Australian mining company-Base Titanium expects a higher mineral output in the current financial year than previously projected, amid higher sales in the first quarter.
It hopes to mine between 300,000 and 320,000 tonnes of Ilmenite up from a previous projection of 270,000 to 300,000, in a recently revised production estimate.
Zircon output is projected to go up to between 26,000 and 28,000 tonnes, from 23,000 tonnes initially projected.
That of Rutile, the third mineral type mined at the Kwale site, however, remains unchanged with the company expecting an output of between 70,000 and 80,000 tonnes.
“There remains, however, the possibility of a halt to, or curtailment of, operations at some point in the future due to a severe Covid-19 outbreak on site or change in government health directives that could impact on the achievement of this guidance,” the firm says in its most recent production guidance range for the financial year 2021.
In the first quarter of this year (January-March), the firm realised higher mineral output compared to the previous quarter (December), amid an increase in sales.
A total of 84,178 tonnes of Ilmenite was mined during the quarter ended March this year, up from 78,500 tonnes in December.
Rutile mined during the period totaled 19,448 tonnes which is higher than the 18,171 tonnes in December while Zircon totaled 7,384 tonnes, up from 6,677 tonnes.
Sales equally increased in quarter one where ilmenite sold increased by 80.6 per cent to a total of 97,179 tonnes compared to the 53,798 tonnes sold in Q4 of last year.
Rutile sales during the quarter more than doubled to 26,074 tonnes compared to 12,017 tonnes while Zircon sold was 6,612 tonnes. This was an increase compared to the 6,399 tonnes sold in the December quarter.
This, as global titanium prices remain stable despite disruption in the industrial and shipping sectors by the Covid-19 pandemic.
“The prices are good so far and we continue with shipments,” Base’s General Manager External Affairs, Simon Wall, told the Star in a telephone interview.
The high output and sales mean more earnings by the government in form of royalties where the company has paid close to Sh2 billion in royalties since it started exporting, and expect the contribution to GDP to reach Sh100 billion over the life of the mine.
In the first quarter of this year, total mineral separation plant (MSP) feed tonnage was higher compared to the prior quarter, pegged on high mineral concentration availability, while recoveries were generally steady.
“Consequently, production of all final products increased compared to the prior quarter,” its quarterly report (January-March) reads in part.
Even so, total operating costs of $19.6 million (Sh2.1 billion) were significantly higher in the quarter compared to the October-December quarter where it spent $16.8 million (Sh1.8 billion) in operations.
This is due to a revision of underlying assumptions for the rehabilitation and mine closure provision, resulting in a one-off non-cash adjustment of $3.3 million (Sh355.9 million), management says.
Excluding this adjustment, operating costs were about Sh53 million ($0.5 million) lower than the prior quarter.
This adjustment is reflected in the increased unit operating costs to $176 (Sh18,979.84) per tonne produced (rutile, ilmenite, zircon, and low-grade zircon).
In the previous quarter, this cost was recorded at $161 (Sh17,362.24 ) per tonne.
The unit cost of goods sold is influenced by both the underlying operating costs and product sales mix.
Operating costs are allocated to each product based on revenue contribution, which sees the higher value rutile and zircon products attracting a higher cost per tonne, management says.
Meanwhile, the company which has been instrumental in contributing to the country’s mineral exports and earnings, accounting for 65 per cent of Kenya’s mineral output, is keen to extend its operations in Kenya after the current mine life comes to an end, in October next year.
It has applied for exploration and future mining licences from the Petroleum and Mining ministry, which is awaiting approval.
Last Month, CS John Munyes commended the company’s efforts in community development.
“We thank Kwale county and Base Titanium for being pioneers of the Community Development Agreements as stipulated in the Mining Act,” Munyes said on Twitter.
In 2019, export earnings from titanium ores were Sh13.9 billion, the Economic Survey 2020, by the Kenya National Bureau of Statistics, shows.
“The value of exports to China (mainland) went up by 36.2 per cent due to increase in the value of exports of titanium ores and concentrates,” KNBS says in the survey.
Together with Tata Chemicals, the two account for over 77 per cent of the country’s mineral revenue earnings.
Others are Kenya Fluorspar(18.6 per cent), Karebe Gold(4.6 per cent), Kilimapesa Gold(0.7 per cent) and Lapigems Limited(0.4 per cent). The rest of the industry players account for 15.5 per cent.