Mineral revenues to stagnate this year

3 May 2016

The mine is expected to contribute an estimated Sh1.9 billion in government revenue, with Sh1.4 billion paid by Base as royalties, Pay As You Earn deducted from employees’ earnings and withholding taxes, it said yesterday.

The company’s supply chain is expected to contribute Sh290 million while Sh200 million of government revenue will be generated through associated consumer spending.

Speaking during the company’s launch of mineral sands project economic and tax benefits in Kenya report in Nairobi, Base resources managing director, Tim Carstens, said the company has been hit by an oversupply in the market, which has affected sales.

“We are facing low prices with increased competition. In Africa alone there has been increased production in Senegal and extension of production in Mozambique. We are likely to contribute the same as 2015,” Carstens said.

This is likely to stagnate the growth of mineral output from Kenya, which rose by 16.7 per cent from 1.5 million tonnes in 2013 to 1.7 million tonnes in 2014, propelled by production of Titanium Ore comprising of Ilmenite, Rutile and Zircon.

The Economic Survey 2015 shows the increase raised overall value of minerals by 6.1 per cent to stand at Sh20.9 billion from Sh19.8billion in 2013.

The price fall comes amid a projected increase in production in the current financial year, Base’s quarterly report for January to March shows.

Rutile production is expected to stand at between 82,000 and 86,000 tonnes, Ilmenite 440,000 to 455,000 tonnes and Zircon 29,000 to 31,000 tonnes.

“Prices for rutile are likely to be under some pressure during the June quarter as a result of this surplus as producers compete for market share,” the report reads.

Carstens said prices are however likely to increase in the last quarter of 2016, projecting good returns in 2017.

“In the next six months prices are likely to improve,” he said.

Mining CS Dan Kazungu said the government will speed up Base’s VAT refund claims to help support its operations.

The government owes the Australian company a total $ 19 million (Sh1.92 billion) in VAT claims from both the construction of the Kwale Project and the period since operations commenced.

Source: The Star, Kenya

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