Base Resources workers construct a dam in Maumba. The miner said it will finish construction between July and September and start exporting by end year. Photo/File
What you need to know:
The miner has brought forward its operational timelines and expects to complete construction between July and September, paving way for first shipment of titanium in the quarter ending December.
The firm 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.
Base Resources, the Australian firm mining titanium in Kwale County, is expected to start operations earlier than expected as it fights to overturn the cancellation of three of its four licenses.
The company had expected to complete construction in the fourth quarter and start exporting titanium by March next year.
The miner has brought forward its operational timelines and expects to complete construction between July and September, paving way for first shipment of titanium in the quarter ending December.
“The project construction continues to be on schedule for practical completion in Q3 2013 and first shipment in Q4 2013,” says Base Resources in a statement.”
The operational progress report comes at a moment when the firm moved to the High Court to contest the decision by the Environment and Mineral Resources minister Chirau Ali Mwakwere to cancel its licenses over non-performance.
The firm 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.
PROPARCO, alongside Germany’s DEG, and Netherland’s FMO last month lent $52 million (Sh4.4 billion) loan to Base Resources after the financiers committed to advancing a total of $170 million (Sh14.6 billion) to the mining operation.
The remaining portion of the loan will be advanced on a quarterly basis and the next disbursement will be made next month.
The company went to court where it obtained temporary orders suspending the minister’s decision until February 4 when the matter will be mentioned. The cancelled licenses cover an area of 113 square kilometres in Kilifi County.
Cancellation of the licences has thrown miner 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.
Mr Mwakwere argues that the company has made little progress after it was given the license nearly 15 years ago, adding that the cancellation was not targeted at Base Resources since 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.
The Sh25 billion projects is Kenya’s first major mining project in over 50 years and is projected to create around 350 new jobs.
In its entire life, the project is expected to record net earnings of $2 billion (Sh172 billion) and generate $270 million (Sh23.2 billion) as income tax and royalties to the Kenyan government.
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 Titanium is expected to sell about 35 per cent of the titanium to US-based firm DuPont with which it signed a purchase deal in 2011.
