Companies

Kwale titanium firm pays Treasury Sh1.3bn royalties

base

Base Resources plant in Nguluku Maumba in Kwale. FILE PHOTO | NMG

The government earned Sh1.3 billion royalties from Australian multinational Base Resources in the year ended June.

Base Resources, which has a licence to mine titanium in Kwale, has made the disclosure in its latest annual report.

The amount represents a 22.7 per cent increase from the previous year when the government earned royalties of Sh1.1 billion from the Kwale operation.

The higher payouts have been driven by a rally in the price of the titanium minerals, including rutile and zircon. Base Resources pays royalties at a rate of 2.5 per cent but says it is ready to double this if the government agrees to a deal it has proposed.

“The group is in ongoing discussions with the Government of Kenya (GoK) with respect to the royalty rate payable for the Kwale Operation in the context of resolution of a number of outstanding issues, including refund of $17.1 million VAT (Sh17.2 billion) receivables related to the construction of Kwale Operations,” the multinational says in the report.

“Royalty costs are provided for, and expensed, on the basis of a five per cent royalty rate being payable to the GoK, whereas the royalty rate applicable under the terms of the special mining lease, and currently being paid, is 2.5 per cent.”

Base Resources says it had provided an extra Sh1.6 billion as royalties payable in the year ended June in the event that the parties reached an agreement to double the rate to five per cent.

The amount represents a 44.9 per cent increase from Sh1.1 billion provided a year earlier.