Australian mining firm Base Resources recorded a 31.2 percent decline in the value of titanium exports from its Kwale mine in the quarter ended March on the back of reduced production.
The company’s sales of the titanium minerals such as zircon, rutile and Ilmenite dropped to Sh3.8 billion in the review period compared to Sh5.6 billion a year earlier.
This came as production of the commodity fell 19.6 percent to 114,465 tonnes, erasing the benefits of a 17.1 percent jump in the international prices to $368 (Sh37,300) per tonne.
Lower export earnings means the government will also collect less revenue in the form of royalties from the company in the quarter.
Base Resources pays royalties at a rate of 2.5 percent of sales value.
The multinational says it reduced production as it prepared to shift its operations to the South Dune, having mined most of the titanium reserves in the current Central Dune.
“As previously announced, the mineral separation plant (MSP) feed rate was reduced to 71 tonnes-per-hour from February to ensure sufficient heavy mineral concentrate stocks are available to allow continuous feed to the MSP during the transition to the South Dune orebody,” Base Resources said in a statement yesterday.
“Consequently, production of all final products was reduced in the quarter.”
The company says it is on course to transition to the South Dune by June at a cost of Sh1.2 billion in a process that will further disrupt production for at least two weeks.
Infrastructure investments related to the shift includes installation of 7,400m of slurry and water piping, an 8,500m 11kV power line, a pipe bridge across the Mukurumudzi Dam spillway, a 1.25MW slurry booster pump and a 1MW process water booster pump.
“Engineering and procurement work is complete and construction, clearing and earthworks were largely complete by the end of the quarter,” Base Resources said.
“The total cost of works for the transition is forecast to be $12.3 million (Sh1.2 billion) and will be incurred over financial year 2019. Total expenditure on the transition to the South Dune orebody to date is $10.1 million (Sh1 billion).”