Australia firm gets Sh2bn dividend from Kwale miner

Base Titanium mining plant in Kwale County.

Photo credit: File | Kevin Odit | Nation Media Group

Base Titanium, the company extracting titanium minerals in Kwale County, will pay its Australian parent firm Base Resources an interim dividend of Sh2.03 billion after earning record revenue for the six months ended December 2022.

Base Resources said in a financial update that the Kenya operation realised revenue of $126.6 million (Sh16.03 billion) in the period, driven by a 32 percent jump in the sales price of its product in the market compared to the corresponding period in 2021.

The company said that the Kwale operation produced 38,384 tonnes of rutile, 170,771 tonnes of ilmenite, 14,043 tonnes of zircon and a combined 9,228 tonnes of low-grade rutile and zircon products in the half-year period.

Rutile achieved an average price increase of 36 percent compared to the previous period, while Zircon and ilmenite prices rose by 29 percent and 12 percent respectively.

As a result of the higher mineral earnings, the company held net cash of $60.2 million (Sh7.6 billion) at the end of the period, part of which is now being distributed as dividends to shareholders.

“We have achieved another consistent and operationally strong half-year period at Kwale Operations which, when combined with increased prices for all products, has resulted in record first-half revenue and the continuation of returns to shareholders via another dividend,” said Base Resources managing director Tim Carstens.

The Kenyan operation had also paid the parent a record dividend of Sh10.7 billion in the year ended June 2022, when its net income grew threefold, highlighting the lucrative nature of the operation on the back of higher global titanium prices.

The Kenyan government was one of the major beneficiaries of the titanium sales boom in the previous financial year, collecting a total of Sh6 billion in the form of taxes and royalties.

The dividend attracted a withholding tax of $13.5 million (Sh1.7 billion) in the period. Base Titanium also paid a corporate income tax of $19.6 million (Sh2.5 billion) and mining royalties worth $18 million (Sh2.3 billion).

The National Treasury is now in line for a slice of the new half-year Sh2.03 billion dividend payout via the withholding tax, which will net it about Sh305 million.

The mining firm pays royalties at a rate of five percent of sales of the titanium minerals, while the parent is charged a withholding tax of 15 percent on the dividends it receives from the local subsidiary.

The titanium mining venture is one of the most successful foreign direct investments that Kenya has attracted in the past decade, creating jobs, generating revenue for the government, and creating opportunities for private businesses.

The mining venture’s success has been helped by rising prices for titanium minerals over the years, including from major markets like China.

Titanium is an important pigment for industrial, domestic, and artistic applications. It is also a choice material for joint replacement, tooth implants, and body piercings.

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