Australian mining firm Base Resources reported a 25.8 percent decline in revenue from its Kwale titanium operation in the quarter ended December on the back of reduced deliveries to customers.
The firm’s sales of ilmenite, rutile and zircon fell to Sh3.6 billion in the review period compared to Sh4.9 billion the year before.
The performance means the Kenyan government will earn lower royalties which the multinational pays at a rate of 2.5 percent of export sales value.
Australian mining firm Base Resources reported a 25.8 percent decline in revenue from its Kwale titanium operation in the quarter ended December on the back of reduced deliveries to customers.
The firm’s sales of ilmenite, rutile and zircon fell to Sh3.6 billion in the review period compared to Sh4.9 billion the year before.
The performance means the Kenyan government will earn lower royalties which the multinational pays at a rate of 2.5 percent of export sales value.
The sales drop was largely the result of reduced shipments which offset higher prices of the commodities, with production holding up relatively better compared to product deliveries.
A total of 72,214 tonnes were shipped out in the review period compared to 127,328 tonnes a year earlier, representing a 43.2 percent drop.
Average price per tonne meanwhile rallied 30.7 percent to $464 (Sh51,000) but this was not enough to lift the turnover.
Base Resources attributed the higher prices to increased demand from producers of pigment, a titanium derivative used in various applications including coating and painting.
“Demand for ilmenite as a feedstock for Chinese pigment producers exceeded supply through the quarter resulting in further price gains for ilmenite,” the multinational said in a trading update.
“Ongoing strong demand and constrained supply will maintain a tight ilmenite market through the March quarter and is likely to result in further price increases.”
Production at the Kwale operation dropped 13.2 percent to 103,864 tonnes in the review period compared to 119,687 tonnes a year earlier.
The company says it was still owed VAT refunds amounting to $16.6 million (Sh1.8 billion) as of December 31, 2020. The claim arises from both the construction of the mining project and ongoing operations at the facility.
Base Resources had received refunds running into $2 million (Sh220 million) during the quarter under review. The company plans to be more assertive in fast-tracking collections of the amounts owed by Kenya Revenue Authority (KRA).
“Base Resources is continuing to actively engage with the Kenyan National Treasury and the Kenya Revenue Authority in relation to the outstanding VAT refund claims and is also taking steps under the investment agreement to secure its position with respect to the VAT paid during construction of the Kwale Project,” the company said.
Delays in remitting VAT refunds is one of the biggest complaints about doing business in Kenya.
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