Base Titanium, the company extracting titanium minerals in Kwale County in Kenya has announced a payment record dividend of Sh10.7 billion to its Australian parent firm Base Resources in the year ended June when its net income grew threefold.
The Australian multinational in its latest annual report says the new payout cemented Base Resources’ position as the recipient of the second-largest dividend income from Kenya after Vodacom Group Limited and Vodacom Group Plc are set to earn a combined Sh22.2 billion from Safaricom for the year ended March. The local subsidiary had paid the Perth-based multinational a dividend of Sh7.1 billion the year before.
“During the reporting period, the group’s Kenyan subsidiary and owner and operator of Kwale Operations, Base Titanium, distributed $90 million (Sh10.7 billion) of surplus cash, via dividend, to the group’s ultimate parent entity, Base Resources,” noted in the annual report.
The cash distribution came as the local subsidiary’s net profit rallied to $105 million (Sh12.5 billion) in the review period, up from $28.8 million (Sh3.4 billion) the year before. Among the major beneficiaries of the titanium sales boom include the government of Kenya, collecting a total of Sh6 billion in the form of taxes and royalties. The dividend attracted withholding tax of $13.5 million (Sh1.6 billion) in the review period, up from $9 million (Sh1 billion) that was deducted on the previous payout.
Base Titanium also paid a corporate income tax of $19.6 million (Sh2.3 billion), significantly larger than the $9.2 million (Sh1.1 billion) paid in the prior year. Mining royalties paid to the government also increased to $18 million (Sh2.1 billion) from $13.8 million (Sh1.6 billion).
The royalty rate was doubled to five percent of titanium sales last year as part of an agreement that saw Base Titanium get a larger mining area while the government kept value-added tax (VAT) refunds that were due to the miner.
The deal announced in October 2021 gave the company the right to extend its mining operations beyond the original boundary drawn on its special mining licence, which covered 1,661 hectares. Base Titanium also surrendered its VAT claims of $16 million (Sh1.9 billion) that arose from the construction of its mining infrastructure.
The Kwale operation has become more profitable, helped by steady production and a surge in the price of the titanium minerals ilmenite, rutile and zircon in the global markets. The miner’s sales jumped 39.8% to Sh33.3 billion in the year ended June, reflecting the impact of the average price of the minerals rising by 32.9% to $621 (Sh74,426) per tonne.