RPT-Australia's Base Resources begins titanium mining in Kenya

Sun Oct 13, 2013 5:24pm EDT

* Project is country's first large-scale mining

* Kenya seeking more revenue from nascent mining sector

By Joseph Akwiri

MOMBASA, Kenya, Oct 11 (Reuters) - Australian miner Base Resources has started mining at its long delayed Kenya titanium project and expects to start exporting minerals in December, it said on Friday.

Ranked as Kenya's first large-scale international mining project, the mine has been delayed since 2006 due to financing constraints, environmentalist protests, disputes with local farmers over compensation for land and government red tape.

East Africa's largest economy is seeking to derive a bigger share of earnings from its relatively modest and undeveloped mining sector, and the launch of the flagship $305 million project is seen as integral to that plan.

"Base Resources Limited is pleased to advise the commencement of ore processing through the mining unit and wet concentrator at the Kwale Project," Joe Schwarz, the project's general manager for external affairs and development, said in a statement.

"While some small container shipments are planned during December, the bulk shipments of finished product are now scheduled to commence in January."

Titanium is resistant to corrosion and can be used as an alloy with other metals to produce lightweight metals for jet engines.

Base Resources Limited said it would ramp up mining over the next several weeks and increase the processing rates to build up a stockpile of concentrate, before the commissioning of the mineral separation plant, which processes the ore.

Much of the mineral produced at the project will be exported to China and the United States, it said.

The project is funded through a combination of debt and equity with lenders including commercial banks and development financial institutions, and has an estimated lifespan of between 11 and 14 years.

Some 330,000 tonnes of ilmenite a year, about 10 percent of world supply, will be produced at the mine located south of the Indian Ocean port and tourist city of Mombasa.

The mine will also churn out 80,000 tonnes of rutile per year, representing 14 percent of global output, and a further 30,000 tonnes of zircon. The minerals are used as pigment in paper, plastics, ceramics and titanium metal.

Kenya also has gold and coal deposits, and a subsidiary of Canada-based minerals and metals firm Pacific Wildcat Resources is scouring the coastal region for niobium, which is also used to make alloys for jet engines and to strengthen steel.