Kenya has banked $279.4 million (Sh36 billion) in taxes and royalties from Kwale miner Base Titanium in the last decade, with the cash tap now set to shut after depletion of ore at the end of this year.
Company filings show that cumulative royalty payments over a 10-year period hit $135 million (Sh17.4 billion) by the end of the financial year ending June 2024.
Base started paying the government royalties in 2014 following the shipment of its first ore exports, initially at a rate of 2.5 percent of the value of the titanium exports, doubling to five percent from 2021.
The Kwale project saw Kenya join the list of top titanium producers in the world that is led by China, South Africa and Australia.
The company has also paid the Treasury income taxes of $95 million (Sh12.3 billion) in the period, and a further $41.1 million (Sh5.3 billion) in withholding taxes on dividends distributed to its Australian parent Base Resources since 2021.
The company pays income tax at the rate of 30 percent and dividend withholding tax at 15 percent. The latest financial filings show that the government’s royalty earnings from the company for the financial year to June 2024 fell by half to $6.78 million (Sh876 million) from $14.6 million (Sh1.88 billion) in 2023.
The fall was attributed to the lower production and sales volumes in the period, and it marked the lowest payout to the exchequer in four years.
Sales revenue for the year stood at $135.1 million (Sh17.45 billion), down from $271.43 million (Sh35 billion) in the year to June 2022.
“During the year, as planned, mining transitioned to the lower grade ore bodies that will characterise the remaining mine life, which resulted in reduced production and lower sales volumes.
“The period also saw softening sales prices for all products,” Base Resources said of the Kwale operation in its latest annual report.
In 2013, the company had estimated that it would pay the government $220 million in taxes and royalties over a 13-year mining period.
Other than the increase in the royalty rate, the higher than projected earnings also reflected rising prices of titanium in the international markets.
Base acquired the Kwale project in 2010 from Canada’s Vaaldiam Resources (formerly known as Tiomin Resources) for $3 million —Sh388 million at current exchange rates— after the latter failed to progress to production after 14 years of holding the concession.
Tiomin had failed in a last-ditch effort to raise capital from China’s Jinchuan Group which called off its proposed investment of Sh1.8 billion for a 70 percent stake in the Kwale operation over alleged lack of transparency by the Canadian firm.
Base Resources is now itself a subject of a buyout bid by American mineral resources firm Energy Fuels, in a Sh32.8 billion (375 million Australian dollars) cash and stock deal.
Base Resources shareholders will hold approximately 16.4 percent of the combined group at the conclusion of the deal, giving Energy Fuels the majority 83.6 percent stake.
