Kwale titanium miner sales decline to Sh4bn on exports plunge

Australian mining firm Base Resources reported a 7.8 percent decline in revenue from its Kwale titanium operation in the quarter ended September on reduced exports.

The firm’s sales of titanium minerals ilmenite, rutile and zircon dropped to Sh4 billion in the review period from Sh4.3 billion a year earlier.

The performance means the Kenyan government will earn lower royalties, which the multinational now pays at a rate of five percent of export sales value.

The sales drop was largely the result of reduced shipments, with the company indicating that it delayed exports to benefit from rising prices of the commodity in the international markets.

A total of 54,137 tonnes were shipped out in the review period compared to 94,994 tonnes a year earlier, representing a 43 percent drop even as production rose 10.7 percent to Sh97,203 tonnes.

The average price per tonne meanwhile rallied 61.7 percent to $668 (Sh74,174).

“Average unit revenue increased to $668 (Sh74,174) per tonne…due to sales mix and increased prices for all products. Due to the above factors and the timing of sales, the revenue to cost of goods sold ratio for the quarter remained steady at 2.5,” the multinational said.

“Despite the usual seasonal dip in the Chinese pigment market at the start of the northern hemisphere summer, which has since recovered, overall global pigment demand remained very strong through the quarter leading to ongoing robust demand for titanium feedstocks.”

The multinational’s local subsidiary, Base Titanium, recently signed a deal to pay the Kenyan government $18.6 million (Sh2 billion) in the form of higher royalties in exchange for an expanded mining area.