Base Titanium doubles government royalties

Base Titanium is set to double royalties paid to the government to five per cent once talks with the ministry of mining are completed.

The firm’s general manager external affairs and development Joe Schwarz said that they have agreed in principal with the ministry of mining to add up the royalties without giving specific timelines.

“As soon as we are able to conclude the agreement and wrap that to the mining lease we will be paying royalties at five percent, it’s a matter of now concluding the ministry of mining how we move forward with that,” Shwarz said.

The Australian firm had in 2015 agreed to revise the royalty, proposing a formula for doubling the rate to five per cent for the first five years of operation.

Base Titanium which currently accounts for 57.08 per cent of total earnings from the mining industry announced that it paid royalties to the tune of$4 million (Sh415.72 million) in royalties over the last 12 months. The firm has so far paid royalties to the government to the tune of Sh1 billion.

Plans by the state to increase the royalties on various minerals have been resisted by major prospecting firms following a legal notice issued by the former Mining CS Najib Balala proposing that royalties be increased from less than 2.5 per cent to highs of 12 per cent for some minerals.

Under the 2013 legal notice royalties on diamonds were to amount to 12 per cent of the gross sales value, while niobium, titanium ores, zircon, and rare earth elements and radioactive minerals, would attract a rate of 10 per cent.

Coal and ores such as metallic, iron, manganese, chromium, nickel and bauxite would be charged eight per cent of the gross sale value, while gold, silver, platinum, platinoid group metals, gemstones, fluorspar, diatomite and natural carbon dioxide gas would be charged at a five per cent rate.

Industrial minerals including gypsum, limestone and silica sand would attract the lowest charge of one per cent of the gross sales value.

Despite the recent enforcement of the Mining Act 2016, miners have continued to pay the old royalty rates for different minerals with the ministry treading carefully so as not to create a harsh investment environment.

Data by the Kenya National Bureau of Statistics for 2016 shows that the nascent mining industry raked in Sh23.3 billion in 2016 down from Sh23.8 billion the previous year.

The state statistician reported that in the 12 months to December, production of the titanium ore minerals rose 7.0 per cent to 588,421 tonnes from 549,897 tonnes in 2015 while the value rose 3.67 per cent to Sh13.29 billion from Sh12.82 billion.

Last year the ministry contracted audit firm Deloitte, to conduct a study on new royalty percentages for different minerals found in the country.

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