Joseph Schwarz, General Manager, External Affairs and Development, Base Titanium

In addition to Kwale, Base plans to explore further opportunities in Kenya and elsewhere in Africa.

Joseph-Schwarz-WEBBase Titanium is an Australian company that owns and operates the Mineral Sands Project in Kwale Kenya, East Africa. Can provide us with a brief introduction to the project?

Joe Schwarz (JS): The Kwale project, which has a mine life of 13 years, is comprised of two separate deposits: the central dune, where operations began and where we are mining now, and the south dune, which is on the other side of the dam. The central dune is a high-grade deposit compared to the south dune. At present, Base Titanium is mining around 9 million metric tons per year (mt/y), producing 360,000 mt/y of equivalent ilmenite, 80,000 mt/y of rutile, and 30,000 mt/y of zircon.

The mine throughput will ramp up to 12 million mt/y: the production of ilmenite will drop off to roughly 270,000 mt/y, rutile by the same sort of proportion, so 50,000 mt/y to 60,000 mt/y and zircon down to between 15,000 mt/y to 20,000 mt/y.

The Kenyan government’s hopes to stimulate investment in the mining sector are largely pinned to the Mining Bill 2014, of which Base Titanium has been vocal in its criticism. What do you believe are the overarching issues and how can they be rectified?

JS: For a country that has long neglected minerals as a potential economic contributor, the first step is to develop a long-term strategy and policy around where the country wants the industry to be in the next 20 years. This later informs the legislation. Unfortunately, this did not happen in Kenya; legislation is nearing completion without reference to a policy.

Fundamentally, the government needs to contribute more in terms of minerals information: there is little geological data, no geophysical information, and very little available to support grassroots exploration. Miners who are inclined to explore Kenya must obtain their own basic data, but the Mining Bill 2014 would not encourage them to take that risk. A potential investor would look at the bill as is and rightly come to the conclusion that it does not encourage investment, but instead is rather punitive. The original bill was essentially the result of the most onerous clauses and provisions from various other legislations in different jurisdictions being picked out and lumped together into one bill. A mining bill can call for free carry, local listing, right of preemption or other benefits to the country, but these cannot all be amassed into one piece of national mining legislation without it being considered unattractive.

In the currently adverse commodities market environment, the government ought to rethink its approach to growing the minerals sector. The rather narrow view taken on extracting as much tax revenue as possible ignores the significantly larger direct, indirect and induced benefits to be derived from the mining economy. This can only happen in a stable and competitive environment that encourages the rapid growth of the industry, which in turn will generate increased tax revenues.

Kenya’s formalized mining industry is in its very early stages, but industry participants have openly stated that when serious new mining companies enter this market, they will look to the example of Base Titanium. Why is that?

JS: Base Titanium has an unparalleled safety record, a differentiated approach to involving the community and a commitment to complying with all international standards relating to environment, community, etc.

Looking more closely at each of these points, Base Titanium’s safety record speaks for itself. We have incurred three lost time injuries, two of which were during the construction phase, in 13 million man hours worked, resulting in a cumulative lost time injury frequency rate of 0.23. The Western Australian average rate is over two and that is in a part of the world that has been mining for over 100 years. Many of our employees have never worked on a mine before, so this performance is a testament to the training, procedures, and enforcement applied to ensure a safe working environment for our employees.

Regarding the community, we have created a system that relies on a mutual exchange of benefits: the community gets from us what they want and we get from them what we want. We have already built infrastructure, schools, health centers, but the focus now is moving away from infrastructure towards self-sustaining community investment programs, such as teaching the community how to grow cotton commercially. What does Base Titanium receive in exchange? We have a loyal workforce, a supportive and protective community and a reference point for future projects.

Lastly, Base Titanium’s programs comply with local legislation as well as the relevant international standards: the Equator Principles, the IFC performance standards, Voluntary Principles on Security and Human Rights, International Labor Organization standards, and others.

What are Base Titanium’s future plans for its mine in Kenya and aspirations beyond the country?

JS: In addition to operating the Kwale Mine, Base Titanium plans to explore further opportunities in the country and in other conducive jurisdictions in Africa. The Kwale Project is the launch pad for future growth of the company.

This interview was conducted as part of research by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in May 2015 and can be accessed here. To participate in this report, please contact Sharon Saylor at ssaylor@gbreports.com.

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