Titanium firm to take on Mwakwere over licence recall
The site at Maumba where Base Titanium plans to build a dam for mining purposes in Kwale. The company recorded a rise in mineral production in the quarter that ended in December 2014. PHOTO / FILE/ NATION MEDIA GROUP.
What you need to know:
Base Resources claimed it had not yet received official communication of last week’s gazette notice revoking three of its four licences from the Department of Mines and Geology.
The firm is expected to begin mining in Kwale through its local subsidiary, Base Titanium, in the fourth quarter of this year.
It holds a licence for an area estimated to have 950 million tonnes of rutile, zircon and ilmenite and other minerals worth around Sh420 billion.
Base Resources, the Australian firm mining titanium in Kwale County, has said that it will contest the government decision to cancel three of its licences at the Coast in court.
Base Resources claimed it had not yet received official communication of last week’s gazette notice revoking three of its four licences from the Department of Mines and Geology.
Environment and Mineral Resources minister Chirau Ali Mwakwere on Friday cancelled three licences belonging to Base Resources for “non-performance”.
“The company is taking the appropriate legal action to protect the rights,” said Base Resources in a statement issued Tuesday.
Base Resources is expected to begin mining in Kwale through its local subsidiary, Base Titanium, in the fourth quarter of this year.
It holds a licence for an area estimated to have 950 million tonnes of rutile, zircon and ilmenite and other minerals worth around Sh420 billion ($5 billion).
The company has, however, come under pressure for taking too long to start mining on three other blocks issued by the government more than a decade ago. “They were given a licence close to 15 years ago and they have nothing to show for it to date,” said Mr Mwakwere.
Base Resources, however, countered that it had met all the licensing requirements. “Furthermore, the company successfully had these three licenses renewed in 2011 and 2012, as such, Base can see no legal basis for the gazette notice purporting to now cancel them,” said the statement.
“The gazette notice has no relationship in any way to the Company’s 100 per cent owned Kwale Project which is covered by a 21-year special mining lease held directly by Base,” added the statement.
The confusion on whether the Base Titainium’s licences had been cancelled persists after the same ministry gazetted a new law in September that would require mining firms to set aside a 35 per cent ownership for locals.
Foreign-owned miners were given a grace period of between three and five years to comply with the law but the main concern by miners is that the requirement has far-reaching consequences yet it was not considered at the time of making financial commitments.
The Base Resources chief executive Tim Carstens said that the regulatory changes were creating uncertainty that is soiling Kenya’s name as a global investment destination.
“Unfortunately, this confusion is becoming all too familiar for the mining industry in this country and is unquestionably doing damage,” said Mr Carstens.
The firm’s share price has not been affected by minerals ministry’s recent action but following the 35 per cent rule, the share price halved to Australian dollar 0.25 (Sh23.17).
Confusion and conflict over minerals is an emerging trend as Kenya discovers the resources. Fenxi Mining Industry, the Chinese firm mining coal in Kitui, has also run into trouble with locals over sharing of revenues.
Base Resources said that it would still go ahead with a plan that would make it easy for Kenyan investors to buy the miner’s shares that are listed on the Australia Securities Exchange.
The plan is to have prospective investors buy shares through local stockbrokers.
“Once we have that in place, which should be in the next couple of weeks, we will announce who the brokers are and how to go about it,” said Mr Carstens.
