Joe Schwarz, General Manager, Base Titanium

KENYA Special

Base Titanium is a wholly owned subsidiary of Australian registered and dual listed Base Resources (ASX & AIM: BSE), primarily focused on the Kwale Mineral Sands operations in Kenya. Could you provide some insight into the project’s current status and expectations going forward? 

Base Titanium acquired the Kwale project assets in 2010, currently its sole operating mine, which it successfully financed and developed into Kenya’s flagship mining operation. Mining commenced in October 2013 and the first export shipment of mineral left Mombasa in Februrary 2014. In terms of value, the contribution of Kwale exceeds that of the rest of the mining industry in this country combined. However, we have a limited life of mine, with a total of 13 years. To leverage our well-developed infrastructure, we are now embarking on a program of near-mine regional exploration in order to identify additional resources that will increase the life of mine beyond the remaining eight years. We carried out an airborne geophysical and radiometric survey in June 2015 along the coastal strip from Mombasa to the Tanzanian border and, after identifying a number of interesting anomalies, have procured exploration tenure.

 

There is currently a big drive towards the promotion of Kenya’s mining industry. How has the government endeavored to make the sector more investor-friendly?

The Ministry of Mining is working hard to create a new, more investor-friendly environment by updating its mining policy and legislation. In order to identify potential areas of interest to investors, the ministry is also embarking on an extensive airborne geophysical survey to map prospective areas and plans to create an updated geo-database.

Obtaining prospecting licenses has also become much easier with the recent introduction of an online mining cadaster, which also features a public interface showing the location and ownership of all existing licenses. Applications can now be uploaded directly making the process much more efficient and transparent. This is a major development in bringing exploration management into the modern era.

 

In what ways has the Kwale project benefitted the surrounding region?

Over the life of mine, our overall contribution to GDP is estimated at US$1 billion. Our contribution to export revenues is about US$120 million a year, and this figure could rise significantly if mineral sand prices continue improving. We have also spent US$7 million so far on our community programs, including social infrastructure, livelihood enhancement, health and education. Last financial year we expended 34,000 training man-hours at an investment of US$750,000. In addition to on-the-job internal training, we also run formal external schemes including apprenticeships, graduate programs and internships.

A key philosophy is maximizing local content; we prioritize employment opportunities for locals and derive most of our inputs from Kenyan suppliers. A recent independent study conducted by Ernst & Young on the Kwale operation quantified the positive impact the project is having on the local economy. Of the US$310 million total capital expenditure to construct the project infrastructure, US$106 million was spent in Kenya with local suppliers. We spend US$45 million annually on non-labor inputs, 84% of which is procured from Kenyan suppliers. There are also many indirect and induced benefits arising from the operation – the study found that for every direct employee, four indirect and induced jobs are created through the supply chain and consumer spending.

 

How do you support training and progression for employees?

Our training and skills transfer programs are designed to systematically address existing knowledge gaps and enhance skill levels of our employees. This is run in conjunction with a succession plan aimed at progressively replacing expatriates with homegrown skills. Since February 2014 the expatriate complement has been steadily reduced from 65 to 37 today as the number of Kenyans occupying management, professional and skilled positions has increased commensurately over the same period. In fact, we recently appointed one of our Kenyan engineers on a short-term expatriate assignment at the Base Resources office in Perth. This is both a clear indication of Base investing in local talent and also evidence of the high caliber of the Kenyan workforce.

 

Do you have a final message regarding Kenya’s mining industry and the future of Base Titanium?

As the country’s flagship mining operation, Base Titanium is working collaboratively with the Ministry of Mining to demonstrate what can be achieved in developing Kenya’s mineral resources. We look forward to further nurturing that relationship as the government works towards attracting new investment in the sector and as Base Titanium looks to add value to the sector by extending the mine life at Kwale. We look forward to seeing more exploration taking place in Kenya as commodity markets improve over the coming years. We believe Base Titanium has set the blue print for investment in Kenya’s mining sector with regards to safety, employment, training and environmental management and as a development partner to our local communities.

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