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Titanium exports turn on economic prospects

Recognition of titanium mining at the Coast as one of Vision 2030 flagship projects is one of the pointers that the mineral is emerging as key revenue earner for the country.

On Friday, Vision 2030 Director General, Dr Julius Muia, signed a memorandum of understanding with officials of Base Titanium Ltd for the Kwale Mineral Sand Project to be implemented in line with the country’s key development projects.

“The Kwale Mineral Sands Project is the single largest mining project undertaken in Kenya since independence with a capital investment of Sh26 billion,” said Muia.

This mine’s recognition did not come as a surprise. Data from the Economic Survey 2017 shows that the country’s total mineral output — which includes soda ash, fluorspar, salt, carbon dioxide, diatomite, gold, gemstones — last year was valued at Sh23.3 billion with titanium ores contributing Sh10 billion.

Base Titanium Ltd, which has been mining titanium the past three years, contributed Sh13.3 billion or nearly 60 per cent of the mining sector contribution to the Gross Domestic Product (GDP), up from 43 per cent in 2014 and 54 per cent in 2015.

“The earnings from titanium will spur the government and investors into exploring other minerals that lie untapped in the country. Increased prices and earnings from titanium will strengthen Kenya’s position as a diversified economy. With time, this will help propel the economy to a higher level of development,” said Muia.

According to the pact, Vision 2030 Delivery Board will support Base in the implementation of the Kwale Mineral Sands Project within its mandate and Public Private Partnership framework.

This will include support the firm’s requests for intervention on matters requiring action and collaboration by respective State agencies.

And in return, the firm will use its international networks to highlight its engagement with the Board in order to market Vision 2030 and the Kenyan mining sector more broadly.

According to the company’s General Manager in charge of External Affairs and Development, Joe Schwarz, last year Base Titanium earned the country $4 million (Sh415.6 million) in royalties. Royalties are regular payments made to the Government for giving mining companies the rights to exploit minerals.

Since Base Titanium started mining operations in 2014, the firm has remitted to the national coffers over Sh1 billion in royalties, besides the many other benefits the company has accrued in the economy.

While Base Titanium has been paying the government 2.5 per cent of their total earnings as royalties in the past two years, the company has entered into a new agreement with the government to pay five per cent royalties.

The company has so far invested a massive Sh320 billion investment for the plant in Kwale county. According financial analyst Aly Khan Satchu, who is also the chief executive of Rich Management, the discovery and large-scale mining of titanium in Kwale is the game charger in Kenya’s mining sector and economy at large.

“To invest Sh320 billion in an area is something big. Base Titanium has opened an enormous opportunity for the country,” he said. The company has put up the plant and other infrastructure projects like the main access road, a dam and boreholes, a 132kV power transmission line and substation and a ship loading facility in Likoni.

“We have so far created 640 direct jobs and another 1,430 indirect jobs in the supply chain. According to a study carried by Ernst and Young, we have induced another 1,360 jobs through consumer spending within our ecosystem through direct and indirect employment,” Schwarz said.

The firm has ensured that 65 percent of its workforce is from Kwale County while 32 per cent have been recruited from across the country, with a paltry three per cent being expatriates.

Schwarz said the country has an opportunity to earn more sustainable earnings and other accrued benefits from the mining of titanium if the government can streamline and create a conducive environment for further exploration at the Coast and other potential areas. The current reserves in the licensed area of 4,000 acres in Kwale can last only in the next seven years.

“Further exploration will mean additional jobs for local residents, more revenues in the form of royalties and taxes to the national and county governm ents and the communities.

Exploration represents the best chance to see new investment and further economic benefits,” Schwarz said. But further exploration by the company has been put on hold due to misinformation, land holder incitement by politicians who feel the projects hasn’t translated much benefits to the communities in the area.

According to a new revenue sharing agreed by the government, but which is yet to be implemented, the national government will take 70 per cent from the royalty earnings; the county 20 per cent while 10 per cent will be invested in the local community.

COMING TOMORROW: Why mining industry is on the launch pad ready for take-off

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