Kenya, Tiomin sign $150mln titanium deal
Date: 07-Jul-04
Country: KENYA
Author: Mike Pflanz
The deal was proposed eight years ago, but has been delayed by environmentalists' objections over radiation fears and demands by local farmers for more compensation.
The main application for titanium is in the aerospace industry, which consumes 50-60 percent of material, while other uses are in sports equipment such as golf clubs and tennis racquets, the medical sector in tooth and hip implants, and military applications.
The main application for titanium is in the aerospace industry, which consumes 50-60 percent of material, while other uses are in sports equipment such as golf clubs and tennis racquets, the medical sector in tooth and hip implants, and military applications.
"It has been a long process getting to where we are today, and it is my great pleasure... to complete the official issuance of the special mining lease for the Kwale titanium mining project," Stephen Kalonzo Musyoka, Kenya's Minister for Environment and Natural Resources said at the signing ceremony.
The deal is one of the largest private investments in Kenya and the first mining lease of its kind agreed since independence from Britain 41 years ago, Musyoka said.
Plans to mine titanium in three further coastal areas would take Tiomin's investment to $300 million, Jean-Charles Potvin, President and CEO of Tiomin said.
Potvin did not say over what time frame the additional investment of $150 million would be made.
"To date Tiomin has invested in excess of $25 million on exploration, engineering, legal and environmental issues," he said. "The Tiomin mineral sands project will inject at least $20 million annually into the local economy."
Tiomin will pay compensation of 80,000 shillings ($1,003) per acre of land, upping its original offer of 9,000 shillings.
Around 40 permanent jobs will be created at each of the deposit sites, and a further 1,000 during the construction phases on each site, Potvin said.
Environmentalists had argued that the mine, from which Tiomin will extract ilmenite, rutile and zircon, would expose villagers to considerable radiation and harm forest and marine life, charges which the company denies.
Ilmenite and rutile are mineral sources of titanium dioxide used in making pigments, and zircon is used in ceramic glazes and electronics.
Tiomin says it expects to produce an annual average of 330,000 tonnes of ilmenite, 77,000 tonnes of rutile and 37,000 tonnes of zircon from its new mine, earning Kenya 460 million shillings annually in royalties and taxes for the first five years, and 810 million shillings in subsequent years.
POSITIVE FOR KENYA
"It will send a louder positive message than the riots of the weekend sent a negative one," Edward Gitahi, an investment manager at AIG Global Investments in Nairobi said.
"It is one of the biggest deals ever signed in Kenya, and just in terms of confidence in the country it has to be a good sign. As we move forward we will see money being spent here, a lot of people being empowered through employment and eventually foreign exchange hopefully being traded."
Nairobi's business district was hit on Saturday by running battles between police with teargas and demonstrators angry over the banning of a rally to protest against the government's delay to enact a new constitution.
The jobs market along Kenya's coast has been hit by a slump in tourism after a suicide bomb attack on an Israeli-owned hotel near the coastal city resort of Mombasa in November 2002.
