Base Titanium, the company mining titanium in Kwale County, has suspended operations after flooding of the site. The announcement was made by its Australian-based parent firm Base Resources.
“This series of rainstorms over recent days resulted in flash flooding that overwhelmed the dewatering systems for the three operating hydraulic mining units (HMUs). Recovery work is underway, with one of three HMUs back in operation and delivering approximately 45% of normal mining volumes,” Base Resources said.
The remaining two mining equipment are currently not operating as they continue to be dewatered and replacement of the pump motors progresses, adding that its annual output projections may not have to be revised despite the uncertainty over the resumption of full mining capacity.
“While the timing for returning to full mining volumes is uncertain, it is not currently expected that the company’s production guidance for the financial year 2022 will need to be revised. A further update will be provided once timing for returning to full mining volumes becomes clear,” said the firm.
The Kenyan mining operation has benefited from a global supply disruption of mineral sands production with the price of titanium having risen 54.8% in the quarter ended March from a year earlier. This is set to lift its earnings besides generating higher royalties and taxes for the government.
Demand for titanium minerals
Base Titanium sold the commodity at an average price per tonne of $740 (85,840) in the review period, up from $478 (Sh55,448) the year before. This raised its revenue by 28.3% to Sh9.2 billion despite quantities sold declining 17% to 107,700 tonnes.
Kenya, which earns royalties from the Kwale operation at a rate of five percent of sales, is another beneficiary of the price boom. Base Resources said strong demand for the titanium minerals ilmenite, rutile and zircon led to the price gains.
“Demand for imported ilmenite as a feedstock for Chinese Titanium dioxide pigment producers, particularly from the company’s customers, again exceeded supply resulting in significant price gains. Despite this very high price environment, ilmenite supply from traditional swing sources has not been able to keep pace with demand and markets remain very tight,”
Base Resources added that the Ukraine conflict is expected to significantly disrupt the supply of Ukrainian mineral sands, further supporting the high prices. The company said it had secured even higher prices for products being delivered in the current quarter ending June.