Australian mining firm Base Resources exported titanium worth Sh5.2 billion from its Kwale mine in the quarter ended December 2017, benefitting from the mineral’s higher price in the international markets.
The Kenyan government, which the multinational pays a royalty at the rate of 2.5 per cent of sales, is expected to earn some Sh130 million in the review period.
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Base says in a trading update that its exports of Ilmenite, rutile, zircon and low-grade zircon stood at 156,362 tonnes in the review period or a 20.6 per cent increase from 129,649 tonnes the year before.
Rutile is used in the manufacture of refractory ceramic, zirconium is mainly used in linings for furnaces, kilns, incinerators and reactors; while Ilmenite is mined for titanium dioxide production used as a base pigment in paint, paper and plastics.
The increased export volumes coincided with higher prices of the commodity to lift the sales value 55.8 per cent to Sh5.2 billion, up from the previous period’s Sh3.3 billion.
“When combined with the higher zircon prices achieved in the quarter, the average revenue per tonne increased to a record $323 per tonne,” Base said in a statement.
The average revenue per tonne stood at $250 a year earlier.
The multinational says it has locked in even higher zircon prices for contracted sales ending March, adding that further price rallies could be curtailed by the emergence of the mineral’s substitutes.
Demand for zircon has in recent months been driven by tight supply which has spilled over into this year, Base said, adding that sales enquiries have exceeded its supply capacity.
“While potential exists for further price growth during the coming quarters, emerging concerns from zircon producers over the potential for substitution or thrifting of zircon may begin to restrain the extent and/or frequency of any such increases,” the multinational said.
Base, which plans to embark on a second phase of mining at the Kwale mine, has also moved to expand its global operations by agreeing to acquire an 85 per cent stake in Madagascar’s Toliara Sands for $75 million (Sh7.7 billion).