Australian mining firm Base Resources recorded a 22.8 percent drop in the value of titanium exports from its Kwale mine to Sh3.9 billion in the quarter ended September, weighed down by reduced production.
Sales in the same period last year stood at Sh5.1 billion, with higher selling prices failing to compensate for the reduced output of the titanium minerals Ilmenite, Rutile and Zircon.
The sales slump will result in reduced earnings for the Government which is paid royalties at a rate of 2.5 percent of the export values.
The volume of exports of the titanium minerals fell 41.7 percent to 81,679 tonnes from 140,185 tonnes after production declined 36.2 percent to 97,644 tonnes.
The company says production was affected by the migration to the new South Dune site after resources at the maiden Central Dune were exhausted.
“As expected, mining commenced on the northern fringes of the South Dune, where grades are lower, resulting in reduced output of finished products,” Base Resources said in the trading update yesterday.
The multinational says it benefitted from higher prices of the commodities in the review period, a trend that is expected to hold in the short term.
“Ongoing constraints on the global supply of sulphate ilmenite and high-grade chloride feedstocks (including rutile) have maintained tight market conditions for titanium minerals resulting in continued positive price momentum,” the company said.
Base Resources realised average revenue per tonne of sales of $469 (Sh48,448) in the review period compared to $354 (Sh36,568) the year before, representing an increase of 32.4 percent.
The shift to the South Dune will see the company access another resource estimate of 114 million tonnes.
The move could extend the company’s local operations beyond 2024, benefitting employees and the government which earns royalties and taxes. Base Resources spent a total of Sh1.2 billion on the mining site transition.
The multinational is also exploring for more titanium deposits in a new licence application covering a land area straddling Lamu and Tana River counties.
Its prospecting and mining activities have so far been in Kwale County.
Base Resources says it is too early to tell if the exploration will be successful. The multinational will however extend its operations in the country if the survey establishes commercially viable deposits of the minerals.