Kwale miner Base Titanium saw its sales surge 72.8 percent to Sh7.5 billion in the quarter ended September on increased exports and higher prices of the minerals in the international markets.
The company’s sales in the prior year stood at Sh4.3 billion. The jump in turnover will boost earnings for the Kenyan government, which is paid royalties at a rate of five percent of sales.
Base Titanium sold 87,500 tonnes of the titanium minerals ilmenite, rutile, and zircon in the review period, representing a 61.7 percent increase from 54,100 tonnes a year earlier.
The minerals fetched an average price per tonne of $714 (Sh86,536), marking a 6.8 percent jump from $668 (Sh80,961).
Production expanded 20.4 percent from 97,300 tonnes to 117,200 tonnes, putting the miner in a position to enhance exports of the titanium minerals that are key pigments for industrial, domestic, and artistic applications.
Demand for most mineral sands products is expected to ease in the current quarter ending December but the slide could be mitigated by supply constraints, according to the miner’s parent firm Base Resources.
“While it is expected that the economic situation in Europe will reduce overall pigment demand, it is expected to continue to support Chinese pigment exports, which will, in turn, support demand for ilmenite imported into China,” said Australian multinational Base Resources of its Kenyan subsidiary’s operations in a trading update.
“Most Chinese pigment exporters are dependent on imported ilmenite, as opposed to domestic ilmenite, for quality and/or logistics reasons.”
The local unit spent Sh1.1 billion ($9.2 million) on preparatory work on a new mining site at its Kwale operation in the quarter under review, with ore extraction expected to start next March.
Base Titanium has commenced land acquisition and procurement of equipment during the third quarter for the new mining site, known as Bumamani.
Through the Bumamani project, the miner expects to extend the life of the Kwale operation by about 13 months to December 2024, setting itself and the government up for additional revenue at a time when the price of titanium has gone up in recent years.
The new mining area, which covers what is known as the Kwale North Dune, is expected to yield up to 17.9 million tonnes of titanium ore, out of which the firm expects to get 42,000 tonnes of rutile, 171,000 tonnes of ilmenite and 20,000 tonnes of zircon.
In the quarter ended June, capital expenditure on the new site stood at just Sh12 million ($0.1 million), indicating that activities only commenced from July onwards.
In total, the company expects a total capital expenditure of Sh3.4 billion ($28.1 million) on the new site, which will cover the acquisition of land and the additional mine services and infrastructure that will be required.