Base Titanium’s future in Kenya is now in the government’s hands as it awaits decision on eight crucial prospecting licenses that will determine its exit or stay after December.
The company is currently mulling a post-mining strategy and closure of the current activities in Kwale with mining expected to end in December when minerals will be fully depleted.
This will mark the end of a decade of mining and exporting of titanium ores by the company, with the key minerals of Rutile, Zircon and Ilmenite accounting for up to 65 per cent of Kenya's mineral exports over the period.
Last October, the company announced that, following an exhaustive exploration and evaluation process seeking to further extend the life of Kwale operations, mining is expected to end in December 2024 as per the current mine plan.
Processing activities will conclude shortly thereafter, with Kwale operations transitioning to post-mining, where operations include the process of decommissioning and reinstatement.
If a mine is not attended to in a proper way, it can give rise to catastrophic environmental effects for a long time ahead.
Base whose capital expenditure on its project to date is to the tune of $370 million (Sh59.4 billion) entered Kenya’s mineral sector in 2010, with operations in Kwale commencing in 2013.
The first shipment of minerals from its Mombasa port facility was made in February 2014.
It had hoped exploration in three licensed areas would have led to extension of mining activities, but findings made last year indicated there were no enough minerals for commercial investments.
“….it concluded that both lack sufficient grade or scale to support the capital investment required to extend or establish new mining operations,” Base said in its latest quarterly operational update, released on Tuesday.
Its future in the country now depends on a decision by the Mining, Blue Economy and Maritime Affairs ministry, which announced the partial lifting of a four-year moratorium on mining licenses in October last year, paving way for fresh issuance of permits to investors.
The ban, which was imposed in 2019, was to allow for the mapping of the country’s minerals.
“Base Resources continues to engage with the Department of Mining with a view to progressing its eight prospecting licence applications in the Kwale, Kuranze and Lamu regions, most of which were lodged prior to the decision to implement the moratorium in 2019,” the firm said.
This is ahead of the release of its half-year consolidated financial results for the 2023-2024 financial year, on February 26.
During the quarter ended December, expenditure on exploration activities in Kenya was $430,000 (Sh69 million), up from $303,000 (Sh48.6 million) in September.
If it secures prospecting licenses, Base could remain in the country beyond 2024, with exploration potentially taking place on an area totalling 722 km2 in the Kuranze region of Kwale County, about 70 km west of Kwale operations, together with an area south of Lamu, totalling 888 km2.
The Lamu, Tana River explorations are however long-term plans, as it would take between five to 10 years, if not longer, to establish the existence of adequate resources before making heavy investment.
“We hope to continue contributing to the growth of Kenya’s mining sector,” general manager External Affairs, Simon Wall, told the Star.
Production of the three minerals at Kwale has significantly dropped, with earnings both for the company and potential revenue for the government going down.
In the December quarter, ilmenite production dropped to 38,900 tonnes compared to 84,500 tonnes same period in 2023.
Rutile was 9,300 compared to 19,500 same period the previous year while zircon produced totalled 3,800 tonnes compared to 7,400.
Volumes sold for the three minerals were 63,700 tonnes, 15,000 tonnes and 3,300 tonnes, compared to 74,100 tonnes, 14,700 tonnes and 5,000 tonnes of ilmenite, rutile and zircon sold, respectively, in 2023.
Rutile is used to produce light, strong, corrosion-resistant titanium metal for use in aircraft, spacecraft, motor vehicles and desalination plants.
Titanium in general is used in chemical processing equipment, desalination plants, power generation equipment, and offshore oil and gas platforms.
Titanium metal is also biocompatible with the human body and is thus used for surgical implants such as knee and hip replacements.
“Prices for all products softened due to ongoing economic uncertainties and sluggish demand across key markets,” the firm said.
In December, it was fetching $589 (Sh94, 534) per tonne on average down from $1,029 (Sh165,154 ) in September, which was also lower compared to $652 (Sh104,646 ) per tonne in December 2023.
In the year ending June 2022, Base paid Treasury $30.07 million (about 4.8 billion-current exchange rate) in royalties, and $26.8 million (Sh4.4 billion) in corporate and withholding taxes.
Despite lower production levels for the remainder of Kwale operations’ mine life, the company plans to continue bulk shipments of ilmenite and rutile, mainly to China, which will result in greater volatility in quarterly sales volumes.
