiomin’s assets for $3 million and pledged a two per cent royalty from revenues. It will have to pay an additional 2.5 per cent royalty to the government once production commences in 2013.
Mr Mwakwere said that the firm’s inactivity was hurting Kenya’s mining potential. A surge in global commodity prices and investor appetite for new frontier markets has revived interest in Kenya’s mining potential.
Investors are interested in gold, mineral sands such as titanium, coal, and mineral earths such as titanium, rutile, zircon, and ilmenite.
Firms involved include UK-listed GoldPlat; China’s Fenxi Mining (coal); and London-listed African Barrick Gold is prospecting for gold in western Kenya.
